Daily Gold & Silver Market Report – 01/05/2017

Cassie Bastien

1/5/2017 10:59:00 AM

GOLD HOLDS ITS GROUND AT MORE THAN 3-WEEK HIGH

Gold futures held their ground Wednesday at an over-three-week high as the U.S. dollar fell from a 14-year high after the release of the Federal Reserve’s December meeting minutes. Markets and Commodities’ reporters Myra Saefong and Mark Decambre with MarketWatch said, “Minutes from the central bank’s policy-setting meeting showed that Fed officials saw the possibility that they might have to raise interest rates faster than the ‘gradual’ pace that they have stressed for some time. … Higher interest rates can be a negative for Gold, which tends to benefit from looser monetary policy, but the U.S. dollar extended its decline after the minutes, offering dollar-denominated Gold some support.” Saefong and Decambre report Gold for February delivery was at $1,165.30 an ounce just after the release of the minutes, which according to FactSet is its highest finish since December 12. iiTRADER Chief Market Strategist Bill Baruch told MarketWatch shortly after the Fed minutes, “There is a nice mix of uncertainty and concern on economic conditions moving forward and this should help keep a bid under Gold.” Futures prices are staging a mini rally, rising in six of the last seven sessions “in the wake of a downtrend in December sparked by expectations that [President-elect Donald] Trump will work to enact policies that may be bullish for stocks but less favorable to assets that are considered havens, like Gold,” Saefong and Decambre write. “Some market researchers believe bearish bets that the yellow metal will fall further amid anticipations of further strength in equities are overdone, which may set the stage for a rebound in the Precious Metal.” Founder of GoldForecaster.com, Julian Phillips, said in a Wednesday research note, “It does look like Gold prices are no longer headed lower so we do expect a more vigorous response in the Gold price as the market is overhung with huge short positions in the futures and options markets.”

A PROMISING YEAR FOR THE SILVER INVESTOR

While Gold often gets the hype, CommodityTradeMantra.com says Silver will be a better bet in 2017. As the Silver supply has failed to keep up with demand for much of the past decade, the market continues to tighten. James Burgess reports Silver demand is up more than 35 percent since 2009, while supply grew by a little more than 10 percent. And, Burgess notes, “with Silver consumption set to expand indefinitely, the supply deficit will continue to put upward pressure on prices in the years ahead. … In the pre-bullish environment, investors will be looking to developers in the right place at the right time who can cash in on low-cost mining to scoop up and develop new pure play properties.” Burgess believes low-buying opportunities will diminish once undervalued Silver starts climbing higher and capital starts pouring in.

WORLD STOCKS HIT 1 1/2 YEAR HIGH

Following strong Chinese economic data, world stocks hit their highest level since mid-2015, adding to optimism about global growth and inflation, which has driven markets since the start of the new year. A private sector survey shows Chinese service sector growth rose to a 17-month high in December. Investec economist Victoria Clarke said, “While I am always cautious about December data because of seasonal factors, we certainly have seen across the board positive [Purchasing Managers’ Index] data in Japan, China and the UK as well this morning.” Since the November election of Republican Donald Trump, stocks and bond yields have continued to rise. Clarke said, “There seems to be a continuation of the Trump momentum we saw in December, and this promises to be the prevailing mood until we get into the detail of what Trump will actually do and the battles he may have with Congress.” Reuters’ Abhinav Ramnarayan said, “With just two weeks to go before Trump takes over, investors and policymakers are waiting to see if his actions match his rhetoric and if his policies will be approved by Republican lawmakers. … China stepped into both its onshore and offshore yuan markets to shore up the faltering yuan for a second day on Wednesday, sparking speculation that it wants a firm grip on the currency ahead of Trump's inauguration.”

At 11:59 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,185.40 Up $18.20
• Silver, $16.70 Up $0.12
• Platinum, $975.10 Up $28.90
• Palladium, $735.20 Down $4.60

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