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Weekly Gold & Silver Market Recap – 8/23/2013


Gold was flat for the majority of Monday after seeing substantial gains the week prior due to monetary policy concerns, technical buying and further inflows to bullion-backed ETFs. The Gold price had jumped 8 percent over the last nine sessions while Silver rose roughly 13 percent last week, giving it its strongest week since September 2008. The week had many investors closely scrutinizing Wednesday’s release of the U.S. Federal Reserve minutes from July’s policy meeting to gain further insight into possible plans for the future of quantitative easing (QE). “Our economists expect the minutes to reveal that the committee members viewed the improvement in labor markets and reduced downside risk as sufficient to signal that should the current trends continue, many on the committee stand ready to reduce the pace of asset purchases in September,” Barclays said in a note.


Investors are returning to Gold as analysts predict a very optimistic outlook for the metal. JPMorgan analyst, John Bridges, stays true to the yellow metal and suggests that Gold should be part of a portfolio, especially if someone is not confident in their currency. “We feel that there's at least a technical bounce here,” he said, adding, “If you're still uncertain about whether the financial crisis is truly over, then having some Gold in the portfolio makes a lot of sense.” Bridges went on to say, “Gold is not an investment. Gold is a wealth-protection device. Gold does not increase in value over the long term. It holds its value over the very, very long term."


On Tuesday, Gold, known as an alternative investment for some, continued to trend upward for the fourth time in five sessions due to a weaker U.S. dollar. The market patiently waited for the Federal Open Market Committee meeting minutes, which was sought after to possibly provide more insight into the Fed’s plans to taper fiscal policy. The speculation of when the Fed will cut back its monthly bond buying program has been a key topic, and the majority of investors believe it may be as soon as September.  The thought was that the minutes would confirm the forecasted date.


As expected, the release of July’s Federal Reserve policy minutes failed to stimulate Precious Metals prices in any significant way. Since Fed-centric news began dominating financial headlines several months ago, it may be time to start wondering if the impact of reducing the Fed’s quantitative easing (QE) program is already priced into metal’s markets. “Gold dipped briefly in reaction to the minutes but quickly rebounded to set new intraday highs,” one market analyst said. Gold has rebounded significantly from lows reached in June but the price is approaching technical resistance levels in the $1,375 to $1,425 per ounce range. If tapering of the $85 billion in monthly mortgage-backed and treasury securities commences during the third quarter as many market experts predict, it will be interesting to see how Precious Metals prices react.


Thursday, Gold remained relatively flat as low volume and lack of investor commitment ahead of the highly anticipated Fed stimulus tapering kept Precious Metals trading in a tight range. The price plunge that saw Gold retreat to lows below $1,200 per ounce in late June has initiated a bevy of physical buying in India and China. Both nations traditionally represent the largest buyers of Gold jewelry, bars and coins, and the price retreat has further incentivized this demand among two investment cultures that view Gold as the conventional method of preserving wealth. Since reaching its low point, the Gold price has rallied 16 percent. Many economists and analysts are now predicting prices to rise through the end of the year as outflows of Gold-backed ETFs slow and strong physical demand endures. JPMorgan Chase & Co. and Bank of America have both increased their 2013 projections for Gold, with the latter forecasting an average price of $1,495 per ounce during the fourth quarter.


As the week came to an end, Precious Metals jumped after government data showed new-home sales were weaker than expected, which caused U.S. stocks and the dollar to immediately fall. The news added to analysts’ speculation that the Federal Reserve will continue their bond buying program, which provided Gold a gain of nearly 2 percent.  “The new home-sales data tells us that all is not well with the economy, and the Fed needs to continue to support growth,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “The housing recovery is an important thing that the Fed will be looking at when it makes its decision on the timing of the tapering.”

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

  • Gold, $1,398.30, Up $25.50.
  • Silver, $24.11, Up $1.01.
  • Platinum, $1,541.00, Down $0.10.
  • Palladium, $752.60, Down $3.90.
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APMEX 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. 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 Market Reports are not intended as a comprehensive discussion and there may be other factors affecting the financial marketplace. These Market Reports are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, purchase or sell any Precious Metal product. All orders, purchases and sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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