Daily Gold & Silver Market Report – 12/09/2016

Cassie Bastien

12/9/2016 10:36:00 AM

INVESTORS ARE NOT JOINING THE RALLY

The stock market’s relentless surge is still causing a fair amount of discomfort in the investor world. Instinet’s Frank Cappelleri says, “there is getting to be a shortage of superlatives for this market,” and it shouldn’t be acting the way it is just yet. Trying to console the bears, Cappelleri says, “It won’t last into perpetuity, but this is the kind of behavior that happens in uptrends.” Victor Reklaitis with MarketWatch said 43.1 percent of respondent on this week’s American Association of Individual Investors (AAII) survey were bullish, which is down from 49.9 percent in late November. The last time more than half of individual investors were bullish was at the start of 2015, which is why Bespoke Investment Group views individual investors as not on board with this rally. Reklaitis writes, “you could also argue retail investors are showing some real cheeriness, given that AAII figure is holding above 40 percent for a fourth-straight week, for the first time in about two years.”

EVERYTHING IS AGAINST GOLD

In its longest run since November 2015, spot Gold is heading for a fifth consecutive weekly loss as the Federal Reserve gears up to increase interest rates while record levels of U.S. equities lure money out of safe-haven investments, like Gold, and fund holdings fade. According to a Bloomberg report, “assets in bullion-backed exchange-traded funds contracted for a 20th straight day as of Thursday, the longest stretch since May 2013.” As investors try to speculate the Fed’s move at next week’s meeting, Gold is ending the year on the ropes. Eddie Van Der Walt and Susanne Barton with Bloomberg write, “The S&P 500 and the Dow Jones Industrial Average are at all-time highs amid speculation President-elect Donald Trump’s policies will spur growth. Investors are also assessing the European Central Bank’s decision on Thursday to tweak its bond buying.” ICBC Standard Bank Plc Head of Precious Metals Strategy Tom Kendall says the yellow metal is “getting hit from all directions. We have very weak physical markets, we’ve had this surge in bond yields and equities, ETF outflows and talk of Trump’s fiscal stimulus, all of which conspired to push down prices.” Barnabas Gan, an economist at a Singapore-based Oversea-Chinese Banking Corp., sees Gold continuing to lower, saying, “With the U.S. Fed most likely to raise interest rates next week by 25 basis points, the firmer dollar is a very, very strong factor to limit any rally.”

SILVER HEADED FOR FIRST WEEKLY GAIN SINCE BEFORE ELECTION

Silver spot prices “were on track to book solid weekly gains as investors look ahead to an upcoming meeting of the Federal Reserve,” but instead slipped early Friday morning, according to Sam Bourgi with Economic Calendar.com. He continued, “Silver is on track for a weekly gain of around 3%, as prices rebounded from nearly six-month lows. That would mark the metal’s first weekly gain since before the November 8 presidential election.” As investors looked ahead to the December 13-14 Federal Reserve policy meeting, the U.S. dollar was back on the offensive Friday, raising the dollar index 0.5 percent to 101.55. “The dollar has now gained in three consecutive sessions, offsetting a previous slump that sent the currency to three-week lows,” Bourgi said. Data from the CME Group show traders feel there is a 95 percent probability the Fed raises interest rates Wednesday.

At 11:36 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,214.80 Down $8.00
• Silver, $16.64 Down $0.08
• Platinum, $931.00 Down $25.10
• Palladium, $726.00 Down $2.80

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