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Weekly Gold & Silver Market Recap – 6/7/2013

GOLD CLOSES LOWER IN UP & DOWN WEEK

This week had a bit of everything in the market, and by the end of the week Gold finished slightly lower. On Monday, Gold was off to a good start with news out of Asia. Both the U.S. dollar and some European shares fell due to poor Chinese data, which gave the Gold price a boost. The data announced this week played an important part in the price of Gold as the U.S. central bank said Monday it will keep up the current pace of its stimulus campaign until economic indicators show continued strengthening. Standard Bank analyst Walter de Wet said, “The $1,400 level will be the peg in the ground for Gold, as this is a psychological mark, which also generated a lot of options activity lately, and I would see prices hovering around it in the run-up to the U.S labor report on Friday.” News out of India this week did nothing to support Gold. The country’s government is putting a restriction on imports of the metal. The Reserve Bank of India extended imports restriction on banks that they introduced last month. The announcement came after the country’s Gold imports increased between April and May by nearly 20 tons. Societe Generale analyst Robin Bhar said, “The news that the RBI will curb imports of Gold by agencies has weighed prices down today as it is a wider restriction and could imply lower imports of Gold into the country.” Friday’s release of the U.S. jobs report completed the week by surprising experts with belter than expected numbers. Precious Metals prices initially added to losses after the release of the monthly jobs report, but experienced some choppy trading afterwards as investors had time to process the information. The report showed the addition of 175,000 jobs in the private sector in May, though the unemployment rate jumped to 7.6 percent. With many economists calling for the tapering of the Federal Reserve’s quantitative easing, this data simply adds another piece to the puzzle.

GOLD FINDS MANY AVENUES OF SUPPORT

Gold has seen many factors driving down the cost; however, there are contrasting factors that lend support to the yellow metal. Weak manufacturing data for May weighed on the dollar Monday morning causing a lift in Precious Metals prices. Reports showed that industrial output fell for the first time since November. Divergent economic data continues to cause uncertainty about the future of the Federal Reserve’s monetary easing program. Jeffrey Wright, managing director at Global Hunter Securities claimed, “Drawing out the process of stopping QE [in the U.S.] or the rate of QE is supportive for Gold in the near term, since it will delay a rise in real interest rates.” While the unemployment numbers set Gold prices back Friday, earlier in the week the job growth report showed that the economic picture is not as clear as some seem to think. The report showed 30,000 less new jobs created last month than was expected. The report will be taken as an indication that the economy in the United States is slowing and gives cause for the U.S. Federal Reserve to continue its monetary easing program. “As far as the tapering debate goes, the report does nothing to bolster expectations that the Fed will ease its foot off the pedal over the summer,” Andrew Wilkinson, chief market economist at Miller Tabak, said. The continuance of easing has previously supported the cost of Gold. While the Gold prices have been lower as of late, it has given the physical buyers an great opportunity. According to the World Gold Council (WGC), demand for Gold is down about thirteen percent in the first quarter of this year compared to last year. However, that is mostly influenced by the large sell-off of electronically traded funds during that time. It is a totally different story with Gold coins and bars, which are up 10 percent based on a five year average. “The steady level of buying confirmed that central banks and institutions continue to favor Gold’s diversification benefits, as they reduce their portfolio allocations to U.S. dollars and euro,” the WGC states. “Again during the first quarter, the central banks adding to their Gold reserves were distributed widely around the globe, with volumes concentrated in emerging markets.” As Gold prices have been moving lower, the U.S. stock market has been doing the opposite. A survey shows that some investors are growing leery with such growth in the equities market. Nineteen analysts surveyed by Bloomberg showed the largest proportion of bullish sentiment for Gold since mid-March. “The concern is that we see stock markets come under pressure and then see an increase in risk aversion,” said Mark O’Byrne, executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “Gold’s already had a correction, so people see value in the Gold market.”   

At 4:45 pm (EDT), the APMEX precious metals spot prices were:

  • Gold, $1384.00, Down $33.80.
  • Silver, $21.69, Down $1.13.
  • Platinum, $1502.50, Down $28.30.
  • Palladium, $757.00, Down $5.30.

For more APMEX reviews of daily and weekly Precious Metals market activities, visit our News and Commentaries page.

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Disclaimer:
APMEX’s ‘Market Reports’ provide our readers with a review of spot price activity and some of the factors that may be affecting the market for precious metals, three times during the trading day. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The "News and Commentaries" are not intended as a comprehensive discussion and there may be other factors that may be affecting the financial marketplace. These "News and Commentaries" are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, to purchase or to sell any precious metal product. All orders, all purchases and all sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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