Commentary for Friday, March 21, 2014 (www.golddealer.com) – Gold closed up a mild $5.50 to $1336.00 in a bout of short covering and perhaps bargain hunting. Seeing that gold was down the first 4 days of this week any good news is welcomed. But like I said yesterday let’s keep the right perspective as gold has rallied these past 6 weeks being up $138.00.
I think the real story continues to be Janet Yellen’s comments about the specter of higher interest rates but the press seems content and the S & P is making new highs. If you consider gold in the wider time frame (30 day chart) we have moved down from $1380.00 (mid-March) to $1330.00 so I think short traders are happy to cover going into the weekend especially with the continued trouble of Russian intervention.
And for you long term buyers gold has significant support in the $1320.00 to $1350.00 range going back to early February of this year. So the markets are comfortable and holding if you want the short version and the recent $10 billion in additional taper chills long speculators.
This is not bad considering the dollar was much stronger mid-week and the stock market continues to get investor attention. And for those who believe higher interest rates are right around the corner (not good for gold) just look at how flat the bond market has become. I think we are in for a long winter’s night when it comes to interest rates especially if our economic numbers remain flat as we move into spring. That is the problem with blaming everything on the snow – it sounds good but what if quantitative easing really is not doing any good? I will leave that to the Wharton guys but it is worth consideration.
Silver closed down $0.12 at $20.28 in ho-hum trading. And I am beginning to feel like this market needs a completely new dynamic to create some energy. Even my old time silver whale visited the store and bought gold. I called him on it and he claims it must be the weather (see everyone is using that excuse).
Platinum closed up $1.00 at $1436.00 and palladium closed up $18.00 at $788.00. The US Mint is now producing newly minted (2014) American Platinum Eagles and the premiums have dropped from $150.00 to $75.00 over spot which is another reason to consider this diversification. A new Exchange Traded Fund for palladium will be launched this Monday. This and the possible problems with Russian palladium supplies might light a fire under both platinum and palladium.
(Kitco News) – Participants in the Kitco News weekly gold survey are split over their views on gold’s direction for next week, with a nominal number expecting weaker prices. In the Kitco News Gold Survey, out of 33 participants, 18 responded this week. Six see prices up, while eight see prices down and four see prices trading sideways or neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week, most participants were bullish. As of noon EDT, Comex April gold prices were down about $43 an ounce on the week. Those who see weaker prices said gold needs to recalibrate after this week’s sharp rally and subsequent fall. “I think we have a little more downside to this. We’re holding just under the key support levels. Last week we went up to $1,400, (nearly) hit it on Sunday and spent the rest of the week selling off. For next week we need to get above $1,346.50, which is the 20-day moving average. The 20-day and the 10-day are flatting out, so that could be a ceiling. If we can’t close above $1,346.50, then we could come to test the 200-day and the 50-day, which are now sitting at $1,302.60 and $1,299.10,” said Charles Nedoss, senior market strategist at LaSalle Futures Group. Those who see higher prices expect gold to add to its rebound from this week’s lows. “It was a rough week for those of us who were bullish gold a week ago… the trifecta of bearish news. (Russia President Vladimir) Putin didn’t advance his aggression beyond Crimea, (Federal Reserve Chair Janet) Yellen made one hint of a more hawkish-than-Bernanke view strengthening the dollar, and the WSJ (Wall Street Journal) story the European Union is ‘considering’ relaxing the 400-metric-ton-a-year selling limit on EU central bank gold reserves. Despite all that, gold has held the secondary support levels (around) $1,325 and we expect the next stage will be an intervening rally that carries gold back toward the $1,360-75 level. We look for gold to close higher in the week ahead,” said Ken Morrison, editor of online newsletter Morrison on the Markets. Those who are neutral see prices trading sideways said gold needs to consolidate after this week’s large price swings. “Gold should be in for some consolidation or range-bound trade as everyone watches the situation with Ukraine/Russia simmer – which remains a bullish influence – and contemplates Fed policy – which is a bearish influence. Gold has had a great run and many traders are just booking profits and looking for a good re-entry level or if they are forced to liquidate more positions. I will be neutral next week,” said Frank Lesh, broker and futures analyst with FuturePath Trading.
The walk-in cash trade was off again today and so are the national phones. It is not dead but considering gold is consolidating above $1300.00 I expected more snap-back action. This would indicate the public is still bearish and might be waiting for the other shoe to drop. If you are still on the fence and have not established a core position in bullion, today’s pricing is not bad and trying to catch the exact bottom in this consolidation is impossible.
The GoldDealer.com Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday- 4) (Tuesday – 4) (Wednesday – 2) (Thursday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.
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