TORONTO, ON (July 7, 2015) – Precious metals dealers can now offer Registered Savings Plan (RSP) accounts to Canadian clients through a Closed Loop RSP platform. Continue reading →
Two major headlines over the weekend. The first did not yield the results I expected for gold and company, while the second may have calmed fears and weighed on gold and company. Continue reading →
The first half of 2015 ended with a stellar day for our corner of the financial world as physical demand picked up sharply yesterday on a global level. The lower price points and ongoing concerns in Greece certainly had investors and traders seeking the diversity and security an investment in physical metal can offer. This morning finds good and slightly better than expected economic data out of the U.S. continuing, which is fueling a rally in the USD and sell-off in bonds which are weighing on gold and silver as they probe lower and re-test support at $1,165.00 and $15.50. The surprise of the day comes from palladium which rallied sharply during the Asia trading day and briefly traded above $700.00. A rumored large physical order got the market moving higher which may have forced buy stops to be elected on the electronic trading platform.
This morning finds palladium is still up $25.00 at $698.00 and it appears to be assisting platinum, which is up $11.00 at $1,091.00. With liquidity already decreasing in front of a long holiday weekend in the U.S., the rest of the week could bring fireworks as we will receive the June U.S Employment Report tomorrow and the market will continue to trade on Friday. Physical demand should continue to support the market on the dips towards $1,155.00, but a break below $1,150.00 in gold likely signals a revisit of the low $1,100.00s. Technical resistance from the 10-, 50- and 100-day averages, which are currently residing between the low $1,80.00s through low $1,190.00s, should be stiff, but a break above $1,200.00 could see shorts running to cover along with momentum buyers jumping in, so the rally could be significant.
Happy July 4th to all who celebrate and to everyone else have a good weekend. My next commentary will be on Monday.
Roy
News over the weekend that talks broke down between Greece and its lenders sent gold and silver higher when trading resumed yesterday. Gold and silver briefly chipped away at resistance above $1,185.00 and $16.00, but it was short lived and in early U.S. trading gold, silver and platinum are back to Friday’s closing levels while palladium is down $8.00 at $670.00. The short and sweet on Greece is that debt repayment tomorrow is very unlikely. The government of Greece has imposed capital controls and closed the country’s banks through July 6. The citizens of Greece will have access to their deposits only by visiting an ATM machine where they will be limited to withdrawing 60 Euro per day. On July 5, Greece will vote on a referendum where they will decide what their future will be within the EU.
While it is not receiving nearly as much news today as Greece, stories are breaking that Puerto Rico is on the verge of default as it is unable to meet debt obligations tied to bonds that were sold to finance the government. Today brings us to the beginning of the “summer holiday season” and, while today may offer no indication of where prices are headed, I continue to think we will see increased volatility in July, August and beyond.
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As the trading week draws to a close, precious metals continue to probe lower as good U.S. economic data has been impressive and weighs on our market as the yield on the ten year bond is now at 2.46 percent. The uptick in physical demand with the lower spot prices has been impressive and the low volume being seen in the futures market would indicate the pace of speculative selling is slowing. These two factors would indicate, as we approach the lower end of the recent trading range, that a move back up may be in the cards for next week.
When trading began in Europe this morning, silver spiked lower, but held support at $15.50. It has since bounced and is currently at $15.80. As the June 30 deadline for Greece is just around the corner there is still no resolution on debt repayment. Another emergency meeting is scheduled for tomorrow as all markets await news early next week.
Have a good weekend,
Roy
Gold and silver moved lower yesterday with several factors weighing heavily as we move towards the lower end of the recent trading range. Here are the factors, in no particular order: silver’s failure to hold $16.00 was disappointing for the longs and brought speculative sellers back to the table, the situation in Greece appears a bit calmer as headlines would indicate progress is being made over debt repayment, and the USD moved higher as did rates with the yield on the 10-year bond again above 2.40 percent. The good news for our corner of the market is that physical demand picked up sharply on the dip as it continues to do, but the bad news may be that the bottom is not far off and a rally from here means demand will slow down as we move towards the middle or upper end of the trading range.
In a bit of a surprise yesterday, Fed Governor Powell said two rate hikes this year remain a possibility. If hawkish comments like this continue during July and August, the likelihood is the USD will strengthen and, during a period where many market participants are on vacation, gold and silver could be vulnerable to spikes lower as speculators increase short positions during a period where liquidity is not great. In the short term, I would expect the market to test $1,155.00 and $15.40 where I expect it to hold, at least initially. Resistance levels are not far away and gold should face plenty from $1,185.00 through $1,195.00 while silver can expect resistance from $16.05 through $16.15 and again as it approaches $16.50.
Trading resumed yesterday on a quiet note as China was closed for a holiday and all market participants waited for the latest news on Greece. While the potential for a default still exists and headlines are mixed, it does appear as a bit of progress was made today as the deadline for debt repayment draws closer. While gold traded steadily on Friday, it was unable to close above resistance at $1,205.00, which I thought was necessary to get this week off to a good start (for those rooting for higher prices). It appears that many short term position traders may have had the same view as gold’s failure to move higher overnight has brought sellers back to the market with gold now working its way through support which runs from the low $1,180.00s through the mid $1,170.00s.
Platinum and palladium are continuing their move lower this morning as palladium has fallen below $700.00 while platinum has fallen to a $120.00 discount to gold. Silver is the highlight this morning as it is up on the day despite its 3 siblings being sharply lower. News that speculative silver short positions continued to increase last week on the futures exchange while physical demand is increasing may indicate the “shorts” are growing nervous this morning as they look to lighten up. The gold silver ratio, which was at 75.00 last week, is now at 73.30. If the ratio continues to move lower, look for silver to take a run at $16.75 in the coming days.
The FOMC / Chair Yellen gave us a dovish report Wednesday afternoon, which brought a rally to our market that has continued as the USD weakened and interest rates moved lower. While it still appears a rate hike is coming this year and some voting members would actually support two hikes this year, it was comments about forward projections that all markets focused on. Specifically, the FOMC has lowered their target federal funds rate in 2016 and 2017, which means they foresee fewer rate hikes over the next two plus years. Chair Yellen made reference in her press conference to international economic conditions adversely affecting U.S. GDP in the coming years, in addition to making comments about inflation levels likely to not meet target levels.
Gold has been the leader of the pack as it has broken through $1,200.00 as many short positions have likely been covered along with a strong pick up in physical demand globally, but strong technical resistance still looms through $1,215.00. The news out of Greece continues to worsen as protestors have taken to the streets, which only adds to their economic woes. The IMF continues to take a hard stand, telling Greek officials that repayment must begin on June 30th, but the meeting that took place yesterday produced no results and another emergency meeting is scheduled for Monday. Today feels like a summer Friday, as volume is surprisingly light, but a gold close above $1,205.00 could set the stage for a break above resistance next week and a run beyond $1,225.00.
Have a good weekend,
Roy
Precious metals moved lower yesterday in light trading as the market was unable to build on Monday’s gains. Continue reading →
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Precious metals begin the week with a bit of an economic surprise in that the recent run of strong U.S. data did not continue. Continue reading →
Precious metals approach the end of the trading week pressured by improving U.S. economic data and supported by growing concerns regarding Greece. Yesterday’s better than expected U. S. retail sales report was followed this morning by a better than expected reading on the producer price index. Both economic releases are in line with what the FOMC is looking for with regard to economic activity and inflation. With the increasing likelihood of a rate hike coming sooner than later, unless this trend for good economic data suddenly reverses again, we could be looking at a USD that continues to rally and weighs on our market over the summer months.
Support continues to come from the sharp increases in physical demand on all dips as we have already seen this morning with the bounce in gold off $1,175.00. The issue within the Eurozone appears to be at the 23rd hour and growing more critical by the moment as negations between Greece and the IMF over loan repayments have broken off. An outright default could begin the process for Greece withdrawing from the Euro community, which should trigger a sharp increase for physical demand in Europe.
Have a good weekend,
Roy
Precious metals traded quietly yesterday as decent physical demand may be getting the “shorts” nervous, but overall light volume kept our market in a narrow range. On the positive side for precious metals, we have crude oil sharply higher as it is back above $60.00 and the USD has weakened on the back of comments by President Obama who said the USD is too strong and Bank of Japan officials saying the Yen needs to rally. Lastly, the Euro is back above 1.13 as uncertainty about Greece’s proposal for debt repayment appears to be unsatisfactory.
On the negative side, we have rising interest rates with the yield on the U.S. ten year bond now at 2.47 percent. In addition, a better than expected report on job openings in the U.S. raises the possibility for a strong June employment report which will support a rate hike by the FOMC. This morning finds gold leading the charge higher as short covering / buy stops were hit when the market broke above the 10-day average at $1,183.25. While silver is currently back above $16.00 it is not keeping pace as the gold / silver ratio now trades above 74.00. Look for gold to face stiff resistance from the 50-day average at $1,196.50 through the 100-day average at $1,205.20.
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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.
ADDISON, TX (June 1, 2015) – Beginning June 1, 2015, Dillon Gage Metals will become the first in the U.S. to extend trading hours for precious metals to 24 hours a day, five days a week, matching the Globex market hours business model. Continue reading →
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.
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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
Has the volume of customers selling scrap to you decreased? We are hearing that from clients in all 50 states. During the boom in the gold market in 2011-2012, everyone witnessed a huge uptick in people selling gold and platinum jewelry, stainless steel flatware and other items containing precious metals. Continue reading →
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.
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.
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 →
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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.
Despite the largest cut in Chinese interest rates since 2008, the 1.00 percent reduction in reserve requirements failed to propel gold through resistance above $1,210.00. This morning finds pressure on our market coming from U.S. equities recouping much of Friday’s big loss and another speech by New York Fed President Dudley in which he reiterated his stance that he hopes the FOMC will begin raising rates later this year.
Despite the debt situation in Greece continuing to worsen there were surprisingly few headlines over the weekend as the prospect for Greece leaving the Euro-zone continues to increase. As the technical picture in our market continues to dominate gold and silver have quickly moved from testing resistance to looking for support levels to hold as gold is back to the mid $1,190.00s and silver has fallen below $16.00. Platinum and palladium are on the ropes this morning as both have fallen below their 10-, 50- and 100-day averages.
Gold continues to be the captain of the ship as precious metals remain stuck in their recent trading ranges. As gold continues to pivot around $1,200.00 we have seen physical demand pick up every day this week on the dips while speculative and perhaps producer selling emerges on the rallies. Economic data has been mixed all week as have comments from FOMC members, which has only added to the directionless tone of our market. The headline story for today as we already begin thinking of what our market will do next week is the big sell-off in equities, which is being fueled by concerns over the Greek debt situation (will it remain in the EU) and regulatory concerns in the Chinese market which will bring greater regulatory oversight.
On the positive side for gold, we have crude oil making a new high for 2015 yesterday, interest rates as witnessed by the 10-year bond remain very low and the USD has backed off over the second half of the week. This morning’s much anticipated reports on the Consumer Price Index and Leading Economic Indicators followed the trend and were mixed as compared to economic consensus, but perhaps ever so slightly supportive of precious metals. As the U.S. equities slide is continuing as I finish today’s commentary, it will be interesting to see if traders move into gold and it can challenge the 100-day moving average at $1,212.25.
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Have a good weekend,
Roy
Roy Friedman is off today, so our insights come from Peter Aan, a Senior Dillon Gage Metals Trader.
Gold is trading today inside yesterday’s range, but at mid-morning is near the top of its range. Stepping back a bit from the chart, we see a market at a point of equilibrium – well below the high from April 6 at 1224.50 (June contract), but finding buyers well above the recent support at the March 31 low of 1178.20. Look for a penetration of Tuesday’s range (1201.3 to 1183.5) to be the first indication of direction.
Silver is also inside Tuesday’s range so far today, but its chart pattern is weaker than gold’s. Moderately oversold, this market could begin a test of the April 10 high of 16.650 (May contract) if Tuesday’s high of 16.340 is taken out.
The Platinum chart resembles the gold chart. A penetration of Tuesday’s high of 1160.90 (July contract) could set the stage for movement towards the April 6 high of 1188.20 and a penetration of Tuesday’s low of 1141.20 could encourage a move towards the March 30 low of 1114.70.
Palladium shows yet another inside day so far. Like the others, yesterday’s range is the key – 770.75 to 755.00 in the June contract. The nearest resistance level of note is the recent high of 788.00 and the nearest support level is 751.60 from April 8.
Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.
Despite the stronger USD and hawkish comments from FOMC members on Friday, gold led the way higher, recording a fourth straight weekly gain. Continue reading →
Precious metals have followed the course this week and have spent Monday through Thursday moving lower as the USD has strengthened. While the FOMC minutes were a bit more hawkish than expected, with a June rate hike still on the table, it is important to remember those discussions took place three weeks ago and the economic data since the March meeting has been very weak. The selloff this week has been harder on silver than gold and with silver’s move lower yesterday, the gold silver ratio is pushing 74 which is a level that has recently indicated silver is about to rally and outperform gold with the ratio moving back towards the upper 60s.
This morning finds all four precious metals sharply higher, with gold back above $1,200.00 despite the USD strength and crude weakness although it remains above $50.00. Physical demand, while not great, continues to be just good enough as the short sellers were not able to push gold and silver below $1,190.00 and $16.00. This morning’s rally has the feeling of short sellers covering and locking in a profit before the weekend, but a close above $1,200.00 and $16.50 will be a victory of sorts for the market and should bring a test of $1,225.00 and $17.00 next week.
Have a good weekend,
Roy
Despite the continued run higher in crude oil yesterday, which broke above $54.00, gold and company continue to be most heavily influenced by the USD. Following the weak employment report on Friday, precious metals spiked higher as the USD weakened with the Euro trading above 1.10 as gold took a run at $1,225.00. By the close yesterday, the USD had regained much of the recent loss and gold was testing support as it closed in on the 50-day moving average at $1,205.50. Silver was unable to hold above $17.00 and will now look to hold support on either side of $16.60 where the 50- and 100-day averages currently reside. Following recent dovish comments by several FOMC members, it is difficult to see a rate hike in June, which should lend support to our market.
At this point the focus likely shifts to economic data that may or may not support a hike in September. Yesterday, Minneapolis Fed President Kocherlakota made a case for rate hikes not beginning until the second half of 2016 with a goal of the Federal Funds rate not reaching 2.00 percent until the end of 2017. While he is likely to be out voted by his peers and rates will move higher sooner than that, his comments could be indicative that the FOMC is growing increasingly concerned about the U.S. economy. We will get a better handle on the FOMC’s views later today when the minutes from last month’s meeting are released. This morning is off to a quiet start with all four metals probing lower on light volume.
For the sake of anyone who missed it on Friday, the March employment report was much weaker than expected as the Labor Department report showed just 126,000 new jobs were created against the economic consensus expectation of 245,000. On top of this, the two previous months which showed robust jobs growth had those figures sharply lowered in revisions contained within Friday’s data. Expectations for a rate hike by the FOMC in June are further diminished on the back of this very weak report as policy makers are unlikely to raise rates, while job growth at the very least cannot be counted on to support economic expansion.
This morning, New York Fed President Dudley sounded very cautious when asked about the timing of a rate hike as he said the employment report, weak retail sales and weak manufacturing data have been a surprise. The reaction to the report as expected has been a weaker USD as the Euro is back above 1.10 and lower interest rates as the bond rally has brought the yield on the 10-year bond down to 1.85 percent. As a result, all four precious metals opened sharply higher when trading resumed yesterday and have extended those gains. With gold and silver currently at $1,220.00 and $17.10 both are trading above their 10, 50 and 100 day moving averages.
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Precious metals begin Q2 with gold in the driver’s seat as the tug of war continues between gold holding above $1,200.00 and running higher or falling below $1,150.00 and potentially testing $1,050.00. As we continue to look for the direction the market will take, U.S. economic data remains mixed which only adds to the choppy tone. The FOMC rate hike timetable remains uncertain which adds to the choppy market and the other major markets such as U.S. equities (choppy and volatile), crude oil (range trading between $40.00 and $50.00), and bond yields (range bound) are not providing the insight precious metals participants are looking for. Therefore, volume has been decreasing as many have taken a wait-and-see attitude. Through all of this the USD has rallied sharply in Q1 with the occasional reversal. I would keep a close eye on the USD as a move below 1.05 Euro (gold likely lower) or above 1.10 Euro (gold likely higher) will be the catalyst for our next move.
Hawkish comments by Fed members this week, intimating that a rate hike in June is still a possibility, have weighed on gold and company as the USD moved higher, but volume has been light and there was just enough physical demand at lower levels to offset the speculative selling as witnessed by silver holding $16.50, which is the current intra-day low. This morning has brought us another weak U.S. economic report and, as expected, our markets are now in rally mode. The ADP Employment Report showed that 189,000 new jobs were added last month by private employers, this figure badly missed the consensus expectation of 225,000. Perhaps more concerning was the fact that it was the lowest job creation figure since January of 2014. As I finish today’s commentary, gold is challenging $1,200.00 and it feels like it will break through to again challenge resistance at $1,210.50 (100-day average) and $1,213.50 (50-day average).
My next commentary will be on Monday as Dillon Gage will be closed on Friday in observance of Easter Friday and Passover.
Roy
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Following a weak close on Friday, trading resumed yesterday with light physical demand through the Asia Pacific region, which may have sent some of the recent longs looking for the exit sign as prices moved lower. This morning finds all four precious metals on the defensive as a stronger USD, calmer tone in the Middle East, lower crude oil market and a big rally in U.S. equities weigh on our market. In another sign of a U.S. economy which may not be ready to support a rate hike, consumer spending in February missed the mark as household savings soared to a two-year high. While this data was certainly impacted by winter weather, I believe it further supports a rate hike no sooner than September.
As our market is now probing the lower end of the recent range with gold and silver failing to hold $1,200.00 and $17.00, we can look for support in gold at the 10-day average at $1,183.50. Silver may hold the key here as the 10-, 50- and 100-day averages are fall within 22 cents. Initial support should be seen at $16.76 which is the 50-day average, followed by $16.61 which is the 10-day average, and finally $16.54 which is the 100-day average. Physical demand should pick up sharply as we approach $16.50, but a break below that level will likely empower the short sellers.
Roy Friedman is off today, so our insights come from Peter Aan, a Senior Dillon Gage Metals Trader.
The strong rally in Gold in the first part of the week met resistance just under the upper Bollinger Band and the March 2nd high, giving us a mid-range close on Thursday, and trading lower in early trading today. A close today below Thursday’s low of 1194.8 in the June contract would be the first concrete sign that the rally may have run its course.
Silver had a more impressive rally, taking out minor resistance formed in late February and piercing the upper Bollinger Band. It’s easing back this morning, and a close today below Thursday’s low of 16.91 in the May contract would signal a possible short-term trend change.
Platinum’s rally was not as strong as Gold or Silver, and it is struggling this morning. A failure to close above last week’s high of 1145.7 (July contract) would hint that movement back down to the recent low of 1088.8 might be forthcoming.
Palladium didn’t get the memo about the rally, and today has fallen to the lowest level in several months. The next support level is at the October low of 729.95, with subsequent levels below 700.00
Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.
Gold and silver traded on below average volume Monday and Tuesday as unconvincing probes higher following Friday’s big rally were sold by recent speculative buyers who locked in profits. There have also been reports of producer selling in front of $1,200.00 gold as we approach month end and the end of the first quarter of 2015. Following a continuation of USD weakness in Europe this morning, with the Euro now testing 110.00 after being at 105.00 last week, gold is again testing $1,200.00 while silver trades above $17.00.
This morning finds U.S. economic data again missing the target as witnessed by a very weak report on Durable Goods Orders which fell for the fifth time in the last six months. On the back of this news, the yield on the U.S. 10-year bond has fallen to 1.86 percent as bond traders appear to be less concerned with a rate hike by the FOMC any time soon which should support gold and silver. Crude oil moving up and a U.S. equity market which again appears to be top heavy should also lend support. Technical trading continues to dominate our market as USD movement on the back of daily economic releases set the tone for the market. Support in gold at $1,185.00 and $16.85 in silver appears to be strong, but if the rally does not continue in the coming days expect the downside to again be probed. If gold breaks $1,200.00, we can expect resistance at the 100-day average at $1,208.75 and the 50-day average at $1,222.50. Silver is trading above its 10-,50- and 100-day averages, but it has surprised me by not taking a look at $17.40 – $17.50.
Precious metals continued to rally throughout the day on Friday as the USD weakened and crude oil rallied. The dovish FOMC report continues to impact our market as speculative short positions were covered before the weekend at the same time as now longs were entering the market. Physical demand was steady at the higher price points with silver leading the charge higher. If you believe like I do that the U.S. economy is still not out of the woods and remains on shaky legs despite the growth in payrolls and drop in unemployment rate, then you also suspect that the USD will continue to weaken through the spring and perhaps longer. The weakening USD will of course support gold and silver and just perhaps we will look back and say the recent dips below $1,150.00 gold and $15.50 silver were indeed buying opportunities. Slow and steady are just not the way for silver and the move I talked about in Friday’s commentary, calling for a run into the spread between the 50 and 100-day moving averages, happened all in one day as silver rallied over 80 cents.
Barring any geo-political news, the direction of all markets appear to be tied to the USD’s intra-day reaction to U.S. economic data. In the short term, gold support should be expected from $1,175.00 through $1,165.00. A break below $1,1650.00 likely means the USD is again in rally mode and sub-$1,150.00 can be expected. Gold is likely to face resistance as we approach $1,200.00 from producer selling, but a break above $1,200.00 should see us testing resistance between $1,225.00 through $1,240.00. Silver support should be strong as we approach $16.50 while a break above $17.00 should bring us a look at $17.40 – $17.50.
Despite the FOMC removing “patient” from the policy statement on Wednesday afternoon, the tone of the statement and Chair Yellen’s subsequent press conference clearly had a more dovish tone than the markets were expecting as witnessed by the big rally that ensued in most markets. As the policy statement was being read, the USD weakened sharply Wednesday afternoon, rallied yesterday and is weaker again this morning as its direction sets the course for gold and silver. While there remains a possibility of a 25 basis point rate hike at any time now, most commentators see the hike coming in August. As Chair Yellen and the FOMC would like to see the unemployment rate fall further while the inflation rate stabilizes at higher levels, I do not think a rate hike will come before the fourth quarter and I am still not convinced we will see one this year. Continue reading →
Ahead of the FOMC decision this afternoon, gold and silver continue to probe lower as witnessed by gold trading down to a four-month low yesterday before bouncing as we continue to trade around $1,150.00 and $15.50. Platinum and palladium continue to move sharply lower as investor and industrial demand highlighted by weak imports from China weigh heavily. Platinum, having failed to hold $1,100.00, is trading at $1,090.00 this morning which is a level not seen since 2009. Continue reading →
Welcome to FOMC week. The two-day meeting concludes on Wednesday afternoon with Chair Yellen scheduled to hold a press conference at 2:30pm EST. All markets will be waiting for any hint on a policy change that would indicate the much talked about rates hike(s) are set to begin. The tone of her statement and answers to questions will be critical as a dovish nature with words like “patient” continuing to be used would indicate the FOMC may be concerned with the recent weak economic data and a rate hike could be pushed back to the fall or perhaps not at all this year. Such an indication would weaken the USD and likely bring a big rally to our market as speculative short positions, which continue to grow ,would be covered while fresh buying is being done. A “hawkish” tone and the removal of “patient” would signal that a rate hike in June or perhaps August is likely which will pressure our market as the USD will likely continue strengthening.
As precious metals head for the finish line this week, gold and silver are currently trading above $1,150.00 and $15.50 which may be a victory of sorts considering all the negative factors currently weighing on precious metals. The USD has taken a bit of a break from its “take no prisoners” rally which has helped as physical demand remains for the moment strong enough to offset speculative selling. The next headline we may have to deal with (and it could come today) is from crude oil which is once again under very heavy pressure. Crude is down 2 percent this morning and down 7 percent for the week as it currently sits on either side of $46.00. Extreme U.S. stock market volatility has returned which may support gold if U.S. equities are pushed lower and capital rotates back to our market. Continue reading →
Precious metals and all financial markets continue reacting to the two major economic headlines which are: the strength of the USD and when will the FOMC raise interest rates. The USD has moved higher by leaps over the past two weeks and now sits at 11 year highs. On modest volume, gold and silver continue probing lower as: physical demand, which has picked up, is unable to offset speculative selling, the ETF market experiences liquidations and crude oil saw a drop of over 1 percent yesterday, which added pressure. Platinum and palladium were hit a bit harder as platinum has fallen to 5+ year lows and palladium has failed to hold $800.00.
Following Friday’s big sell-off on the back of the U.S. jobs report, trading resumed yesterday with a bit of short covering and physical demand bringing us a test of $1,175.00 and $16.00 where selling reemerged. With gold and silver entering a new lower trading range, I would expect the “shorts” to keep the pressure on unless we get an unexpected headline. A test of $1,150.00 gold and sub-$15.50 silver, where physical demand should be significant, is likely to spur on a short covering rally. Adding to negative market sentiment we have platinum trading at multi-year lows as it hovers just above $1,150.00.
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