Commentary for Tuesday, Aug 6, 2013 (www.golddealer.com) – Gold closed weaker today off $19.40 at $1283.20 recovering somewhat from earlier lows of $1278.00 so the $1300.00 level is history for now and until this psychological level can be regained it is fair to say gold will remain defensive.
Near term support should be seen at $1270.00 which we saw on July 17 but considering the dollar was weaker today this market has definitely lost its mojo. IF this continues the real question will be whether gold will move to and hold the recent double bottom of $1211.00 seen on July 5th and July 27th.
Today’s news however was counter intuitive. The trade imbalance moved to $34.2 billion the lowest in 3 1/2 years, the dollar was weaker and metals were down. And the Chinese continue to buy cheaper gold her imports at 101 tons.
Silver was down marginally off $0.20 at $19.51 and considering the rather flat “off” numbers the last few days it might suggest silver is no longer following gold.
Platinum was down $20.00 at $1427.00 and palladium was also weaker down $12.00 at $723.00. Goldman Sachs today said that demand for palladium would exceed production by 1.33 million ounces this year.
Gold touched the $1200.00 support in late June and has since bounced nicely higher moving to the much stronger $1350.00 level in mid July after confirmation by the Fed that quantitative easing was not going anywhere without fulfilling the prescribed lower employment numbers. Still members of the FOMC (Federal Open Market Committee) commented as recently as today that the Fed could begin “tapering” this year and the trading floor rumor persists that “tapering” might be seen as early as September. This in conjunction with improving US economic numbers and today the assessment by some European players that their economic problems while not solved have at least stopped getting worse makes it difficult for gold to get upward traction. So with today’s weakness the momentum for gold belongs to the bears and is supported by lower oil.
Kira Brecht (Kitco) thinks there is a positive correlation between the price of gold and crude oil. “Given the recent high correlation between the two markets, falling crude oil prices, especially a strong move under the $102 per barrel level, could weigh on gold prices near term. Of course, gold is a unique market in that it reacts and responds to a variety of economic, political and inputs. It is a safe-haven investment during times of military and political instability and uncertainty. It is a source of capital preservation and a portfolio diversifier. It reacts to movements in the U.S. dollar, inflation data, growth data and central bank policy. The level of crude oil prices and the subsequent inflation impact is only one piece of the puzzle. But, for active traders of gold, it might be worth keeping a crude oil chart up on your trading screen in addition to the gold and the U.S. dollar.”
Our phone business was on the quiet side but the walk in business at the CNI Building was stronger today than I have seen in sometime. In LA there is just something powerful about walking in with cash and walking out with the silver bullion. Investors like to put down green and walk out with product…no waiting…and the most asked for silver bullion today was again US Silver Eagles in tubes of 20 coins all the way to Monster Boxes of 500.
So for today at least the physical delivery of silver bullion gets all the attention. Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your evening. These markets are volatile and involve risk: Please Read Before Investing
Written by California Numismatic Investments (www.golddealer.com).