Commentary for Friday, May 2, 2014 – Gold finally closed up $19.50 at $1302.60 but the road to back above $1300.00 was a bit bumpy.
There was a slight dip in the price of gold after the release of the jobs number but the market recovered holding the important $1280.00 line and even with an encouraging almost 300,000 new jobs created the interest rate remains amazingly low. A few CNBC commentators this morning claimed that interest rates will rise later this year as a consequence of continued improvement in the US economy. But for now a low interest rate environment supports the price of gold and the happy face jobs number is negative for gold even with a disaster happening behind the scenes as participation numbers fall to pre-1980 levels.
And then news of further escalation in Ukraine pushed the price of gold over $1300.00 as pro-Russian forces shot down 2 Ukrainian helicopters and Putin has told the Ukrainian government that it should remove its troops from eastern and southern Ukraine. So we are once again off to the races as the usual gold technical analysis gives way to real terror on the geo-political scene. What a mess which should remind you older folks of lessons which should have been learned in World War II.
As far as longer term price pressure relative to Ukraine you have a repeat of what happened the first of April and the same $50.00 spread working given things don’t blowup. If this regional escalation stands down gold could move lower by $50.00. Support is good at $1280.00 level so expect another flat market in this region looking for more news.
The dollar moved lower even though the employment stats showed 228,000 new jobs in March! And once the rally began gold moved quickly above its 100 day moving average ($1282.00) and its 200 day moving average ($1300.00). In what looked like a ho-hum week gold ended up $19.50 on the day and up $2.00 on the week.
For gold to sustain itself in the longer term the more than willing Chinese and Indian quest for gold must continue to assert itself and believe me the movement of gold from the west to the east will eventually push gold to new highs. All this day to day stuff will eventually seem like a missed opportunity to the western investor.
This from Allen Sykora (Kitco) – HSBC: U.S. Mint Gold Coin Sales Up From March But Down Year-On-Year – U.S. Mint data show gold-bullion coin sales in April totaled 56,000 ounces, up 70% from 33,000 in March but down 77% from 246,500 in for the same month last year, says HSBC. “The pick-up in gold coin sales in April from the previous month is a sign that retail investors remained upbeat on the yellow metal as prices fell to an average of USD1,299/oz in April from an average of USD1,335/oz in March,” the bank says. “Gold coin sales are often used as a gauge for retail investor demand, which typically rises during periods of price drops and weakens during periods of price rallies. The (year-on-year) drop in gold coin sales for April can be explained by the larger base as sales surged immediately after the two-day price rout in mid-April 2013.” Mint silver coin sales in April were listed at 4,590,500 ounces, down from 5,354,000 in March but up from 4,087,000 in April of 2013.
Silver closed up $0.50 to $19.49 which managed to take away the buzz created this week at new lows.
Platinum closed up $14.00 at $1440.00 and palladium closed down $1.00 at $813.00. Platinum and palladium still look like sleepers to me with mining problems part of the permanent equation and 40% of the world’s production of both metals coming from South Africa.
(Kitco News) – The majority of participants in the Kitco News’ weekly gold survey said they see lower prices next week. Out of 33 participants, 19 responded this week. Of those, 11 see prices weaker, while four see prices up and four see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts. Last week, survey participants looked for prices to rise this week. As of 11:30 a.m. EDT, Comex gold for June delivery was up $1.50 for the week. Sean Lusk, director of commercial hedging with Walsh Trading, said he looks for gold to retreat after the jump in U.S. nonfarm payrolls reported Friday and the continued strength in equity markets. “It’s going to put some downward pressure on the metals,” he said. “I think the only thing keeping it up here is this Ukraine news – there have been some skirmishes in the country and the market has its eye on that.” George Gero, precious-metals strategist with RBC Capital Markets Global Futures, said he sees prices rising since “all of the negatives are already in the market,” citing factors such as stronger U.S. economic data this week. “At this point, we’re probably going to be moving a little bit higher and there is going to be a reallocation of assets next month into gold,” Gero said. Adrian Day, president and chief executive officer of Adrian Day Asset Management, is among those who sees little change, pointing out gold has held around the recent lows three times since March. “China’s weak manufacturing number and improved economic reports — and the Fed’s response — in the U.S. suggest gold may be weak or flat next week,” he said. “But with the Ukraine situation unsettled, I would not want to be out of gold and we could see a bounce any time.”
The walk-in cash trade is usually very active as markets move higher and this was the case through yesterday and the metal of choice was silver bullion. But today’s pop to the upside had an unusual chilling effect on the walk in cash traffic. First time for this that I can remember as the phones were busy all day with mostly people buying gold, still the pop in prices slowed business today. If your interested in investing some money in precious metals the American Gold Eagle 1 oz and the Australian Gold Kangaroo 1 oz are very popular.
The GoldDealer.com Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 5) (Tuesday – 5) (Wednesday – 3) (Thursday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers.
We are thinking of putting an In and Out Wagon in our parking lot when the need for a hamburger arises. Everyone loves a good hamburger and we thought it would be a nice way of saying “thanks” for the business. Anyone with a tax free invoice ($1500.00) can get a free Double/Double on the way out. The truck would be in the parking lot about 2 hours and we would have tables in one corner. The upside to this idea is getting a great hamburger when you make a purchase in person. The downside is that while we have a large lot this idea might create a parking problem for vegetarians. Please opine at RSchwary@aol.com and thanks for the input.
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