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Weekly Gold & Silver Market Recap – 9/27/2013

PRICES MOVE ON MIXED MARKET SIGNALS

Precious Metal prices experienced ups and downs this week on speculation of economic stimulus tapering occurring this year and the countdown for a potential government shutdown. Metals started the week giving up gains from previous sessions. Banyan Partners chief market strategist Robert Pavlik said, “Tapering might begin as soon as October or they might hold off until a new [U.S. Federal Reserve] chairman is elected. The comments and the message the Fed sent last week is the economy is still on some soft footing and doesn’t have the strength to begin this process — that’s not a good message to send.”

OFFICIALS CONCERNED OVER FED CHAIRMAN SELECTION PROCESS

The Federal Reserve’s new chairman has continued to be discussed and debated. Dallas Federal Reserve President Richard Fisher said the process has been “terribly mishandled” and the selection “should not be a public debate.” The next chairman’s policies will have an effect on markets, depending on how opposed or favorable they are to the Fed’s current monetary easing policies.

ECONOMIC CONDITION WORRIES CONSUMERS 

U.S. consumer confidence took a turn for the worse in September, reaching its lowest level since May. Viewpoints of stagnant wages and fear over new job creation in the next six months are starting to show in consumer data, which could potentially affect markets in the coming months. IHS Global Insight director of consumer economics Chris G. Chistopher, said “Political bickering and finger pointing over the debt ceiling and possible government shutdown is not a positive for consumer mood and spending, especially in the fourth quarter when holiday retail sales are vital to many retail channels.”

GOLD LOOKS TO BREAK MULTI-SESSION LOSING STREAK

Gold recovered ground lost during morning trading Tuesday as technical support and physical demand helped rally Precious Metals back to even levels. “Buyers have been stepping in each time Gold holds support down near $1,300 an ounce, which looks like a short-term bottom for now,” U.S. Global Investors head trader Michael Matousek said. As Gold looks to snap a three-day losing streak, concerns regarding next week’s U.S. employment reports continue to pressure the yellow metal, as a positive report would likely encourage an imminent reduction in the Federal Reserve’s quantitative easing measures.

U.S. BUDGET CONCERNS WEIGH ON INVESTOR SENTIMENT

Gold rose mid-day Wednesday on the heels of technical buying and concerns surrounding U.S. budget negotiations and a potential government shutdown. Breaking a three day skid that saw Gold tumble nearly 4 percent, the yellow metal avoided sinking below technical support levels and gained further backing from safe haven investors fearing the consequences of a potential stalemate in U.S. budget discussions. “Worries about the U.S. government shutting down are pushing people to gold,” R.J. O’Brien & Associates senior commodity broker Phil Streible said. Analysts have predicted low levels of volatility in the near future, as the last weekend of September marks the end of the third quarter and fresh unemployment data will be released the first week of October. 

BUDGET STANDOFF FAILING TO SIGNIFICANTLY IMPACT MARKETS

News showing a decline in weekly unemployment numbers has trumped budget negotiation concerns and weak home sales data pushed the Gold price lower Thursday. Following a round of technical buying, Gold’s safe haven appeal was temporarily present during Wednesday’s session, driving the metal up for the first time in four days. However, on Thursday it appeared the majority of investors and speculators were comfortable with the prospects surrounding budget discussions in Washington. “Market players evidently expect the parties to reach an agreement in good time and do not anticipate the sort of lengthy political wrangling that was seen two years ago. According to various politicians, however, the U.S. Congress appears deeply divided,” Commerzbank Commodity Research analysts wrote. Silver has followed Gold’s lead and traded lower Thursday as the U.S. Commodity Futures Trading Commission’s investigation into potential Silver market manipulation came to a close, concluding there were no suspicious patterns in the massive number of fast-paced electronic trades. Regardless of any short-term manipulation, “[P]hysical buyers have a long-term view and are much more concerned with the U.S. debt burden and the consequences.

ANALYST: NO EVIDENCE DEBT CEILING WILL BE RAISED IN TIME

Gold and Silver prices were hovering just over one percent higher Friday morning as investors continued to weigh a potential shutdown in Washington. Saxo Bank’s Ole Hansen said, “Many traders are sidelined at the moment as a general level of confusion exits. Support is obviously coming from the U.S., where lawmakers are once again playing Russian roulette with the budget and debt limit. … [F]or now the main focus [is] on the U.S. Congress.” MarketWatch’s Howard Gold believes a government shutdown or default by the U.S. is not priced into the market, and that should concern more people. Chris Krueger of Guggenheim Partners explained to Gold, “The complacency on this issue is alarming. Clearly with Washington policy, everybody’s been focusing on the Fed and the taper.” Krueger also wrote in a note to clients, “Our growing concern is that everyone is far too complacent that just because there has been a deal in all the prior fiscal cliff fights that there has to be a deal in this debt ceiling fight. There is no evidence to suggest that the debt ceiling will be raised in time.”

At 4:55 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,339.00, Up $12.90.
  • Silver, $21.83, Up $0.04.
  • Platinum, $1,421.70, Up $8.50.
  • Palladium, $730.30, Up $6.80.

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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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