Weekly Gold & Silver Market Recap – 6/20/2014

Ted Prince

6/20/2014 3:53:00 PM

Precious Metals prices remain flat Friday but will end the week substantially higher thanks to Thursday’s surge, which caused Gold’s largest rally in four months.  Amid a Federal Reserve commitment to low U.S. interest rates and the fear of another entry into the military quagmire in Iraq, American investors heavily increased positions in Gold Thursday, pushing the metal up more than $45 to end the day.  Aside from this, the last couple weeks have witnessed very little movement.  Record low trading volumes coupled with a lack of economic headlines have kept Gold and Silver locked into a relatively narrow price range.  Analysts and financial experts are still anxious about a stock market correction and slowed U.S. economic growth in the coming years.  Such concerns are causing many formerly sidelined investors to seek the safe-haven appeal offered by Gold and Silver. 

Gold had its best day in more than eight months Thursday as prices hit two month highs. Silver was also up as high as 5 percent. Rising prices were fueled by continued conflicts in the Middle East and the Federal Reserve’s indication that interest rates will remain low for a long time. "The Fed statement and geopolitical tensions sparked a frantic reversal in market sentiment. Investors are now bullish instead of bearish on Gold," RJ O’Brien senior commodities broker Phillip Streible said. Platinum and Palladium prices also shot up as South African mining strike negotiations broke down.

With Gold making such a drastic single day movement, some professional investors such as George Gero, Precious Metals strategist at RBC Capital Markets, believe large investment entities will take notice and begin increasing positions in Gold.  “I don't think it's a one-day movement. I think such a sharp one-day movement is a signal. I think the institutions are making note of it. I think they've been underinvested," Gero said.  The Federal Reserve’s monthly summit ended Wednesday with comments that proved bullish for some Gold investors.  Thursday’s market open saw a $500 million position taken, giving the price an initial boost that precipitated ongoing Gold futures buying throughout the day.  With a sudden onset of price volatility, investors kept a watchful eye on Gold and Silver markets.

The Gold price was flat to start the week but heightened turbulence in Iraq caused some investors to seek asylum in the form of Precious Metals. “Some people see the need for Gold, as there has been a breakdown of international agreement in Ukraine and as the situation in Iraq worsened,” Jeffrey Christian, managing director at CPM Group Inc., said.  To start the week, Gold remained range-bound over the previous weeks as trading was down more than 25 percent and headlines failed to oust the yellow metal from its price pattern.  Geopolitical turmoil and an ongoing stock market surge were acting as opposing forces, struggling to influence short-term Precious Metals prices.

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

• Gold, $1,317.20, Up $1.10.
• Silver, $21.95, Up $0.24.
• Platinum, $1,459.80, Down $16.70.
• Palladium, $822.30, Down $16.30.

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