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Weekly Gold & Silver Market Recap – 11/15/2013

GOLD BEGINS WEEK FLAT FOLLOWING FRIDAY SELLOFF

Gold traded at even levels Monday following Friday’s significant price dip on surprisingly upbeat employment data. As anxious traders and investors await clear signs regarding the future of U.S. monetary policy, positive jobs data fuels speculation that the Federal Reserve will soon begin tapering its monthly asset purchase program, a negative factor for Gold. Following Friday’s selloff when Gold sank below $1,300 per ounce, no new economic reports were expected to reveal anything that could considerably impact metals. "This week is data-empty and it will be a question of working out if there is a follow-through to the reaction that we saw last week and whether bond yields continue to climb, and assess how the market looks at tapering," Saxo Bank senior manager Ole Hansen said. The next Fed meeting is set for December 17-18, which is when the market expects the official announcement of a fiscal policy cutback.

WORLD GOLD COUNCIL HAS HIGH EXPECTATIONS FOR CHINA

The World Gold Council (WGC) forecasted Monday that China’s total demand for Precious Metals could increase 29 percent to reach 1,000 tons this year, causing the country to surpass India as the world’s largest Gold consumer. This month, a Gold vault that holds up to 2,000 metric tons opened in Shanghai. The location was simple to choose as demand in Asia is growing ever so quickly. “Such a facility is a massive vote of confidence for the Chinese Gold market,” said Philip Klapwijk, managing director of Hong Kong-based Precious Metals Insights Ltd. “The trend for demand has been very strongly positive,” said Klapwijk, who has monitored Precious Metals since 1988.

GOLD SEEN AS A GOOD LONG-TERM BUY

The Gold price fell to a 3-1/2 week low, its lowest level in one month, Tuesday with anticipation that the Federal Reserve could begin tapering stimulus measures as early as December. As equities markets surge to new record levels and employment data continues to improve, Precious Metals prices are temporarily suffering losses. “Gold is still reeling from the jobs report last week, and Yellen’s Thursday hearing might be the next catalyst for gold,” Lido Isle Advisors’ president Jason Rotman said. “If she is very dovish, gold could snap back higher.” However, some experts see Gold as an excellent long-term buy due to ongoing Fed spending and lower interest rates. Because of those factors “This makes me believe that gold is a short-term sell, but a very good long-term buy,” Insignia Consultants chief market analyst Chintan Karnani said.

STOCKS FALL ON FED TAPER FORECASTS

Speculation surrounding a sooner-than-expected reduction in quantitative easing caused the Dow Jones Industrial Average to retreat from its record high on Tuesday. Strong corporate earnings figures along with an upbeat jobs report have increased the expectations that the Fed will continue its current level of stimulus for an extended period of time. “The jobs report Friday, that’s really what changed the idea that we could have a December taper, and ever since then you’ve had more and more comments coming out of the Fed that perhaps it is on the table,” Wells Capital Management chief investment strategist James Paulsen said.

GOLD MARKETS FLAT AS PHYSICAL BUYING HALTS SELLOFF

The selloff of Gold has been temporarily curbed due to physical demand from central banks on expectations that the Federal Reserve will soon begin tapering its $85 billion monthly bond buying program. “The weakness in equities is bringing some people to Gold,” David Meger, director of metal trading at Vision Financial Markets, said. “The price drop has improved physical demand.” The next technical level that Gold needs to breach in order for traders and investors to see a bullish trend will be above $1,326 an ounce.

YELLEN COMMENTS ON GOLD DURING TESTIMONY

The Gold price jumped for a second straight session on Thursday as incoming Federal Reserve Chairman Janet Yellen gave clear indication that the U.S. Federal Reserve would continue its current level of monetary stimulus measures until economic recovery and a vibrant U.S. jobs market are firmly in place. “The possibility of continued tapering and Yellen's comment about the importance not to pull the plug too early is initially [in] support of Gold,” Thomas Power, senior commodity broker at futures brokerage RJO Futures, said.

Yellen was asked about Gold during her Senate testimony, and said, “I don’t think anyone has a good model of what makes Gold prices go up or down, but certainly it is an asset that people want to hold when they are very fearful about potential financial market catastrophes , or economic troubles and tail risks.” Yves Lamoureux, president of Lamoreux & Co., said, “For us, little is changed fundamentally as real rates are rising. The bigger concern is if miners start unloading Gold futures to hedge their production going forward — something that had been unpopular with shareholders and put on shelves.”

PROFIT TAKING PUTS DENT IN GOLD’S REBOUND

Precious Metals prices continued to slightly waiver through mid-day trading Friday, but were still on track for a weekly gain. Profit taking took Gold and Silver prices down slightly during early morning trading. U.S. Federal Reserve Chair nominee Janet Yellen’s testimony to the U.S. Senate yesterday saw dovish monetary policy comments lift Precious Metals prices. MKS Capital senior trader Alex Thorndike said, “I think a $1,270-$1,300 [per ounce] range should hold into next week. The market will now look to next week's (Fed meeting) minutes for any further information on a tapering timeline, which of course will influence Gold and Silver.”

At 4:00 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,289.40, Up $1.10.
  • Silver, $20.80, Up $0.02.
  • Platinum, $1,441.50, Down $3.60.
  • Palladium, $733.40, Down $7.90.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

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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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