Commentary for Monday, July 28, 2014– Gold closed up $0.20 at $1303.30 watching the Federal Reserve and a possible interest rate change this Wednesday.
I don’t buy the rumor but some believe the Fed will raise rates to stay on top of possible creeping inflation. With pending home sales moving in the wrong direction my money says the Federal Reserve does just what Yellen promised – stay the course, which will support gold.
Silver closed down $0.06 at $20.52.
Platinum closed up $12.00 at $1490.00 and palladium up higher by $1.00 at $880.00
This from FXEmpire Commentary – “The GBP/USD traded higher as investors squared positions ahead of Wednesday’s U.S. Federal Reserve Federal Open Market Committee monetary policy announcement and Friday’s U.S. Non-Farm Payrolls report. Although the majority of investors believe the Fed will stay the course until its next meeting in September, some feel the need to lighten up on short positions after an eight day decline just in case there are any surprises.
Position-squaring ahead of the U.S. economic events later this week also helped boost the EUR/USD slightly. Most of the move was attributed to short-covering with very limited speculative buying. There were no economic reports today from the Euro Zone so investors had very little news to trigger a reaction. Technical factors may have also helped underpin the market since several indictors showed the Euro in oversold territory, following last week’s crushing sell-off.
September crude oil weakened again on Monday, however, the market had reached a technical retracement zone which may encourage profit-taking, short-covering or aggressive counter-trend buying. Fundamentally, a steep increase in gasoline stocks continues to remain the catalyst behind the weaker crude oil prices. Although supply has fallen because of the increased production of gasoline, this is not being driven by true demand for crude oil.
December Comex Gold futures rebounded for a second day, following the sharp sell-off on July 24. The current chart pattern suggests the market may retracement to $1318.50 to $1325.30 before the next round of selling pressure begins.
Fundamentally, the market is being underpinned by a slight drop in the U.S. Dollar which is being caused by uncertainty going into the Fed announcement on July 30 and the U.S. jobs report on August 1.
Two U.S. economic reports today also helped pressure the dollar. Flash Services PMI for July remained unchanged at 61.0, but failed to meet the 62.3 estimate. Some estimates were as low as 59.8. U.S. Pending Home Sales for June fell 1.1%. This was well below the May figure of 6.0%. Traders were looking for a reading of -0.2%.”
I am a big fan of Moving Averages in the precious metals which can provide additional directional information. But like all technical indicators should be taken with a grain of salt. Some popular averages are 50, 100 and 200 day periods – the shorter ones being more sensitive than longer periods.
The theory here – underline that word – is that when the moving average is moving lower and the price of gold moves below that average it signals possible further weakness. If the price of gold is moving higher and the price of gold rises above that average it may signal that further buying is in order.
Now compare gold’s close today ($1303.30) to its 50 Day Moving Average (DMA) ($1293.00) – 100 DMA ($1302.00) and 200 DMA ($1286.00) / it may be significant that today’s gold close is higher than all three moving averages.
Look also at silver’s close today ($20.51) to its 50 Day Moving Average (DMA) ($20.17) – 100 DMA ($20.08) and 200 DMA ($20.33) / it may also be significant that today’s silver close is higher than all three moving averages.
SINGAPORE, July 28 (Reuters) – “Gold slipped slightly on Monday due to a stronger dollar but held above $1,300 an ounce as its safe-haven appeal was burnished by heightened tensions between the West and Russia, and violence in the Middle East.
* Spot gold dipped 0.2 percent to $1,305.45 an ounce by 0011 GMT, largely holding the previous session’s 1.1 percent gain. The metal logged its second consecutive weekly drop on Friday on strong U.S. economic data.
* Fighting subsided in Gaza on Sunday after Hamas Islamist militants said they backed a 24-hour humanitarian truce but there was no sign of any comprehensive deal to end fighting with Israel.
* Fierce clashes between Ukrainian troops and pro-Russian rebels continued on Sunday as Europe and the United States prepared economic sanctions on Russia over the conflict.
* In a measure of investor sentiment, hedge funds and money managers boosted their bullish bets on gold futures and options as the yellow metal’s price rose last week, while slashing net-long positions in silver, the Commodity Futures Trading Commission said on Friday.
* Russia and Turkey lifted their gold holdings in June as both countries increased their bullion reserves for a third consecutive month, data from the International Monetary Fund showed on Friday.
* Silver bullion banks Deutsche Bank, Bank of Nova Scotia and HSBC have been accused of manipulating prices in the multi-billion dollar market in a lawsuit filed on Friday.
* The company operating the gold price ‘fix’ has appointed a supervisory committee to oversee the century-old system of benchmarking gold prices ahead of the implementation of stricter regulations, its website showed on Friday.
* Some disappointing U.S. earnings and weak German economic data pressured world stock markets on Friday.
* The U.S. dollar hovered near six-month highs against a basket of major currencies early on Monday, holding onto solid gains made last week as investors turned bearish on the euro.”
The World Gold Council posted a comprehensive report on their site – China’s Gold Market: Progress and Prospects. If you are serious about the price of gold read this report about the positive link between the growing Chinese middle class and gold consumption. I have taken a small quote from the article regarding jewelry stores in China which will give you an idea of the possible scalability of their gold demand.
“There are now approximately 100,000 jewellery outlets in China, stocking mostly 24 carat products. The boom in Chinese jewellery consumption has been accompanied by break-neck growth in the number of retail outlets. The first wave of openings targeted wealthier first and second tier cities but in recent years expansion has been concentrated on China’s over 600 third and fourth tier cities. Many of the stores are franchises belonging to the large Hong Kong retailers such as Chow Tai Fook and Luk Fook or local heavyweights such as Lao Feng Xiang and China National Gold Group. The latter, for example, has in just a handful of years built a portfolio of 2,200 stores. There are also many smaller, regionally focused groups; mega-stores such as Beijing’s famous CaiBai and retail chains owned by jewellery manufacturers. Growth in the number of shops has occurred hand-in-hand with a huge increase in the number of department stores and shopping malls in China’s cities. Each department store will typically have no less than five jewellery counters and new malls will feature outlets representing several of the famous brands.”
This comes from Zero Hedge / GoldCore / Ed Steer’s Gold & Silver Daily –
“The New York Times ran an op-ed piece today by British Conservative backbencher Kwasi Kwarteng, suggesting that China could someday peg its currency to gold, as Britain did in 1821.
“China has the reserves to do this, and it could have the political will, if the dollar proved to be unreliable as a store of value in the future,” he says. “Having expanded its manufacturing base and captured international markets, China may well find a world hooked on its products. It could eventually — in, say, 20 years — peg the renminbi to gold, considering it preferable to the dollar as a store of value, because of its permanence and longevity. With a balanced budget and a gold-backed currency, China’s economy could be even more formidable than it is today. Such a move would truly mark its return as the “Middle Kingdom.”
Hard as it may be to contemplate today, this scenario would, in many ways, be a more secure basis for an international monetary regime system than the system of floating exchange rates that Nixon inadvertently created in 1971, one that forever overturned the Bretton Woods order.”
It is an interesting article and it is interesting that it was published in The NY Times as it is a newspaper that has traditionally been quite hostile towards gold.
Some form of quasi gold standard in China is something we have written about since 2005 and it seems more likely by the year.
The world turns slowly…and then very fast.”
The idea of a real gold backed currency has been the Holy Grail of gold bullion buyers for more than 30 years. I have always believed the idea was a pipe dream because as the world became more interrelated its currency fate became more related.
World governments have a common interest in a “race to the bottom” relative to valuations because after Bretton Woods their value relative to gold was replaced with their value relative to one another. This of course answers the question as to why they keep a wary eye on each other’s fiscal policy.
And a real gold backed currency could lead to another feared outcome – deflation. I know it sounds funny but without the capacity to expand the money supply – even without end – you could create a financial deflation box.
I always figured the gold standard conversation was also just fantasy because there was no replacement for the dollar. No other currency had the strength and staying power based on the economic powerhouse which is US manufacturing.
But postings like the above are becoming more common in this world of high stakes financial poker. This Spy vs Spy contest between world currencies is rigged toward inflation but one which might have dire consequences if the participants misstep.
Perhaps a gold backed currency is not as farfetched as I once believed – but not because it is a natural result of government currency debasement.
Is it possible that this new currency will be created because the old and dead Cold War has been replaced with a new and savvy financial opponent who is not satisfied to play second fiddle on the world financial stage?
An opponent with an obtuse political agenda which now understands that the “military strength” game played with the US is a loser and will sooner or later challenge US dollar hegemony?
The walk-in cash trade today was none existent – actually it was not that bad but when we are talking about what’s for lunch at 10:00 AM it is never a good sign. Phones were quiet too – typical of summer trading.
What does not seem reasonable is that gold is barely able to hold $1300.00 as political tension escalates – with this level of violence it should be testing overhead resistance at $1375.00.
The GoldDealer.com Activity Scale is a “3” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 4) (last Wednesday – 5) (last Thursday – 5) (last Friday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers.
Email confirmation using a PDF File when buying or selling is functional. It also includes the various forms of payment and includes bank wire instructions. And you can now see your actual invoice or purchase order on your computer screen.
When you buy or sell please check to see if we have your current email on file and that your computer will accept our email (no spam).
About shipping information – when buying or selling your rep will walk you through your current mailing information. Thanks for keeping us up to date if you have moved.
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. Live pricing moves all the buy/sell product prices on a real time basis. Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.
In addition to our freshly ground organic coffee offered visitors throughout the day we have added cold bottled water and cokes.
Like us on Facebook and follow us on Twitter @CNI_golddealer.
Thanks for reading from your friends at GoldDealer.com and enjoy your evening.
Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.