Daily Gold & Silver Market Report – 01/03/2017

Cassie Bastien

1/3/2017 10:16:00 AM

GOLD SLIPS WITH A STRONG DOLLAR

As the U.S. dollar's positive start to the new year kept pressure on Precious Metals prices, Gold fell Tuesday morning after posting its biggest quarterly loss in more than three years. Jan Harvey with Reuters said, “The themes of late 2016 appeared to be persisting in the wider markets in the new year, with equities bouncing while the dollar posted its biggest rise in three weeks.” President-elect Donald Trump's November victory boosted the dollar, lifting the opportunity cost of holding non-yielding Gold. Saxo Bank head of research, Ole Hansen, said, "The market has carried the theme of higher dollar, yield and stocks into 2017 -- a formidable challenge to Gold. We have plenty of event risks [this] month, with Donald Trump (taking office) on Jan. 20 being the biggest. With exposure cut dramatically, we may see the selling pressure from long liquidation fade as most of the adjustments would have been carried out before year-end." In addition, indications from the U.S. Federal Reserve on further interest rate increases in 2017 are buoying the dollar and pressuring Gold. Harvey said, “A strong start to 2016 meant that Gold still managed to end last year with its first annual gain since 2012, rising 8.5 percent.” Palladium prices rose 20 percent in 2016, its largest annual gain in six years, and was the best-performing Precious Metal for the year.

PLATINUM STARTS THE NEW YEAR WITH A RALLY

Support for Platinum may have been found as the metal rallies Tuesday morning, rising about the 20-day moving average. However, William Adams with BullionDesk.com said, “It would take a move back above $952 per ounce to suggest prices are trending higher again. … Generally strong auto data seems to have been ignored in the second half of the year, with poor jewelry uptake and the Gold price weighing on sentiment. Another bullish feature is that South Africa’s [Platinum Group Metals] output fell 12 percent in the year ending October 2016, according to Statistics South Africa.” A weakened jewelry market may cause depressed sentiment for Platinum prices, though a turnaround in the economic outlook for China, the largest Platinum jewelry consumer, may mean more spending on luxury items. Adams closes by saying, “[Platinum] prices appeared to have formed a base and there is some buying evident today; we wait to see if there is follow-through buying in the days ahead.”

US STOCK FUTURES KICK OFF THE NEW YEAR ON A HIGH

The first trading day of the new year saw increases across the board, with Dow Jones Industrial Average futures advancing by triple digits and U.S. stock futures following a jump in oil prices and upbeat Chinese economic data. Yashaswini Swamynathan with Reuters said, “After coming within a hair's breadth of the historical 20,000 mark in December as part of a post-election rally, the Dow is likely to make a fresh attempt at breaching the milestone on Tuesday.” Swamynathan also reported “Brent crude prices rose more than 2 percent to $58 on Tuesday after a deal among major producers to limit oversupply came into effect on Sunday.” A private business survey showed China's December factory activity picked up more than anticipated, boosting the manufacturing heading into 2017. As President-elect Donald Trump takes office Jan. 20 investors are are watching his noted policy changes. Swamynathan noted, “The markets closed lower on Friday but marked solid gains for the year, surging after Trump victory on bets that he would introduce market friendly policies such as tax cuts and simpler regulation.”

At 11:16 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,158.60 Up $5.10
• Silver, $16.46 Up $0.45
• Platinum, $944.00 Up $39.30
• Palladium, $713.40 Up $29.10

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