Weekly Gold & Silver Market Recap – 7/26/2013

GOLD SOARS PAST $1,300 FOR FIRST TIME IN ONE MONTH

Gold began the week on a high note after breaking through the key resistance level of $1,300 an ounce, a level that the Precious Metal had tested, but failed to beat in the past month. Gold prices reached as high as $1,322.50 on Monday morning before relaxing back down only to spike again before the U.S. stock market open. Throughout the day on Monday the Gold price continued its climb and closed above $1,300 per ounce for the first time in more than one month. After the National Association of Realtors said that home sales in the U.S. fell by 1.2 percent, the U.S. Dollar fell against other currencies, leading to further increases to Gold’s price. Analysts also pointed to a move in China which made it easier to borrow money, while not rewarding savers. The analysts said, “That spells ‘buy Gold’ in Mandarin just as it does in all other languages.” The major story for Gold has been the potential end of quantitative easing (QE). Federal Reserve Chairman Ben Bernanke’s reassurances that the withdraw of the QE program would depend on economic conditions, which ultimately initiated a strong week of gains for the yellow metal. 

INVESTORS MOVE ON OPPORTUNITY TO TAKE PROFITS

On Tuesday, prices fell a bit and many analysts believe the fall was simply short covering and profit taking. For clues on the future of Gold’s price, EverBank’s Mike Meyer wrote, “The next couple of Fed meetings should have a significant impact as to the near-term direction of metals, as any hints of procrastinating plans to taper should act as a springboard, but anything to the contrary would tend to keep it suppressed.” 

Equities indexes wavered, leaving stocks relatively flat midway through Tuesday’s trading session. Following a day that saw the S&P 500 continue its winning streak to end the day at a new record high, markets continue to assess some disappointing corporate earnings data. As the market rally endures the perpetuation of loose monetary stimulus measures, many analysts are still bullish as the S&P 500 is up 151 percent from its March 2009 low. “The momentum is slowing a bit, but the trend is still up,” John Fox, fund manager and director of research at Fenimore Asset Management Inc., said. 

WORLD-WIDE ECONOMIC DATA PRESSURES PRECIOUS METALS

News out of China and other economic data came out mid-way through the week, which continued to affect prices as investors look for clues as to what will happen next. Andy McLevey of Interactive Investor said, “Arguably, so long as we have the promise of cheap money on the table, then there’s scope on the upside. But that disappointing Chinese PMI [which fell to an 11-month low] should also be acting as a cautionary note to the market.”

POSITIVE OUTLOOK FOR GOLD TO REACH $3,000

MarketWatch’s Andy Xie has high hopes for Gold as he forecasted the metal to reach $3,000 per ounce in the next five years, citing the case that the East will be taking over Gold’s mantle from the West in that time period. He said, “China and India account for roughly two-thirds of global demand for Gold. … The tension between where Gold is priced and where demand is located is manifesting itself in two ways: first, Gold shops in Asia have no physical Gold to meet demand; and second, the price of Gold set in Shanghai is consistently higher than in London or New York. Physical Gold is likely to flow from the West to the East due to the pricing gap. It is only a matter of time before the warehouses of London and New York are emptied. When the stock is all shifted to the East, the price fixed in Shanghai will become the real price.”

APMEX CEO MICHAEL HAYNES FOCUSES ON ECONOMIC NEWS IN RESPONSE TO QE3 BEING TAPERED

Gold jumped toward the end of the week, reacting to the state of the U.S. dollar as speculation over the tapering of domestic stimulus and macroeconomic data influence currency movement. As it has become more apparent that the Federal Reserve will inevitably reduce the level of bond purchases in the near future, investors look to other factors that historically impact world currency and the Gold price. “The market seems to be responding to recent weakness in the dollar coupled with today’s weakness in the jobless report,” Michael Haynes, chief executive officer APMEX, Inc., said. “Generally, it seems that Fed tapering is really becoming less of an issue as the world economic data begins to weigh on various currencies.” Look for traders and investors alike to pay close attention in the coming weeks to U.S. and global economic news that could influence metals including word from Fed Chairman Ben Bernanke concerning the future of quantitative easing (QE).

Precious Metal prices were down during morning trading Friday and then bounced back by end of day. With prices depressed to multi-year lows and the future scale of quantitative easing (QE) still in question, many experts view current Precious Metals prices as an excellent buying opportunity for investors. The massive sell-off of Silver futures contracts in the first half of 2013, which reduced the price by nearly 34 percent year-to-date, has diminished the Silver price to a level that has analysts touting the metal’s tremendous upside potential. As Silver prices have fallen to what some experts refer to as “artificially low” prices, many anticipate a reduction in Silver production. “The basic influence on Silver is the supply/demand relationship and there are potential issues for lower supply and higher demand at these lower price levels,” Haynes said.

At 4:44 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,335.40, Up $3.90.
  • Silver, $20.08, Down $0.16.
  • Platinum, $1,432.00, Down $16.90.
  • Palladium, $727.30, Down $14.90.

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Disclaimer:

APMEX’s ‘News and Commentaries’ 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.

US Dollar Prices are in USD

Precious Metal Prices
4/25/2014 12:30:45 AM EST

Metal Bid Ask Change
Gold $1,292.00 $1,294.00 $1.40
Silver $19.51 $19.61 ($0.14)
Platinum $1,402.50 $1,412.50 $2.90
Palladium $797.00 $802.00 ($1.30)
4/25/2014 12:30:45 AM EST

Click here for Historical Charts*All Charts are in USD


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