Gold Remains Steady into the Weekend

Gold Remains Steady into the Weekend

Commentary for Friday, June 27, 2014 (www.golddealer.com) – Gold closed up $2.60 going into the weekend at $1319.00. So the support above the important $1300.00 levels seems to be holding up – but I would like to see more conviction in this current trading range.

Gold held a tight trading range ($5.00) in the overnight Hong Kong and London markets. Also remember July 4th is next Friday so we are looking at a short trading week coming up.

The metals developed strength over the last few weeks because of active short-covering and inflation talk but that now seems a bit uncertain. Supporting gold for now is the continued talk that perhaps the US recovery is somehow lacking – considering how strong US stocks have been I just don’t get this connection. Still over the past 4 weeks gold is higher by $74.00 and silver is also higher by $2.43 with decent physical demand.

Contributing factors of course are Ukraine and Iraq – both present troubles. So the President has his hands full. We have always supported Egypt militarily but as this area becomes more unstable I wonder if we don’t need another look at our foreign policy.

Silver closed down $0.03 at $21.07 and there was a pop in physical buying today.

Platinum closed up $8.00 at $1478.00 and palladium was up $7.00 at $841.00. Both platinum and palladium are up $19.00 on the week. Also this week we have received some of the largest rhodium orders we have seen since the Baird 1 oz bar became popular.  

From CPM / Dorothy Kosich (MineWeb) – PLATINUM SUPPLY – The major strike against the top three South African platinum producers which began on January 23, 2014, was declared officially over on Monday. “South African platinum mine supply is projected to decline by 708,000 ounces this year, of which, roughly 633,000 ounces is estimated to have been lost during the prolonged industry-wide strike,” said the report. “Weighed by lower production of platinum from mines and scraps, total refined platinum supply is expected to decline to 6.5 million ounces in 2014, a 9.8% decrease from 2013,” CPM predicted. South Africa remains the world’s top PGM producer, followed by Russia, Zimbabwe, Canada and the United States. CPM noted that while global PGM mining capacity increased 1.5% last year, it is projected “to expand marginally in the medium term”. The cost of mining PGMs declined 12.1% in South Africa and 3.1% industry wide in 2013 to an average cash cost of $702.70/oz, according to the report. Secondary supply of PGMs from recycling of auto catalysts, old jewelry and end-of-life electronics fell to 1.24 million PGM ounces last year, down 6.9%. Much of the decline was driven by reduced supplies from auto catalyst scrap. Old jewelry scrap accounted for 11.1% of the available platinum recycling feedstock in 2013. CPM projects that refined secondary platinum supply will decline 3.5% to 1.19 million ounces this year.

PLATINUM DEMAND – Platinum fabrication demand declined to 7.2 million ounces last year, down 1.8%. It was the first decline in platinum fabrication demand since 2009. Fabrication demand was driven lower in 2013 primarily by weakness in the platinum jewelry sector, which dropped to 2.1 million ounces due to reduced demand from China, said CPM Group. Total fabrication demand is forecast to reach 7.34 million ounces this year, up 1.8%, due to ongoing strength from the auto sector coupled with renewed strength in jewelry demand, CPM predicts. Last year, total investment demand for platinum weakened further, CPM noted. However, other investors have been buying platinum, absorbing a supply surplus of 93,000 ounces into reported and unreported inventories. “Increased buying by South African investors more than offset platinum ETF selloffs in the rest of the world,” CPM observed. Meanwhile, platinum coin sales declined from 74,200 ounces in 2012 to 51,000 ounces in 2013, due to lack of investor buying interest. CPM suggested the U.S. Mint’s release of Platinum Eagle coins this year “could spur fresh demand for platinum coins this year, with total sales likely increasing toward 101,000 ounces”. “Investor selling is expected to trickle off over the course of 2014,” CPM advised. “With healthy market fundamentals, investors are likely to revalue their positions on platinum and step in as a bargain buyer when prices are weak.” The total platinum market grew last year to 252.2 million ounces, of which 245 million ounces were in futures and options, up from 202.2 million ounces in 2012, of which 195 million ounces were also in futures and options. Combed ETP platinum holdings were up 55.4% or 869,461 ounces to 2.4 million ounces in 2013, said CPM. The average platinum price in 2013 was $1,486.59/oz.

PALLADIUM DEMAND – In their yearbook, CPM noted that palladium fabrication demand rose for the fourth consecutive year in 2013, reaching a record 8.80 million ounces, for a 3% increase. “The primary driver of palladium fabrication growth during 2013 was from the auto sector,” said the report, which forecast auto sector palladium demand to increase 4.2% this year to 5.93 million ounces. Global palladium fabrication demand is forecast to rise to 9.08 million ounces this year, due to healthy demand from the auto, electronics, and chemical/petroleum refining catalysts sector, CPM predicted. Meanwhile, the palladium market is running a deficit this year, which could total around 367,359 ounces, according to CPM. “Weakness in investor demand is forecast to occur during the latter half of 2014,” CPM advised.

PALLADIUM SUPPLY – Total palladium supply rose to a record 9.2 million ounces last year, up 6.7%, due to a sharp increase in secondary supplies of palladium, up 16.2% for a record 2.36 million ounces, said the yearbook. “A recovery in the auto market, an increased amount of palladium in the auto catalysts available for recovery, and an increase in palladium prices during 2013 all helped bring into the market significant levels of palladium from secondary sources,” CPM observed. Palladium mine production increased to 6.78 million ounces last year, up 3.7%. “In 2014, total supply is projected to decline to 8.71 million ounces, down 4.2% from the previous year,” CPM forecast, as a result of a decline in mine production. Palladium mine supplies in South Africa and Russia are both forecast to decline this year. Total global mine production of palladium is expected to decline to 6.4 million ounces this year, a 5.6% drop, CPM predicted. South African palladium mine production is expected to decline sharply by 14.1% to 2.1 million ounces this year. “One of the biggest threats to the potential rise in PGM prices, especially that of palladium is the large overhang of above ground stocks,” CPM warned. “It is estimated that, excluding stocks held by the Russian government there are around 16 million ounces of 18 million ounces of palladium in global investors. Of this, total perhaps 65%-70% is held by investors.” On an annual average basis, palladium prices reached $726.63 last year.

(Kitco News) – A majority of participants in the Kitco News weekly Gold Survey forecast higher gold prices next week as some technical-chart analysts and participants focused on geopolitical news see the yellow metal holding its gains.

Out of 37 participants, 25 responded this week. Of those, 13 see higher prices, nine see lower prices and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.

Last week, survey participants were bullish for this week. As of 11:30 a.m. EDT, Comex August gold was up about $3 for the week.

Participants who see higher prices said either technical-chart reasons support gold, or that gold would find support from ongoing concerns regarding a militant uprising in Iraq or heightened tensions between Russia and Ukraine.

“Unless $18.64 in silver or $1,241 in gold are broken, I remain on my buy signal for gold to (rise to) $1,450-$1,500 and silver to (rise to) $24-25 this year,” said Mark Leibovit, editor, VR Gold Letter.

Those who see weaker prices said the lack of any physical demand after last week’s rally is a bearish sign, plus they added the inability to break above technical-chart resistance above this week high’s of $1,326.60 an ounce, basis the August futures, suggests a pullback.

“The gold enthusiasts crowded back in last week but were unable to move prices higher. Quarter-end flows were also coming into gold that will reverse early in the month. Worries about Chinese invoicing are set to take the spotlight and that will weigh on prices,” said Adam Button, editor and analyst at Forexlive.com.

Those who see prices sideways or are neutral said they see no catalyst pushing gold out of its $1,300 to $1,330 range.

The walk-in cash trade was more active today than yesterday, especially in the selling of large silver monster boxes – don’t ask why as I have no idea. The national phone trade was just moderate going into the weekend. Very summer-like overall and two calls to larger dealers claim the same results – not slow but not over the top. Inventory on all levels seems available.  

The GoldDealer.com Activity Scale is a “2” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 5) (Tuesday – 2) (Wednesday – 3) Thursday – 2). 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 most 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 our 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 and get cash for your transaction. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary. 

Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading from your friends at GoldDealer.com. Remember next Friday is the 4th of July so we will be looking at a short trading week – thanks for reading and enjoy your weekend.  

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