Weekly Gold & Silver Market Recap – 12/27/2013
GOLD SEEKS SUPPORT AS IMF LOOKS TO RAISE ECONOMIC EXPECTATIONS
Precious Metals prices traded flat on Monday as low trading volume ahead of the Christmas holiday created little movement for Gold and Silver. Gold rallied back above $1,200 an ounce last Friday and looked for further support as ongoing economic strength and an initial U.S. Federal Reserve taper did little to motivate any short term upward momentum. "Gold is in a bit of a limbo now because we know that the Fed starting to reduce their bond buying is a reality and the dollar should hold relatively strong from here," VTB Capital analyst Andrey Kryuchenkov said. With this year’s pullback for Gold and Silver, many investors are using the opportunity to take advantage of lower prices.
U.S. STOCKS JUMP WITH A POSITIVE OUTLOOK FROM IMF
U.S. stock futures traded higher ahead of Monday’s open as the International Monetary Fund (IMF) planned to raise their economic outlook. “The positive assessment the IMF gave with regard to U.S. growth corroborates the improving economic indicators we have been witnessing the last two months in the U.S.,” Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Switzerland, said. “The sentiment going into Christmas and New Year is good. We have an improving global economy and for the first time since the financial crisis we should see a synchronous recovery.” With a seamless resolution to U.S. budget negotiations and the beginning of stimulus reduction, the IMF sees a positive future.
CONSUMER SPENDING INCREASES FOR SEVENTH CONSECUTIVE MONTH
On Monday, the Commerce Department confirmed that consumer spending jumped 0.5 percent in November resulting in the seventh straight month of increases. The good news is a reflection of U.S. employment and industrial production, as the economy has shown strength during the third quarter and leading into 2014. The Federal Reserve has attempted to keep inflation below 2 percent with various measures in place and will likely keep interest rates near zero for the coming months.
PRECIOUS METALS UP SLIGHTLY AHEAD OF HOLIDAYS
Precious Metals prices edged slightly higher through mid-day on Tuesday as the markets prepared to close early before the holidays. After the recent market movement and Gold prices down more than 28 percent for the year, many investors are beginning to wonder if the market can regain its momentum and are looking for direction. Art Cashin of UBS said, “Velocity in the money supply may get the Fed into a minor panic, and I think they may overstep themselves by accelerating tapering that would be disruptive to the market.”
Extending their record for benchmark indexes, U.S. stocks rose slightly on Tuesday. Recently released data for new home sales exceeded expectations and with durable goods sales also up, have provided a boost to consumer confidence and the dollar. When asked his thoughts on the current marketplace Eric Teal, chief investment officer at First Citizens BancShares Inc. said, “General economic conditions are showing a sustainable recovery pattern, I think we’ll continue to grind higher through year-end and we anticipate that the fourth-quarter earnings outlook will be positive as well.”
CONTRARIAN VIEW HAD GOLD GAINING
Gold and Silver prices were boosted in early morning on Thursday after the release of the weekly jobless claims report. Some analysts with a contrarian point of view believe that all the negative talk about Gold in 2013 is a good sign for Gold in 2014. Julian Jessop, head of commodities research at Capital Economics said, “The consensus is that the price of Gold will grind lower in 2014, at best, as the support from loose U.S. monetary policy gradually weakens. In contrast, with investor sentiment already so heavily negative, our view is that the risks for the coming year are firmly skewed to the upside.” Jessop said that a number of looming headwinds such as eurozone instability were expected to help the Gold price this year, but next year could be a different story.
JOBS REPORT REVEALED WORSE THAN EXPECTED NUMBERS
The jobless claims report showed a decline in new claims of 42,000, which is the biggest drop in over a year. Stock indexes also gained after the report. The Dow Jones Industrial Average is looking for its sixth straight record close and 50th record close for the year today, while the S&P 500 is looking for its third in a row and 44th overall. Japan’s Nikkei 225 index rose to a six-year high in overnight trading.
PLATINUM SHINED IN ECONOMIC RECOVERY
The Gold price held on to a moderate gain Thursday, while Silver and Platinum prices surged during morning trading. The Platinum price was supported by a strong demand for supply from the automobile sector. UBS AG’s Dominic Schnider said, “There’s a deficit in Platinum and people probably have just realized how cheap it is. Unlike Gold, Platinum benefits from a global economic recovery.”
METALS FLAT AS INVESTORS EYE 2014
Precious Metals were mostly flat through Friday. As the year comes to an end, many investors will look at current market conditions as they re-evaluate their portfolios heading into 2014. Ole Hansen, head of commodity strategy at Saxo Bank, said, “December will show a fourth month in a row of negative returns; momentum and trend following investors will not be changing their outlook or positioning unless we see a much stronger move to the upside. Traders will continue to favor selling into rallies until we see a potential break back above the December high” of $1,268 per ounce.
Almost 1.3 million Americans anticipate losing their unemployment benefits Saturday, December 28th, with another 1.9 million set to lose benefits by mid-2014, when funds for the federal emergency benefits program, created during the recession to supplement state-provided benefits, will run out. Sen. Jack Reed, D-R.I., said, “From a human level, cutting 1.3 million Americans off their lifeline doesn't make any sense and it's not anything we should be doing.”
At 3:50 p.m. (ET), the APMEX Precious Metals spot prices were:
- Gold, $1,216.90, Up $2.10.
- Silver, $20.11, Up $0.13.
- Platinum, $1,380.60, Up $14.30.
- Palladium, $711.50, Up $10.70.
For more APMEX reviews of daily and weekly Precious Metals market activities, visit our News and Commentaries page.
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