GOLD PRICES END WEEK MOVING UPWARDS
As the week got started there was not much action in the Gold or Silver markets. “It's a real lackluster day,” HSBC Bank USA’s Chief Commodities Analyst James Steel said. “We've had scattered buying in the Precious Metals in general – mostly in Gold – but the gains have run into headwinds with a stronger dollar.” After a flat start to the week, Tuesday saw a rise in Gold due to technical trading and a growing concern over the global economic outlook. “This indicated that the sellers had enough, leading to the bulls coming back into bullion,” said Fawad Razaqzada, technical analyst at GFT Markets. In Europe, the cause for economic alarm seems to be rising. The chief of Germany’s Bundesbank, one of Europe’s largest banks, is concerned that countries are not doing enough to help secure future success in the area. He said, “The crisis that we are facing is a crisis of confidence, and this confidence cannot be gained if we postpone the tackling of the root causes of the crisis.” While he believes the current situation is improving, he is not so convinced about the long term outlook. Analysts continue to say that the high physical demand in Asia is one of the driving forces behind Gold’s price, though it seems the major topic is quantitative easing (QE) around the world. Recent comments from central bank officials have supported ongoing QE in many regions, including the United States and Europe. Roubini Global Economics’ Managing Director of Research Christian Menegatti chimed in, saying, “We are talking about 2014, in terms of winding down quantitative easing. We’ll have to wait much longer for rate hikes… well into 2015 and maybe towards the end of (that year).” The driving force behind Gold being stuck just below $1,600 has been fear that QE could be coming to an end soon, but these views seem to refute that. In a recent CNBC poll, over 70 percent of voters said they were still buying Gold instead of selling it.
MORE MIXED U.S. ECONOMIC REPORTS RELEASED
February’s retail sales report showed the biggest jump in five months. “The retail number was nice and that’s helping lessen concern that high gas prices and taxes would combine to slow down consumer spending,” Erick Maronak, chief investment officer at Victory Capital Management Inc., said. As equities markets have rallied and Precious Metals have inversely fallen, many experts are touting this as an excellent time to buy Gold and Silver. One of Gold’s broader appeals is its inverse correlation to the U.S. dollar, making it an ideal safety net for investors. The dollar is currently near seven month highs against the basket of global currencies. Bullish retail sales spurred hope that the domestic economy could weather the government tax hikes and spending cuts. SP Angel analyst John Meyer said, “Current dollar strength is reflective of a better economic environment in the United States and Gold is likely to keep coming off as investors move to risk-on strategy and away from securities assets.” The U.S. stock market continued to rise Thursday after reports that jobless claims fell by 10,000. In a separate report, producer prices rose by 0.7 percent in February. Both reports are signs of a sustained economic recovery. In addition, the job market’s continued growth is beginning to push wages up. Higher wages means higher domestic demand for goods and services. Additionally, a government report showed that January’s layoffs were the fewest since 2000. The recovery in the labor market could intensify the debate that the Federal Reserve could alter their course of monetary easing. On the other side of the coin there were two separate reports released Friday that added to the speculation of continued monetary easing in the U.S. According to the U.S. Department of Labor, February’s increase in gasoline prices was an unexpected primary contributor to the 0.7 percent increase in the consumer price index (CPI), accounting for about three quarters of the increase. The Department of Labor is reporting that excluding the spike in gasoline, the CPI rose only 0.2 percent, a figure well within expectations. The government reported that inflation-adjusted hourly earnings for all employees fell 0.6 percent in February, though the real average hourly earnings increased 0.1 percent for the full 12 months ending in February. As an added blow to the increased CPI, a separate report from Thomson Reuters/University of Michigan shows that consumer sentiment dropped to 71.8 from 77.6, though it was expected to rise to 78. Across the board spending cuts and government policies were cited as influential in the downgrade. Thirty four percent of respondents, beating the previous record of 31 percent, indicated unfavorable references. In addition, 30 percent of consumers expect economic growth to continue worsening in the next year. So far this year has been filled with a mix of both positive and negative economic indicators around the globe. Those indicators have left investors searching for direction without much success.
At 5:00 pm (EDT), the APMEX precious metals spot prices were:
- Gold, $1593.30, Up $0.10.
- Silver, $28.82, Down $0.06.
- Platinum, $1592.70, Up $0.90.
- Palladium, $774.80, Up $5.00.
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