Commentary for Friday, March 14, 2014 (www.golddealer.com) – Gold finally closed up $6.80 at $1379.00 after being up as much as $20.00 in early trading. The close remains strong however even after settling lower and sets a 6 month high as traders ponder anything approaching the August 2013 high of $1425.00.
In my opinion there is a great deal of headwind in the $1380.00/$1420.00 trading range and most traders expect some sort of a sell-off on any Russian resolution but if this does not happen a close above the $1425.00 level creates a completely new dynamic, confirming gold’s double bottom ($1200.00). The dollar has created support for higher gold prices and while I would not call the trading mood rosy the picture continues to brighten.
The gold market was relatively flat overnight in both Hong Kong and London but saw early safe-haven buying in the domestic market. This continued pressure to the upside is significant when you consider we are at a six month high for gold, the market remains firm and there is no profit taking on the table. Of course all the action has been created by aggressive Russian troop movements relative to Crimea.
The rumor this morning was that if international sanctions are placed on Russia for incursion she might ask for gold in the form of international payment. And any such move would be bad for stocks both here are abroad further supporting recent strength in the gold market.
This situation is very fluid and traders want insurance. The chances of any deal being cut by Secretary of State Kerry over the weekend is small so expect continued tension well into the opening of Monday’s market. If there is no resolution gold will likely test the formidable $1400.00 overhead resistance. As expected the short contingent in gold has disappeared for now and the bulls are in control. The technical picture continues to improve and I would discount rumored China problems for now as their growth rate is more than 8% even though we have seen some corporate bankruptcies for the first time. My sense is that the recent slowdown (if you want to call it that) will not change their mindset on gold and further accumulation.
Silver closed up $0.21 and the physical market seems a bit more update today.
Platinum closed down $10.00 at $1469.00 and palladium closed down $5.00 at $773.00.
(Kitco News) – An overwhelming majority of participants in the Kitco News Gold Survey see higher prices next week as they forecast the yellow metal will build on its safe-haven bids in light of the tensions in Crimea and concerns over China’s economy. In the Kitco News Gold Survey, out of 33 participants, 25 responded this week. Twenty-one see prices up, while two see prices down and two see prices trading sideways or neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week, most participants were nominally bullish. As of noon EST, Comex April gold prices were up about $47 an ounce on the week. Gold market participants are watching a vote Sunday in Crimea whether or not to join Russia, although many world powers have said they will not recognize the referendum. Concerns about the Chinese economy are also giving gold a boost after weaker-than-expected economic reports and talk of the possibility of more companies defaulting after a solar panel manufacturer was unable to pay a bond installment. “We remain positive on gold and we expect it to see more upside movement particularly as the Ukrainian situation becomes more intense. We see the $1,400 level as a major area of resistance and we would take that as our first target level. Also, major concerns for China and bankruptcies – we expect to see more Chinese companies declare bankruptcy as they lack the funds to pay the loans back,” said Adam Hewison, president and chief strategist with INO and MarketClub.com. Some analysts also said this week’s price movement was bullish from technical analysis perspective as April gold futures broke out of their recent range. “The April contract has broken through secondary technical resistance at $1,350.20 and could now target major long-term resistance at $1,423.50,” said Darin Newsom, senior analyst at Telvent DTN. While most survey participants are bullish, they are also cautious. “Gold will remain well bid so long as the Crimea situation percolates. So, at least for next week, gold is likely to be up. It is perhaps overdue for a correction, so once the Crimea situation calms, it may fall back, but this is unlikely to be any time soon,” said Adrian Day, chairman and chief executive officer Adrian Day Asset Management. Few survey participants saw weaker prices or were neutral, and cited the chance of gold retreating after this week’s stout rally.
The walk-in cash trade was busy today but not hot and the phones were steady to busy all day. With gold at a 6 month high I would have expected more action. So the public is not convinced, is still asking questions and remains on the fence.
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