Gold Slammed Again Over Fed Comments

Gold Slammed Again Over Fed Comments

Commentary for Wednesday, June 26, 2013 – Gold began moving lower in the overseas markets last night and continued domestically down $45.20 on the day at $1229.60. This continued Fed talk of tapering and the ETF (Exchange Traded Fund) selling creates the perfect storm for short term traders looking to push the paper market lower. The GLD (trading fund) now stands at 969 tons down from our last reading of 1,001 tons a week ago so the funds have liquidated 1 million ounces of gold in a week.

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The continued knee-jerk reaction to Fed commentary is still hard to figure if you look at the numbers: The final revision of 1st quarter GDP was an increase of only 1.8%. The second revision was a 2.3% increase. This data seems to take off the table the possibility of taper and especially higher interest rates.

Silver closed down $0.93 at $18.59 reacting to the slide in gold prices but as usual those interested in the physical product just purchased cheaper. Platinum was also very weak down $47.00 at $1305.00 and palladium was off $36.00 at $631.00.

PRECIOUS-Gold drops to 3-year low on strong U.S. data (A. Ananthalakshmi) SINGAPORE, June 26 (Reuters) – Gold hit a near-three year low on Wednesday, falling for a seventh session out of eight, as strong U.S. economic data boosted stocks and supported the Federal Reserve’s plan to scale back its bond purchases in the next few months. Bullion prices have been sliding since Fed Chairman Ben Bernanke laid out a strategy last Wednesday to wind down the bank’s $85 billion monthly bond purchases on the back of a recovering economy. Spot gold fell 1.4 percent to $1,258.54 an ounce by 0202 GMT. Gold for immediate delivery fell to $1,254.74 earlier – its lowest since September 2010, while Comex gold also fell to a near 3-year low of $1,254.6. Gold’s losses since the beginning of last week through Tuesday amount to 8 percent, or about $113 per ounce. "We’ve pushed past the $1,270 level seen last week. That’s a key technical level so we are going through a whole bunch of stop losses," said Victor Thianpiriya, commodities analyst at Australia and New Zealand Banking Group. Silver fell over 2 percent to its lowest since August 2010. The Fed said it would wind down bullion-friendly bond purchases from later this year, and end purchases by mid-2014 depending on the economic recovery. Data on Tuesday showed U.S. consumer confidence jumped in June to its highest level in more than five years, while sales of new U.S. single-family homes rose to their highest level in nearly five years in May. -PHYSICAL DEMAND SUBDUED – When gold fell the most in thirty years in mid-April after 12 annual gains, strong physical demand in Asia helped cap losses. However, this time around demand has risen only slightly as buyers are waiting on the sidelines for prices to stabilize. "We have not seen a substantial increase in demand," said Thianpiriya. "The liquidity issue in China is also hurting sentiment." The People’s Bank of China has raised concerns of a lasting credit crunch as it tries to curtail a vast informal loan market and shore up growth, although it has sought to allay fears that its tough stance will lead to a banking crisis. Shanghai gold futures fell almost 2 percent on Wednesday. Demand in India has fallen as the government imposes new rules to discourage gold buying in an effort to reduce a record current account deficit. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 16.23 tonnes to 969.50 tonnes on Tuesday, to their lowest since February 2009.

As expected the walk in trade and phones were off the charts as the public once again buys cheaper product but the balance between buyers and sellers is a bit different. Gold buyers and sellers were about equal so for that to happen in high volume days there are some big sellers of gold bullion. As far as silver bullion is concerned the "cadre of the convinced" rules as buyers outnumber sellers by 8 to 1 according to our house computers.

Well so much for the estimation that everyone was tired and therefore we will be seeing a few quiet summer days of trading. This market continues volatile and for now will remain a gunfight between the bulls and bears but at present the bears have more bullets.  Thanks for reading, enjoy your evening, and keep your head down. These markets are volatile and involve risk: Please Read Before Investing

Written by California Numismatic Investments (www.golddealer.com).

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