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Weekly Gold & Silver Market Recap – 4/4/2014

GOLD SOFTENED BY STOCK RALLY

A rally in U.S. equities quelled the safe-haven demand for Gold Monday, pushing the yellow metal to its lowest level in six weeks. “The rally in the equity market is keeping prices under pressure,” George Gero, a vice president and Precious Metal strategist at RBC Capital Markets, said. “The market players have been nervous ever since the [U.S. Federal Reserve] spoke about higher interest rates.” Though Gold has rebounded nearly seven percent since the beginning of the year, the expectation for softer monetary easing measures and higher interest rates have put pressure on the metal in the last couple of weeks. Traders and investors will continue monitoring macroeconomic data in an effort to reveal signs of Gold’s short-term trajectory.

FED CHAIRMAN YELLEN: WE ARE IN IT FOR THE LONG HAUL

Federal Chairwoman Janet Yellen spoke in Chicago on Monday, saying, the “labor conditions are tougher than in other recessions.” She added the Fed's "extraordinary commitment [in the form of massive bond-buying and ultra-low interest rates] is still needed, and will be for some time." In a prior speech given by Yellen, investors read indications that she was considering earlier than expected interest rates hike. Monday’s speech has tempered that thought. Gold and Silver prices first retreated on the news of this, but soon after rebounded. However, the U.S. dollar and bonds dropped while the stock market held on to initial gains.

STOCK RALLY WEIGHS ON GOLD

The Gold price continued to come under pressure Tuesday as an ongoing rally in equities forced the yellow metal down slightly.  As tensions ease in Ukraine and the S&P 500 reached another all-time high, little was able to halt Gold from settling near its lowest price in seven weeks. Though it appears the short-term appeal of Gold has softened among exchange-traded investors, price pullbacks have historically created strong buying among long-term bullion buyers. Gold remained up over eight percent year-to-date and will look for fresh motivators to drive the price higher in the coming weeks.

AUTOMOBILE DEMAND MAY DRIVE PLATINUM, PALLADIUM HIGHER

According to U.S. Global Chief Investment Officer Frank Holmes, Platinum and Palladium may be the solutions to the pollution problem as these two metals are the two most underreported commodities. He stated that the long-term upside is tremendous, as the automobile industry expands in China and other underdeveloped countries. Both metals can be used in catalytic converters of automobiles to aid in clean air emission. They are also used in other clean air and clean water technologies. Palladium prices have risen since the Ukrainian crisis as Russia controls 40% of the world’s Palladium. There are concerns about the stability of supply that could continue to drive up prices. “Overall, we continue to expect limited releases from Russian state stocks this year and reiterate our expectation for the palladium market to deliver a sizable deficit in 2014," Barclay’s Precious Metals analyst Suki Cooper said.

PRECIOUS METALS PRICES ARE ON THE RISE

Precious Metals prices were all on the upswing Wednesday despite a positive jobs report. Rising metal prices can most likely be attributed to Fed Chairwoman Janet Yellen’s statement on Monday that the Fed was into quantitative easing (QE) for the long haul. Dennis Gartman, author of The Gartman Letter, said, “I’ve been at this 40 years, and I've learned one thing: Don't fight the Fed. If you do, it's a losing battle. They have a bigger margin account than you or I will ever dream of having, and they're continuing to fund your margin account." The loose monetary policy supported by the Fed has been bullish for both Precious Metals and equities markets.

GOLD LOWER AHEAD OF JOBS DATA

Precious Metals gave up Wednesday’s gains in overnight trading, which could be a sign of further buying opportunities for the metals. MKS SA head of trading Afshin Nabavi said, “The potential for Gold prices to move lower in the next couple of sessions seems greater now because of the incumbent macro events. Although the [European Central Bank] is unlikely to change the interest rates, there may be something at the press conference, which could eventually push the euro/dollar lower. And a stronger U.S. jobs number [Friday] will be seen as the final sign that previous weakness in the data was down to bad weather and that the economy is on the recovery path.”

GOLD, SILVER UP ON JOBS REPORT

Gold and Silver prices were pressured this week but jumped up Friday during morning trading due to the declining prices holding against technical levels and the weaker than expected jobs report. “For two days in a row, Gold’s been trying to break below $1,280 [per ounce] and each time fails, that’s why the market is a bit higher,” Afshin Nabavi, a senior vice president at bullion refiner MKS in Geneva, said today by phone. “A few buyers have orders around that area. The jobs numbers are very important.”

The U.S. jobs report was released Friday, which showed 192,000 jobs added in March rather than the expected 200,000. Gold prices immediately jumped over $1,300 [per ounce] and Silver prices climbed back above $20 [per ounce]. The unemployment rate held at 6.7 percent. A separate measure that also includes discouraged and underemployed actually rose slightly to 12.7 percent. Although the report missed the expectation of 200,000 new jobs with unemployment of 6.6 percent, most economists will view this as a continued slow recovery. Gold investors were closely watching the jobs report, as a positive report was expected to be bearish for Gold. Today’s jump in prices indicate Gold investors have a less positive view of this Friday’s jobs report.

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

  • Gold, $1,303.80, Up $17.70.
  • Silver, $20.01, Up $0.15.
  • Platinum, $1,448.60, Up $3.10.
  • Palladium, $791.80, Up $2.00.

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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