Precious Metals Commentary, Analysis and Statistics

Precious metals resumed trading yesterday while still digesting Friday’s very strong U.S. employment data as discussion and speculation about the timing of a rate hike overshadows our market. On Friday morning, N.Y. Fed President Dudley said that labor market improvement, higher wage compensation and rising inflation must continue in order for him to support a rate increase.  While it appears the FOMC is determined to raise rates this year, I continue to think there is enough uncertainty in our economy, and certainly the global economy, that a rate increase this year will be a single event, likely to be in September and perhaps most importantly likely already built into the market.

Overnight, China released data that shows their economy will continue to need further stimulation as their exports declined for a third straight month while their imports declined for a seventh straight month.  The import data could weigh on base metals which could bring additional pressure to precious metals.  The most recent Commitment of Traders report showed speculative long positions on the exchange continued to decline while speculative short positions continued to increase. This may indicate the trading range of recent months is likely to continue as shorts may be poised to cover their positions and take profits in the support range from $1,155.00 through $1,140.00.

Despite a weakening USD, dovish comments by Fed Governor Tarullo, and an urging by the IMF that the FOMC hold off any rate hike(s) until 2016, precious metals continued to probe lower yesterday as nearby support levels were breached. This morning’s highly anticipated U.S. employment report for May was a shocker by how strong it was. Economic consensus was for 225,000 new jobs being created in May, but data showed that 280,000 jobs were created which is the best showing since last December. The data also included upward revisions for job growth in March and April. As expected, the USD is rallying sharply, bonds are selling off with the yield on the 10-year bond now above 2.40 percent, crude oil and most other commodities are sharply lower as talk of a rate hike sooner rather than later gains momentum yet again.

<p>Our market is lower across the board but certainly not in a free fall as much of the speculative selling and long liquidation may have been done earlier in the week. Gold is bouncing a bit off the intraday low of $1,162.10 as physical demand is picking up. Look for support in the mid-$1,150.00s with a break below $1,150.00 likely signaling that a test of $1,125.00 will be seen. Silver, which has traded below $16.00 earlier this morning, is back above that level as physical demand is very strong.

<p>Have a good weekend,

<p>Roy

Precious metals firmed up yesterday, but considering that the Euro jumped from the low 1.09s to the high 1.11s, the move higher in our market was not very impressive.  Dovish comments from FOMC members and the ongoing issues with Greece and their debt payments provided the support. This morning finds precious metals lower across the board as we continue to look for direction. Despite sluggish economic data continuing this week, interest rates are moving higher which is likely weighing on our market. 

The yield on the 10-year U.S. bond has jumped over 3 percent this morning.  The yield, which was moving lower just a few days ago, is now at 2.33 percent and follows a global sell-off in bonds which began yesterday. Support for gold and silver continues to be found in the low $1,180.00s and at $16.50 where we continue to see a sharp increase in physical demand.  That same physical demand slows down considerably as we probe either side of $1,200.00 gold and above $17.00 on silver.  Keep an eye on platinum as it is trading at an $80.00 discount to gold and could be a “good buy”.

Last week came to an end with gold and silver holding the lower end of their recent trading ranges and showing signs that we were poised to revisit the upper end of the same range. The two key supportive events last week were a downward revision in U.S. Q1 GDP which now shows the economy shrank by 0.7 percent as the strong USD weighed heavily on exports. While this is “yesterday’s” news it allowed bond yields to fall and the USD rally took a break which helped stabilize gold and company.

<p>The second event took place in the GLD ETF market where a very large purchase report to be 100,000 contracts (1 million ounces) of a bullish options strategy was reported to have been placed by one trader.  Following these events there has been much chatter over the weekend which surrounding the possible Greek exit from the Eurozone and the possibility of a spike in oil prices as tensions continue to grow in the Middle-East as fighting in Iraq intensifies. Both of these headlines are likely to cause many of the recent “shorts” to cover.    In early U.S. trading gold and silver have rallied above $1,200.00 and $17.00 but the in order for the momentum to continue gold needs to break through resistance from $1,210.00 through $1,215.00.

Precious metals traded quietly yesterday following Tuesday’s early sell off as physical demand and speculative selling offset each other. This morning finds that gold and silver have already tried it a bit higher and a bit lower from yesterday’s settlement prices, but there was no follow through on either side and as I finish today’s commentary, both are trading at yesterday’s settlement prices as we continue to look for direction. The USD has been in rally mode, which has weighed on precious metals and most commodities, but it is now approaching levels where traders may unwind positions that should help gold and silver retest $1,200.00 and $17.00.

Keep a close eye on the U.S. 10-year bond and crude oil markets as they may hold the key for the next move in our market. The yield on the 10-year bond is currently at 2.15 percent and has been drifting lower. A move in the yield back towards 2.00 percent should bring buyers to our market, while a jump in the yield above 2.25 percent will likely see precious metals pressured by speculative short selling. Crude oil, which was recently above $60.00, has fallen to $57.00 this morning as mounting inventories in the U.S. and concern that the summer driving season in the U.S. will be impacted by a weak economy have brought sellers to that market, which is likely to weigh on gold.

Precious metals are beginning the unofficial start of the summer season on the defensive following a Friday afternoon speech by Chair Yellen and comments by her colleagues over the weekend. While the FOMC claims their decisions on a rate hike will be data driven, the comments from most voting members are certainly “hawkish” as their intent is to raise interest rates this year with a growing focus on September being the target date. This has brought us a stronger USD and driven gold and company below recent support levels as long positions are likely being liquidated while new short positions are being initiated.

This morning’s economic data has been mixed but the ley reading may be contained within the Durable Goods report as the closely watched business investment component rose sharply which indicates industry is investing in capital equipment as they gear up for an improving economy. All in all, the chatter this week will focus on the strength of the USD, its impact on all markets and any further indications on the course of the FOMC. Look for gold and silver to find support in the low to mid-$1,180.00s and $16.60s. If these levels hold, we could be in for a long week as the market drifts up towards $1,200.00 and $17.00. A dip below these levels could bring a test of $1,150 and $16.25.

The FOMC minutes on Wednesday afternoon provided no surprises and little new information. As such, the highly awaited release barely moved our market and had little impact on all other markets’ intraday trading. While the committee did express concern over a slowing in job creation and economic activity, they did remove key words like “patient” that normally provide support for precious metals and most commodity prices. All in all, I would say the report leaned toward the dovish side and a rate hike for June is off the table. The committee continues to stress that their decision on a rate hike will be data driven, but so far the data does not support a rate hike, especially while consumer confidence and retail sales are falling.

In front of a three-day weekend we find ourselves with a market again looking for direction. The USD has moved a bit higher, but so far precious metals have been able to shake that off. On the flip side, weak economic data has not provided the steam for higher prices. This morning’s consumer price data revealed that the Index has fallen 0.2 percent over the past 12 months which is a further sign that the FOMC’s inflation target will not be met and further delay a rate hike. With gold setting the course, look for support from $1,201.00 through $1,196.00 and resistance from $1,210.00 through $1,215.00.

Enjoy the long weekend,

Roy

Memorial Day Hours

Dillon Gage Trading room and Refinery will be closed Monday, May 25th, in honor of Memorial Day. Continue reading →

Precious metals ran into a surging USD yesterday and as a result sold off sharply. While gold fell below the 200-day moving average at $1,216.00 and the 100-day average at $1,212.00, it did hold $1,200.00 which was a victory of sorts. Silver took a pounding and fell below $17.00, but as it has done so many times it rebounded on the back of a pick up in physical demand.

Yesterday’s surprisingly strong U.S. economic data came from housing starts which surged to a seven-year high. While a shocker, it may have been the result of builders locking in loans and beginning construction before rates move higher. This will be a closely watched economic release in four weeks, because if housing starts remain strong it will increase the likelihood for a rate hike by the FOMC in September. This morning finds gold and silver continuing to bounce but volume is light as we trade at $1,211.00 and $17.25. All eyes will be on the FOMC minutes which are scheduled to be released at 2:00PM EST. Comments about sluggish Q1 growth and expectations for Q2 should provide the hint for the FOMC’s plan for interest rates.

Gold and company recovered from early losses on Friday buoyed by weak economic data as gold settled above the 200-day moving average at $1,217.00, which technically points to further gains ahead. Silver continues to impress as it settled above $17.50 on good physical demand throughout the day. Trading resumed yesterday with good physical demand in the Asia Pacific market highlighted by reports of very strong demand in India as gold and silver have recorded intraday highs of $1,232.00 and $17.77.

Looking at the week ahead, all eyes will be on the Wednesday release of the FOMC minutes from their April meeting. On the back of a run of weak economic data. talk is growing that a rate hike could now be pushed off until 2016, which has weakened the USD and given life to our market. Confirmation of the FOMC’s concern about the state of the U.S. economy with a dovish tone in the minutes could propel gold beyond $1,250.00, while a surprisingly hawkish tone could see us revisiting $1,185.00 very quickly.

Precious metals continued to be supported yesterday by weak economic data as the U.S. Producer Price Index fell by .4 percent in April. This provided the fuel for gold to break above the 200-day moving average at $1,218.00 as it recorded an intraday high of $1,228.00. Silver had an equally impressive day as it broke above $17.50 for the first time in three months. With much of Europe on holiday yesterday, their return today to higher prices brought sellers to the market. In pre-U.S. trading, a large sell order on the electronic trading platform took gold below support at $1,215.00 as $1,210.60 in the active June futures contract is the current low.

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Gold and silver, as they have done the past few weeks, have traded on a steady tone for the first half of the week. Despite interest rates rising as the bond market sells off, the USD weakened a bit yesterday providing the fuel for our market to probe higher. On the encouraging side, physical demand continues to pick up despite gold and silver continuing to trade in a well-defined range. On the concerning side, overall volume is falling as ETF, Futures and OTC volume contract. This morning’s spike higher comes on the back of very weak U.S. economy data.

The closely watched retail sales report missed the target badly and further data showed that the prices U.S. consumers paid for goods imported into the U.S. fell for the tenth straight month. The continuation of weak data on the consumer side of the U.S. economy should put to rest any discussion of a rate hike by the FOMC in June and will severely impact what they can do in September unless there is a very significant change in consumer spending as the weather hopefully improves throughout much of the country. On the technical side, all eyes are on gold as it battles with very well defined resistance between $1,210.00 and $1,215.00. Silver continues to impress and perhaps a move towards $17.50 will give gold an added lift.

Precious metals closed last week holding most of the intraday gains as a result of the weak data contained within the Non-Farm Payroll report, which further reinforced the “markets” belief that a rate hike will not come in June. Besides the downward revisions in February and March job creation, hourly wages, which appears to be a figure the “committee” pays great attention to,  are not increasing at a pace that would bring the upside inflationary pressures to support higher interest rates. The trading week began yesterday on a steady tone as physical demand continues to pick up throughout Asia.  This may have been the result of a surprise cut in the one-year lending rate from the Chinese Central bank which continues to look for ways to stimulate a sluggish economy.

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As I discussed in the Wednesday morning commentary, our market again felt “heavy” and I was looking for lower levels. With the USD moving higher, bond yields moving higher globally and crude oil falling below $60.00 we did probe lower, but so far physical demand has been quite good on the dips and we have held in the mid-$1,170.00s and $16.20s.

This morning brought us the much anticipated Non – Farm Payroll report for April with the hope that one way or another it would be the catalyst for moving us outside of the current trading range. Unfortunately for precious metals traders and investors, the data brought little surprise, the economic consensus was spot on as 223,000 new jobs were created last month with the unemployment rate falling to a seven-year low at 5.40 percent. Although it is “yesterday’s news,” in a further sign of how weak the U.S. economy was and perhaps still is, first quarter job creation in February and March were again revised down. All in all we are left with gold and silver still stuck in a trading range and looking for direction.

Have a good weekend,

Roy

Last Wednesday, following weak economic data and a dovish FOMC statement, precious metals were unable to extend a rally that had finally broken above key resistance levels and sold off sharply on Thursday and Friday. Continue reading →

TORONTO, ON (March 6, 2015) – Precious Metals dealers can now offer Registered Retirement Savings Plan (RRSP) accounts to Canadian clients through a Closed Loop RRSP platform. Dillon Gage Metals has partnered with one of Canada’s fastest growing discount brokerages, that utilizes electronic trading and RRSP platforms operated by Dillon Gage Metals. Through this new platform, precious metals dealers and advisors facilitate account solutions for their clients utilizing funds in their RRSPs and TFSA to purchase Royal Canadian Mint bullion coins and LBMA brand bars while storing them in secured and insured accounts at International Depository Services of Canada.

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Precious metals began the week yesterday on a steady note with a bit of physical demand throughout the Asia Pacific region. This was followed by another weak economic report from China as their Manufacturing Index came in lower than expected, setting the stage for further stimulus action from their Central Bank which brought about more buying. Today is a holiday in much of Europe, and as often happens, the decrease in liquidity brings volatility to our market.

Prices spiked up in early U.S. trading as speculative short covering was reported in the OTC market while buy stops on the futures exchange were elected above $1,185.00 and $16.50. As the recent trading ranges continue after the lower end held late last week, we still have a market that is looking for a directional leader. As gold has failed to provide that leadership, I would expect silver to give it a try this week. The week begins with support in gold at $1,175.00 and $1,165.00 while resistance stands at $1,192.00 and $1,210.00. Silver support stands at $16.35 and $16.15 while resistance can be expected at $16.75 and $17.00.

In retrospect, the inability of precious metals to continue the rally on Wednesday, following the very weak GDP report and benign FOMC statement, was certainly a sign that our market was running out of steam despite gold and silver breaking above resistance levels at $1,210.00 and $16.50. The rout began yesterday with recent long positions in gold being liquidated when it failed to hold $1,200.00, as an unexpected strong reading on U.S. employment hit our market hard when the Labor Department reported initial jobless claims had fallen to a 15-year low.

While the USD has continued to weaken the second half of this week, our market appears to be more focused on global interest rates which have spiked higher and have added pressure to our complex. With gold in the driver’s seat, we have quickly gone from attempting a further break out on the upside to now looking for support from physical buyers as gold has returned to the lower end of the recent trading range in the low $1,170.00s. As often happens, our market manages to stage a rally when it feels most vulnerable and that may yet happen again, but I would expect the short sellers to push us back towards $1,1150.00 before we talk about another look at $1,200.00.

Have a good weekend,

Roy

Precious metals continued to probe higher yesterday buoyed by two more weak economic reports. U.S. Consumer Confidence, which is a key indicator of the economy’s health, unexpectedly fell in April by over six percent and the closely watched Federal Reserve Bank of Richmond’s manufacturing survey also missed the mark by coming in lower than expected. The bottom line for precious metals traders and investors was that the USD weakened and our market moved higher. Today begins with another weak economic report but perhaps not a shock to the markets given the recent run of weak data. First quarter U.S. GDP rose just .20 percent verse the economic consensus which looked for a 1.00 percent gain as the USD is again probing lower which should further support our market.

Later today we get a statement from the FOMC as the two-day meeting concludes. I would expect some concession from voting members in today’s statement that economic data does not support a rate hike in June. The key will be any hint over the action that will be taken in September. If the committee acknowledges our economy is now facing a head wind it could set the stage for further weakness in the USD as the likelihood of a rate hike later in the year diminishes.

Precious metals ended last week on the ropes when gold failed to hold support in the mid-$1,180.00s as investors pushed U.S. equities to record highs. Trading resumed yesterday with a steady tone as several headlines over the weekend regarding Greece’s ongoing issues were followed by a story that the Chinese Central Bank may increase their bond purchases to include those issued by local governments in an effort to further stimulate their economy. The result was broad based buying throughout Asia which was followed by good buying in Europe.

This morning finds recent short sellers likely looking to cover as the rally continues with gold closing in on $1,200.00 and silver has spiked higher having just broken above $16.00. While the rally to begin the week is encouraging, it is yet to be seen if this is just another move within the recent trading range or resistance can be broken at the 100-day average in gold at $1,211.50 and $16.56 in silver. Keep a close eye on the market Wednesday afternoon as the FOMC meeting ends with a statement but no press conference with Chair Yellen.

Despite a continuation of mixed news, but with a bias towards weak economic data, gold and its cousins have not been able to rally and are beginning to feel like we are going to see lower prices. Ahead of next week’s FOMC meeting on the 28th and 29th the committee will be discussing weak readings on new home sales, manufacturing, durable goods and rising unemployment claims. From my perspective the June rate hike is off the table and a hike in September is far from certain.

Despite the data, which is supportive for precious metals as it has weakened the USD a bit,for the second half of this week our market feels vulnerable to the downside as overall volume remains low and physical demand, while picking up a bit the past few days, is not impressive. Look for gold and silver to test $1,175.00 and $15.50 where physical demand should begin to pick up and support the market. If we break below these levels it could be a quick ride down to $1,150.00 and $15.00.

Have a good weekend,

Roy

Not much has changed for gold and silver this week as the U.S. trading day begins with gold and silver continuing to pivot around $1,200.00 and $16.00, but currently below those levels. With growing concerns over the possible default and exit from the Euro by Greece along with increased tension in the Middle East as U.S. and coalition warships track Iranian boats suspected of carry weapons to Yemen, it is a bit surprising that gold has not performed better and broken through resistance above $1,210.00.

On the flip side, we have a market that is trading on low volume, platinum and palladium continue to move lower and this combination is likely to empower short sellers to pressure gold and silver. If the recent pattern continues, we can expect physical demand to pick up and support gold in the low to mid $1,180.00’s while silver could test $15.50.