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Weekly Gold & Silver Market Report – 8/8/2014

GOLD LOWER ON EARLY STOCK RALLY

The Gold price began the week slightly down as global stocks surged following last week’s downturn.  With geopolitical turmoil in place as the central factor keeping metals prices afloat, many investors continue to ponder the U.S. interest rate scenario.  "Unless there is further serious unrest in any of the trouble spots in the world...we remain pretty much rangebound,” David Govett at brokers Marex Spectron, said.

PRICES ON THE RISE DESPITE FED DASHBOARD

Sara Eisen, writing for CNBC, brings an interesting view on inflation. She points out that now that we have heard the earnings report from more than three quarters of the companies, there is an easy to spot trend. Companies across all industries are raising prices on the consumer. Hershey and Mars are passing along rising costs of cocoa, dairy and nuts to the tune of 8 percent and 7 percent respectively. Kraft is raising prices between 5 percent and 12 percent on beef, turkey, cold cuts, and cheese. Restaurants, airline tickets, coffee, cars, shoes, and soft drinks are all going up. Even Netflix is increasing prices for new subscribers. The bottom line is that no matter what is showing up on the Fed dashboard, prices are going up and inflation is here. If there is a Fed misstep, could it be a golden age for Gold?

MARKET HAS YET TO FULLY REACT TO FEDS PLAN FOR EXITING QE3

Strong earnings boosted stock prices Monday despite sharp drops in the high dividend paying utility stocks. August tends to be a quiet month; so many traders are expecting weaker volumes the next several weeks. “The S&P has had a huge run, and it's earned the right to sit for a bit. The key is to make sure selling remains somewhat contained," Adam Sarhan, chief executive of Sarhan Capital in New York, said. "We're in a very strong bull market right now. Markets may retreat over the next few weeks as traders go on vacation and the Fed continues backing out of its bond-buying program. The real question becomes, will the Fed be able to transition and exit from QE3 gracefully?"

GOLD BACK TO EVEN AS STOCK SELLOFF BOOSTS DEMAND

The Gold price rebounded Tuesday from morning lows as a dip in bond yields pushed the dollar lower and a broad selloff of equities increased demand for bullion.  Though the yellow metal has benefited primarily from the presence of geopolitical turmoil in Ukraine and the Middle East during 2014, economic motivators will ultimately need to facilitate the advance of higher Precious Metals prices.  "We suspect that while political outbreaks provide the occasional jolt, it is the economic crises that seem to have more long-lasting impact,” INTL FCStone analyst Edward Meir, said.  Strong U.S. economic data has been jousting with safe-haven demand gained from crises abroad to keep Gold and Silver range-bound for most of the year.

GOLD JUMPS BACK OVER $1,300 WHILE SILVER CLEARS $20

The escalating situation in Ukraine has put quite a scare in the global equity markets recently while at the same time boosting Gold and Silver.  Gold jumped up 1.6 percent Wednesday and was able to maintain trading throughout the day at that level. It is reported that Russia had placed 20,000 troops on Ukraine’s eastern border and it is anyone’s guess as to what happens next. Also supporting Gold are worries about economic activity in the eurozone. "It’s a safe-haven, flight-to-quality day for gold because of fears in the market caused by lower European stock prices and Putin’s aggressive attitude,” Bill O’Neill, partner at LOGIC Advisors, said.

GOLD HIGHER, STOCKS RETREAT AS U.S. THREATENS FURTHER SANCTIONS ON PUTIN

The Gold price traded higher for the second straight session Thursday as ongoing weakness among U.S. equities increased the safe-haven demand for Precious Metals.  The retreat from stocks into Gold and Silver was partly influenced by escalating geopolitical tension surrounding Ukraine.  As Russian forces mobilize near the border of Ukraine, the U.S. has threatened increased sanctions on Russia.  The rise in crises in the Middle East and Ukraine has been the sole motivator of a higher Gold price this year.  The yellow metal has risen 9.2 percent year-to-date while upbeat economic factors have done much to quell any significant upward momentum for Precious Metals.

GOLD WAVERS AS GOOD NEWS IN UKRAINE BALANCES AIRSTRIKES IN IRAQ

Gold and Silver came off strong following early morning rallies Friday; while stocks reacted favorably on news the U.S. would begin military strikes in Iraq. Tensions appeared to be easing in Ukraine and the U.S. involvement in Iraq may be less than first anticipated. "Iraq is a tragedy, but [President Barack Obama] made clear our engagement is going to be limited. While the markets always sell off immediately in the face of uncertainty, it doesn't take long to realize this airstrike against ISIS (Islamic State in Iraq and Syria) doesn't change the geopolitical picture in any significant way," J.P. Morgan Funds chief market strategist David Kelly said.

At 4:40 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,312.00, Down $0.50.
  • Silver, $19.99, Down $0.02.
  • Platinum, $1,478.80, Down $2.70.
  • Palladium, $863.80, Up $6.70.

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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