Weekly Gold & Silver Market Recap – 9/6/2013
SILVER SHINES AHEAD OF ECONOMIC DATA
Although the week was short due to the Labor Day holiday, Precious Metals experienced an extraordinary few days with large movements in price as concerns grew regarding geopolitical tension in Syria. On Tuesday, safe haven appeal directed investors to Precious Metals as Silver received a three percent jump during morning trading. “The rise in Gold prices was mainly due to safe-haven demand after Israel test-fired rockets in the Mediterranean Sea,” Chintan Karnani, chief analyst at Insignia Consultants in New Delhi, said. Karnani added “There are concerns that there could be indirect forms of attack on Syria before the U.S. congress [meets] next week.” Congress is expected to vote the week of September 9-13 over the next necessary military measures for the current situation in Syria.
MARKET ANTICIPATES RELEASE OF WEEKLY ECONOMIC DATA
Analysts patiently waited for the week’s economic data to be released to provide signs of direction for the U.S. economy. Mitsubishi analyst Jonathan Butler said, “The biggest story is certainly the non-farm payrolls data at the end of the week, where a strong number will certainly weigh on Gold, as this will give more clues about the timing of tapering. We are again seeing some safe-haven buying related to geopolitical concerns after the Israeli missile news but the long-term story is still the macro economic situation and Gold's role as a hedge against that uncertainty.” The market anticipates the upcoming Federal Reserve two-day policy meeting for clues on tapering which begins Sept. 17.
PRECIOUS METALS RECEIVE HEAVY PROFIT TAKING
Wednesday morning, investors began profit taking from Tuesday’s gains causing some movement in price. The conflict in Syria remained to be the focus for investors and analysts, although Precious Metals prices appeared to be the victim of profit-taking. On Tuesday, HSBC analysts wrote that “the potential for Mideast tensions to intensify would be bullish for bullion. A key reason for Gold to rally in response to Mideast tensions is the potential for oil-supply disruptions that a U.S. strike or an escalation of the conflict may trigger. In order for Gold to build on recent gains over $1,400/ounce, oil prices also have to remain strong, we believe. A relaxation in oil prices — for whatever reason — could also undermine Gold.”
ECONOMIC DATA BOOSTS DOLLAR, WEIGHS ON GOLD
The Gold price fell on Thursday once again as a stronger U.S. dollar weighed heavily on Precious Metals prices following positive economic reports. Though Gold tends to be sought as an asylum for nervous investors in times of turmoil, the Syrian conflict seems to be having less impact on markets than Thursday’s strong employment numbers and concern surrounding Fed stimulus tapering. As Gold began falling for the fifth session out of the last six, many analysts and investors were anxiously pondering the upcoming September Federal Open Market Committee meeting. As employment numbers continue to improve, many wonder if the strides that the U.S. jobs market has made will be substantial enough for the Fed to begin reducing the current level of monthly asset purchases. It is speculated if the amount of jobs created came in at roughly 100,000 it could “prompt markets to reduce the probability and the size of a September tapering, which could well send Gold toward $1,488 an ounce,” TD Securities said. “Conversely, a print above 200,000 would do the opposite, with prices moving toward $1,325 an ounce.”
WEAK JOBS REPORT BOOSTS METAL PRICES
Precious Metals prices peaked sharply on Friday after a weaker than expected government jobs report came out. Gold finished the week lower after a combination of Fed tapering fears and stalled momentum regarding the Syrian conflict continued to be the prime motivators of price action. “At the moment it is Syria versus quantitative-easing tapering and this is what is driving the market,” David Govett, head of Precious Metals at Marex Spectron Group in London, said.
At 5:15 p.m. (ET), the APMEX Precious Metals spot prices were:
- Gold, $1,390.50, Up $15.50.
- Silver, $23.88, Up $0.61.
- Platinum, $1,493.40, Up $10.30.
- Palladium, $695.70, Up $9.50.
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