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Weekly Gold & Silver Market Recap – 11/8/2013


Loose monetary policy remained the focus of Gold traders at the beginning of the week as rumors surrounding possible monetary easing measures in the eurozone helped lift the yellow metal on Monday. The news that the European Central Bank (ECB) might begin its own stimulus program arrives on the heels of speculation that the Federal Reserve could initiate tapering measures as early as December. "The (U.S.) central bank is keeping markets guessing. Now December is back on the agenda," Societe Generale analyst Robin Bhar said. "I think it's unlikely, but the Fed statement and thinking suggests they haven't completely ruled that one out. That's really impacting the market, as well as the turnaround in the euro/dollar.” As equities markets continued to notch record levels, short-term ETF traders remained bullish on Gold leaving physical buyers to await new direction on central the bank monetary policy.


Gold bug and Euro Pacific Capital chief executive officer Peter Schiff remains overly optimistic for the yellow metal, predicting that Gold will soar to $2,000 an ounce within a year. He added that he would “be amazed” if the dollar didn’t collapse before President Barack Obama’s departure from the White House in 2017. “I’m waiting for the dollar crash, I’m waiting for the real crisis to hit that I know will benefit Gold,” Schiff said. “The longer it takes, the longer I have to wait for that payday. But the longer it takes, the bigger that payday is going to be.”


The Gold price fell slightly Tuesday to reach a two-week low as U.S. service industries grew fast enough to influence Federal Reserve officials to potentially begin tapering its quantitative easing measures. “The better-than-expected ISM number increases speculation whether tapering will begin in December or not,” R.J. O’Brien & Associates senior commodity broker Phil Streible said. Strength in the U.S. dollar versus other leading world currencies along with bearish sentiment among short-term investors continues to put pressure on Precious Metals prices.


Gold jumped on Wednesday as a weaker U.S. dollar helped curb the metal’s recent losing streak. Expectations that the U.S. Federal Reserve will continue its quantitative easing program well into 2014 has put pressure on the dollar and helped boost Precious Metals prices. "The relative weakening of the dollar is giving some support today but... if the non-farm payrolls come in better than expected on Friday, then we could see gold lose that support," Mitsubishi analyst Jonathan Butler said. Economic reports, such as the non-farm payroll numbers, are being closely examined as prime indicators of forthcoming Fed monetary policy. Upbeat data could influence Fed officials to begin scaling back pro-gold stimulus measures.


On Thursday a flurry of economic news caused the U.S. dollar to strengthen against the euro, in turn causing Precious Metals prices to fall. The fact that new jobless claims fell less than expected wasn’t enough to offset other news, even though the level of claims is still higher than end-of-summer levels, which suggests a weakening labor market. The U.S. gross domestic product rose by 2.8 percent in the third quarter, which is the biggest increase in 18 months. The dollar’s largest boost, however, came from the eurozone. The European Central Bank announced that it would cut its interest rate to a record low 0.25 percent, a move which brought the euro down against the dollar.

Some analysts suggested Friday’s U.S. nonfarm payrolls report would be a major factor in the Gold price’s movement. Credit Suisse analyst Karim Cherif said, “A negative footprint would re-launch a discussion on when Fed tapering will start.” Saxo Bank’s Ole Hansen pointed out that quantitative easing measured across the world appears to be more important to the Gold price than the dollar’s strength. He said, “We now have easing bias in all of the three major centers (Japan, Europe and the United States) and that could further delay any talk of tapering in the U.S., hence the support for Gold.”


Oil prices hit a four month low on Thursday while U.S. and foreign stocks also struggled. Speculation that the Federal Reserve may begin to taper its quantitative easing program earlier than anticipated along with ECB’s continued struggles are beginning to affect the market. “This morning's GDP report sent the dollar surging, and anything commodity-based that was dollar-related just turned and headed south,” Windham Financial Services chief investment strategist Paul Mendelsohn said. “That just rolled over into the rest of the (stock) market.”


The U.S. nonfarm payrolls report shocked economists Friday morning as it showed 204,000 jobs added in October. Expectations were relatively low for the jobs report, as many expected the government shutdown in October to negatively affect hiring that month. Precious Metals prices and U.S. stock futures turned negative after the report’s release, as positive economic news could lead to tapering of the U.S. Federal Reserve’s highly-accommodative quantitative easing program. Meanwhile, the unemployment rate rose 0.1 percent, and the Fed has heavily weighed that figure in the past.


The Gold price headed for a second-straight week of losses, even after news that the European Central Bank was further loosening monetary policy. One thing hurting the Gold price is that the U.S. dollar is nearing a seven-week high. VTB Capital analyst Andrey Kryuchenkov said, “The market is today trying to consolidate and … we will probably hold here with support at $1,300 [per ounce] and then $1,270 [per ounce].”

At 4:34 p.m. (ET), the APMEX Precious Metals spot prices were:

  • Gold, $1,289.80, Down $20.70.
  • Silver, $21.54, Down $0.17.
  • Platinum, $1,446.20, Down $11.60.
  • Palladium, $759.60, Down $0.50.

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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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