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Weekly Gold & Silver Market Recap – 3/28/2014

GOLD FALLS ON STRONGER DOLLAR

Gold ended Monday down nearly two percent as investor concerns grew over rising U.S. interest rates. The market turned somewhat bearish last week after Federal Reserve Chairwoman Janet Yellen stated the Fed’s plan to end its monthly bond buying program and possibly raising interest rates shortly after the current fiscal policy ends. "Momentum investors are capitalizing on the concern over a stronger dollar and rising interest rates by the end of the year," Sica Wealth chief investment officer Jeffrey Sica said. This week investors were still attempting to digest last weeks Fed announcement and deciding on their best option to profit from the news.

ECONOMISTS BELIEVE IMPROVEMENT COMING

Economists have remained optimistic for U.S. economic growth this year. Although the first quarter reflected a weak growth rate of 1.9 percent, it has been forecast that it could exceed three percent by year’s end. All updated forecasts have surpassed previous predictions, such as U.S. economic growth reaching 2.8 percent and consumer spending to increase to 2.6 percent. "Conditions in a variety of areas — including labor, consumer and housing markets — are expected to improve over the next two years, while inflation remains tame," National Association of Business Economics President Jack Kleinhenz said.

GOLD DEADLOCKED ON YELLEN COMMENTS AND UKRAINE RISK

The Gold price was relatively flat Tuesday as escalating tension in Ukraine stalled the dip the yellow metal experienced since the latest Federal Open Market Committee Meeting. “There is some safe-haven buying because of Russia,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates, said. “We could also see some increase in physical demand after the big price drop.” Precious Metals investors are at an impasse regarding the current trajectory of Gold and Silver. Although safe-haven demand for Gold is currently being spurred by geopolitical concerns, pro-dollar comments from Fed Chairwoman Janet Yellen regarding monetary stimulus and higher interest rates are also weighing on metals.

U.S. STOCKS JUMP AFTER OPTIMISTIC ECONOMIC DATA

U.S. stocks rose Tuesday after reports showed consumer confidence reached its highest level in six years. “Things don’t look spectacular here, but they look OK,” Curtis Holden, a senior investment officer at Tanglewood Wealth Management, said. “The U.S. economy seemed to have cooled off from the pace it’s on toward the end of last year. There may be a little relief recently that things may be stable here.” As the Federal Reserve continues to scale back its level of monthly stimulus injections, U.S. equities will begin to rely more and more on traditional market motivators and less on the asset purchase program.

GOLD BUOYED BY CHINESE DEMAND

The Gold price fell Wednesday as a stronger U.S. dollar further pressured the yellow metal. However, Gold remained above the technical level of $1,300 per ounce as robust demand from China and the prospect of a European Central Bank stimulus helped buoy Precious Metals from further experiencing further losses. The recent price pullback has influenced sidelined investors to re-enter the Precious Metals market. “Those investors that had patience and didn’t chase prices in January and February have now got their buying opportunity,” Ken Ford, founding partner at Warwick Valley Financial Advisors, said.

TECHNICAL SELLING BROUGHT GOLD BELOW $1,300

Precious Metals prices continued to move lower Thursday as the Gold price lost support at the $1,300 per ounce mark for the first time in six weeks. VTB Capital analyst Andrey Kryuchenkov explained that technical selling is a large part of why Gold fell Thursday, saying, “Stops (were) triggered below $1,300 [per ounce]. There’s been some continuous speculative profit-taking as bullion remains under pressure from easing geopolitical tension and long liquidation after the early 2014 uptrend broke.”

All eyes are on economic data for clues on Gold’s next move. Lately, each set of positive data has knocked Gold’s price down slightly; however, Thursday’s release seemed to have little impact. The weekly jobless claims report showed a drop of 10,000 to the lowest level in four months. The third and final revision to fourth-quarter gross domestic product showed upward movement as well, from 2.4 percent to 2.6 percent.

GOLD REMAINS BELOW $1,300 ON DECLINING TENSIONS

Gold and Silver prices remained below the $1,300 per ounce and $20.00 per ounce levels respectively throughout Friday trading. VTB Capital analyst Andrey Kryuchenkov said, “Considering that geopolitical tensions have somewhat abated and risk sentiment has improved after good U.S. data, you will barely see any safe-haven buying at this point and there is nothing to hold Gold up. … If we don't close below $1,290 today, we could see some consolidation around these levels ahead of the ECB on Thursday and the U.S. nonfarm payrolls on Friday.”

At 5:15 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,296.40, Down $0.30.
  • Silver, $19.87, Up $0.13.
  • Platinum, $1,411.90, Up $12.70.
  • Palladium, $775.50, Up $15.00.

For more APMEX reviews of daily and weekly Precious Metals market activities, visit our News and Commentaries page.

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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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