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Weekly Gold & Silver Market Recap – 6/28/2013

PRECIOUS METALS WEIGHED DOWN BY POSITIVE U.S. OUTLOOK

This week the Precious Metal prices continued to fall based on a positive outlook with the United States economy. Even before the U.S. market opened Monday, the Gold price pushed near a three year low in overnight trading as it lost nearly one percent on a stronger dollar. So far, this has been a difficult year for the Precious Metal, having lost 24 percent overall. Danske Bank analyst Christin Tuxen said, “This is a fairly quiet week, with not much in the calendar, but with the dollar and U.S. Treasuries yields stronger, we see Gold remaining under pressure." Unfortunately, it did not take any new reports to come out to send the Gold price even lower. By the close of business Wednesday, Gold futures had fallen once again to new multiyear lows. The 23 percent decline in Gold price this quarter has many investors spooked, causing a sustained onslaught of panic selling in electronic markets. “A combination of dollar strength, economic progress and a re-rating to the market’s expectations of central-bank asset purchases are crushing prices,” SpreadEx financial trader David White said. Though Wall Street powerhouses Goldman Sachs and Credit Suisse have downgraded their short term projections for Gold, some experts still tout exposure to Precious Metals in any investment portfolio as an excellent hedge against inflation and geopolitical turmoil. Though the possible slowing of asset purchases has forced Gold and Silver lower, the volume of “new money” flowing into markets is expected to have long-term economic significance in propelling metals prices toward former highs. As the week started winding down, The Gold price is hovering around a very important level with regards to production cost. Reports have surfaced that many Gold mines have closed because it is simply too expensive to mine the metal compared to the current prices. Andrew Su of Compass Global Markets said, “This fall in the price of Gold is not truly based on supply and demand - It's based on expectations of what the Federal Reserve is doing. I think that somewhere along the line the Gold prices will simply start rising, because production will reduce supply significantly.” As Gold experiences gains headed into the weekend, Silver is up more than 4 percent today. Gold is set to realize its largest quarterly dip since 1968, which continues to cause panic among electronically traded Gold investors, but has provided ongoing demand for bargain hunting physical Precious Metals buyers.  

NOT ALL ECONOMIC NEWS POSITIVE THIS WEEK

On Monday, global markets were hit hard by a more than 5 percent drop in the Chinese stock market. This increased fears of a liquidity crunch, so much so that Goldman Sachs became the latest to cut its Chinese growth forecasts. European markets fell prey to negative results after the Shanghai stocks melted down. Stephen Pope, managing partner at Spotlight Ideas, said, “I would suggest that almost all of the downward movement in U.S. futures ... is due to the concern over the state of the Chinese economy and the implications for the rest of the world.” He continued on to say he believes we have overplayed the downside of the U.S. Federal Reserve story, but with China, “we have another excuse to trade with timidity.” In the United States, it seems as if the markets did not show much concern over the disappointing Gross Domestic Product report. The first quarter economic growth in the United States was estimated at 2.4 percent; however, the final revised number came in much lower at 1.8 percent. This report could put a damper on talks of ending the Fed’s monetary easing program. While the growth is positive, many economists believe it will take more robust growth to get the Fed to change its easing course. This idea of continuing the Fed’s monetary easing program gained steam when one of the Fed members spoke Thursday. William Dudley, president and chief executive officer of the Federal Reserve Bank of New York, advised that if future economic data does not meet the expectations that were discussed at last week’s policy meeting, the Fed may not keep their word on tapering monetary policy. “If labor market conditions and the economy's growth momentum were to be less favorable than in the FOMC's outlook — and this is what has happened in recent years — I would expect that the asset purchases would continue at a higher pace for longer,” Dudley said. Dudley has a perpetual vote with fiscal policy and agreed last week with Ben Bernanke’s timeframe to cut back on asset buying.

At 4:46 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1235.80, Up $22.20.
  • Silver, $19.71, Up $1.06.
  • Platinum, $1341.90, Up $12.80.
  • Palladium, $658.70, Up $8.00.

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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