Weekly Gold & Silver Market Recap – 2/7/2014
PERTH MINT SALES REFLECT HIGHER DEMAND FOR GOLD & SILVER
Precious Metals ended on a positive note Monday and remain in high demand among investors, according to the Perth Mint’s monthly sales report. The Perth Mint, which is located in Australia and is the world’s second largest Gold manufacturer, behind China, reported that Gold sales increased by 10 percent in January. Also, Silver sales showed a jump of nearly eight percent for the month. Investors are still very interested in investing in Precious Metals even as the U.S. economy continues to show growth and stability.
GOLD SLIPS MODESTLY
Gold fell slightly Tuesday although the yellow metal rebounded from early lows. A stronger dollar and a modest pick-up in equities weighed on Precious Metals. “There are some signs of stabilization today,” Frank McGhee, head dealer at Integrated Brokerage Services LLC, said referring to the Gold price. After a substantial decline in equities Monday, a boost from emerging currencies helped lift stocks and temporarily suppress the demand for Gold and Silver.
METALS CLIMB ON WEAK JOBS DATA
Precious Metals rose Wednesday after fewer than expected jobs were created by private companies. A reported 175,000 new positions were generated in January, though the Bureau of Labor Statistics predicted 180,000. It has been suggested that severe weather conditions are to blame for concealing true jobs report data. "I don't think we got any weather bounce back in January. But I don't know [if] weather was playing as big as role" as it did in December, Moody’s Analytics chief economist Mark Zandi said. "I bet you a year from now when we get all the revisions in it wouldn't be 74K [jobs created for December]. It'll be 174K."
FED BOND BUYING COULD END IN 2014
The Federal Reserve may end its fiscal policy at a much faster pace than expected. Federal Reserve Bank of Philadelphia President Charles Plosser forecasts the U.S. economy to expand by three percent while the unemployment rate drops to 6.2 percent by year’s end. “My preference is to scale back our purchase program at a faster pace to reflect the strengthening economy,” Plosser said. “We must begin to back away from increasing the degree of policy accommodation in a manner commensurate with an improving economy.” Plosser has been an avid opponent of the Fed’s bond purchases.
GOLD EVEN AS HIGHER STOCKS DEPRESS EARLY GAINS
The Gold price traded flat Thursday as strong gains in U.S. equities suppressed earlier gains made by the yellow metal. A drop in unemployment figures and the European Central Bank’s commitment to existing interest rates helped boost stocks, which caused a temporary pullback from session highs for Gold. Investors now await January jobs figures, set to be released Friday morning. “If we get a good number, then the odds are high that the [U.S. Federal Reserve] may become even more aggressive in withdrawing their stimulus package, and that could certainly impact Gold,” Naeem Aslam, chief market analyst at AvaTrade, said. “If we do see an aggressive approach by the Fed, the selloff in equities could continue again and this could be positive for Gold. At the same time, we are seeing consistent improvement in physical demand for gold, which is also providing a support for the price.”
JOBS DATA DISAPPOINTS; GOLD RALLIES AS THE WEEK COMES TO AN END
The Gold price received a boost Friday from the monthly Automatic Data Processing jobs report. Economists were already predicting a disappointing 185,000 jobs to have been added in January due to the weather, but the report showed that just 113,000 jobs were added. The unemployment rate fell to 6.6 percent, however that figure is mostly due to workers dropping out of the labor force altogether. U.S. stock futures turned lower after the release.
Gold is expected to be on set for its sixth week of gains in 2014 after Chinese buyers returned to the market following a holiday. Friday morning, Mitsubishi Corp analyst Jonathan Butler said, “Investors are in wait-and-see mode, with the usual speculation surrounding the U.S. payrolls number … if it's a poor number, Gold might get some strength from it,” and that’s precisely what happened. Butler continued, “But even with a disappointing number, the trend of selling into the rally is likely to remain in place. That said we are now getting close to the $1,270 [per ounce] resistance level and if that is breached on the way up later today, then the next level is probably around $1,300 [per ounce].”
At 5:23 p.m. (ET), the APMEX Precious Metals spot prices were:
- Gold, $1,268.80, Up $9.60.
- Silver, $20.04, Up $0.06.
- Platinum, $1,385.60, Up $8.70.
- Palladium, $710.60, Down $0.70.
For more APMEX reviews of daily and weekly Precious Metals market activities, visit our News and Commentaries page.
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