Commentary for Monday, July 6, 2015 – Gold closed up $9.90 on the Comex today at $1172.90. I can’t say the price of gold was too impressed one way or the other with the still unfolding events in Greece. Prices were pretty much flat in Hong Kong and London trading between $1163.00 and $1168.00 but there was a late in the day rally which woke everyone up on the domestic close. The question being was gold firmer because of safe-haven buying in Europe or is there some other reason behind today’s move?
You might want to consider the Dollar Index – some writers claim higher gold in the face of the stronger dollar is important. The Dollar Index to me looks more like choppy here – around 96.00 – strong for sure but a trend which has been in place since last Wednesday. At any rate gold did not move higher because of a weaker dollar.
And today’s higher close in gold is still no big deal but let’s consider the price of crude oil – it might be more reactive than gold in this situation. The 5 day chart relative to WTI Crude was steady around $60.00 a barrel from last Monday through last Wednesday and then it began to weaken moving to $52.58 by today and stocks also moved lower – perhaps the realization that a crashing Greece will not be good for anyone?
And then there is the Chinese re-liquidation program for lack of a better term. The idea that China could be in economic trouble is a much bigger threat to gold than Greece.
This from Reuters – “Chinese stocks rose on Monday, as an unprecedented series of support measures unleashed by Beijing brought some relief to a market whose headlong slide over the past three weeks had raised fears about the stability of the world’s second-biggest economy.
In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China’s state-backed margin finance company, which in turn would be aided by a direct line of liquidity from the central bank.
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen closed up 2.9 percent, while the Shanghai Composite Index .SSEC gained 2.4 percent.
That represented a significant pullback, however, from an initial burst of euphoria that pushed both indexes up around 8 percent when trading began, raising questions about whether the rebound can be sustained.
Oliver Barron, China policy research analyst at NSBO, said it wasn’t just faith in the markets at stake after investors had ignored official measures to prop up equities as indexes slid around 12 percent last week.
“After the market continued to fall despite myriad support measures, the government reached peak panic mode and must have worried that investors would not only lose confidence in the markets, but in the government itself,” he said.
The rapid decline of China’s previously booming stock market, which by the end of last week had fallen around 30 percent from a mid-June peak, had become a major headache for President Xi Jinping and China’s top leaders, who were already struggling to avert a sharper economic slowdown.”
Take your pick – but keep an eye on Gold’s Moving Averages for real insight. Compare today’s close ($1172.90) to Gold’s 50 DMA ($1189.00) – 100 DMA ($1191.00) and 200 DMA ($1203.00). We are still below all three averages meaning our momentum is still under pressure and anything else in the headlines – (for me at least) is interesting but not compelling. Keep in mind this may change tomorrow morning but as of now it all looks like sideline noise. Gold is still range-bound waiting for that intrerest rate bump in the night.
Silver closed up $0.18 at $15.72 – silver bullion buyers remain steady today carrying away another truck load of various silver bullion products.
Platinum closed down $18.00 at $1066.00 and palladium was off $19.00 at $675.00. Platinum is now trading at $106.00 discount to gold.
This from Reuters (A. Ananthalaksmi) – “Gold’s safe-haven gains from Greece fizzle on robust dollar – SINGAPORE, July 6 Gold gave up early gains on Monday as a robust dollar outweighed safe-haven demand after
Greeks rejected terms of a bailout package in a referendum.
The failure to sustain the rally shows gold’s struggle amidst prospects of higher U.S. interest rates despite the uncertainty over Athens’ financial situation and its future in the euro zone, a situation that would typically garner safety bids for bullion.
Spot gold was flat at $1,167.57 an ounce by 0401 GMT, after earlier jumping by as much as 0.6 percent.
U.S. gold climbed nearly 1 percent in its biggest daily gain in about two weeks to $1,174.40 before paring some gains to trade up 0.3 percent.
Silver, platinum and palladium all declined but the Canadian Palladium Maple Leaf 1 oz did well today.
“With Greece voting against austerity, the expectation is for gold prices to climb but … momentum (is) fizzling out,” said Howie Lee, an analyst at Phillip Futures.
“Its safe-haven property does not appear to be carrying much weight,” Lee said.
In a referendum on Sunday, Greeks overwhelmingly rejected conditions of a rescue package from creditors. Official figures showed 61 percent of Greeks had rejected a deal that would have imposed more austerity measures on an already ravaged economy.
The vote leaves Greece in uncharted waters: risking a banking collapse that could force it out of the euro. Without more emergency funding from the European Central Bank, Greece’s banks could run out of cash within days.
Gold, typically seen as an alternative investment during times of financial and economic uncertainties, rallied early in Asian hours as the euro slumped and U.S. equity futures fell on risk-averse sentiment in the market.
But the precious metal failed to hold the gains, even as other safe havens such as the yen rallied and the dollar climbed to its highest in a month.
A higher dollar makes gold more expensive for holders of other currencies, while also lowering its appeal as a hedge.
The greenback has also been supported recently by expectations the Federal Reserve will raise interest rates from record lows this year. That has weighed on gold, a non-interest-paying asset.
Gold could get a boost if the Fed decides to postpone a rate hike or if there is a contagion risk in Europe because of the Greek crisis, a trader said.”
The walk in cash trade was active today – silver bullion rules – Monster Boxes, 90% Silver Bags and all the usual suspects. The phones were also busy – the usual story – not much in the way of selling and there has been a broad range of interest – from small buyers to whales.
There was actually a small line at the back door – something we have not seen in months. We apologize for the wait and by the way your animals are welcome in the store – no need to wait in the car especially in the summer months. We also provide fresh water for them.
The GoldDealer.com Unscientific Activity Scale is a “ 7” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 6) (last Wednesday – 7) (last Thursday – 7) (closed last Friday). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”. Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
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