Weekly Gold & Silver Market Recap – 9/13/2013
SYRIAN CONFLICT, FUTURE FED MEETING STRESS METAL PRICES THROUGHOUT WEEK
As the week began, there were strong factors affecting Precious Metal prices such as the possibility of military action against Syria and the upcoming Federal Reserve meeting, which could provide a date to taper fiscal policy. Monday prices remained flat as the market prepared for additional information regarding how the U.S. would approach Syria. President Barack Obama attempted to encourage Americans to have confidence in the decision for military action against Syria, as addressed the nation Tuesday. Syrian President Bashar al-Assad delivered a direct threat through a CBS interview broadcast Monday confirming that consequences from a U.S. strike could provoke terrorist attacks. “You should expect everything,” Assad said. “Not necessarily from the government. The government is not the only player in this region. You have different parties, you have different factions, you have different ideology.” Commerzbank shared their strong belief the Fed may announce a date to taper monetary policy as early as the next policy meeting. “The idea that an exit from ‘QE3’ might begin next week is by no means off the agenda yet in the eyes of market participants, which is likely to make it difficult for Gold to rise above the $1,400 per troy ounce mark in any lasting fashion over the next few days,” Commerzbank commodity analysts wrote.
STRONGER U.S. DOLLAR MOVES PRECIOUS METALS
On Tuesday, Precious Metal prices dropped as the U.S. dollar began to trade higher after U.S. Secretary of State John Kerry stated if Syria gave up its chemical weapons, it could avoid a military strike. With tensions temporarily eased, Gold and Silver prices fell when Russia publicly supported the proposal, which would be a “breakthrough,” according to President Barack Obama.
PRESIDENT ADDRESSES NATION, SOOTHES SYRIAN CONCERN
Gold experienced a 1.6 percent drop Tuesday as the pressure for military conflict diminished and Gold’s safe haven appeal slightly diminished. The Gold price traded mostly flat Wednesday while Silver, Platinum and Palladium prices gained some lost ground after President Barack Obama’s speech on Syria Tuesday evening. Obama said he would explore the Russian-supported diplomatic solution of Syria giving up its chemical weapons. Danske Bank analyst Christin Tuxen said, “The fact that the Syrian situation is all back to a diplomatic solution is something that is not really supporting Gold or crude oil right now and the moves lower seen in the past sessions were merely due to that.”
POSITIVE ECONOMIC DATA PUSHES PRICES DOWN
Gold and Silver prices fell Thursday morning, as another round of uplifting economic data had most analysts convinced the Federal Reserve will likely announce an initial reduction in the level of monetary easing. “Today’s data is another nail on the coffin, and people expect the announcement on tapering to come next week,” Frank McGhee, head dealer at Integrated Brokerage Services LLC, said. Gold futures fell more than 2 percent as tapering expectations gave way to an onslaught of selling once the price broke below key technical levels. Sharps Pixley CEO Ross Norman said, “With things quieter on the Syria front and really not much to add on taper, the market is behaving quite technically just now and traders very much studying the charts.” Investors and analysts will continue to look to the next Fed policy meeting to see if Gold can hold above new support levels should an announcement of asset purchase tapering be declared.
DATA WATCHING CONTINUES TO PROVIDE PRESSURE
Precious Metals prices continued their downward trend Friday. Gold was down 5.4 percent for the week and suffered its worst week since June. Heavy selling linked to quantitative easing expectations and the situation in Syria affected prices and many believe the Federal Reserve’s next chairman announcement will also affect prices. Managing director of IDEAglobal, Mike Gallagher, said, “In the coming months given that the new Fed chairman starts in January, the [former Treasury Secretary Lawrence] Summers effect, if it is announced, could be as dominant (as the Fed's tapering decision).”
At 5:15 p.m. (ET), the APMEX Precious Metals spot prices were:
- Gold, $1,329.60, Down $3.00.
- Silver, $22.31, Up $0.14.
- Platinum, $1,455.00, Up $11.30.
- Palladium, $701.50, Up $9.70.
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