Daily Gold & Silver Market Report – 01/06/2017

Cassie Bastien

1/6/2017 10:48:00 AM

GOLD SLIPS FROM 1-MONTH HIGH

Gold slipped Friday after reaching a one-month high touched Thursday as traders cut bets on higher prices ahead of the U.S. jobs report. Reuters reporter Peter Hobson said, “The [yellow] metal was still 2.2 percent higher this week, its biggest weekly rise in two months, helped by a broad weakening of the dollar and a retreat in U.S. bond yields.” Saxo Bank analyst Ole Hansen said, “Any profit that can be booked at this early stage is welcomed by most, so that's why we're seeing a scaling back a bit.” Investors had been focused on U.S. non-farm payrolls data, which showed 156,000 jobs added in December, lower than the projected 178,000. Negative data usually boosts Gold prices, however, the Federal Reserve has indicated it will continue with further 2017 interest rate hikes. Hobson says, “Higher interest rates exert downward pressure on the gold price by increasing the opportunity cost of holding non-yielding bullion.”

PALLADIUM OUTPERFORMS OTHER PRECIOUS METALS

With the best performance among Precious Metals, Palladium is starting 2017 with a bang. Eddie Van Der Walt and Susanne Barton with Bloomberg.com report, “The metal headed for its biggest two-day gain since August 2015, rising 8.3 percent on bets demand from carmakers will grow after improving manufacturing data in the U.S. and China. … The metal, used to reduce dangerous engine-exhaust gases, is the most industrial of the four [Precious Metals] and has been buoyed by demand from the world’s two largest economies.” Zaner Group LLC Senior Vice President Peter Thomas said, “Demand is outstripping supply. Recent car sales figures have been monstrous -- that’s a reflection of demand. The fundamentals are driving the market.”

CRUDE OIL PRICES SOAR OVER OUTPUT CUT DEAL

Crude oil prices soared Thursday on optimism over the plan to cut production by 1.8 million barrels to balance the market. Alexander Gorodezky with EconomicCalendar.com said, “The fresh rally in prices was supported by the news that Saudi Arabia has reduced its production level according to the output deal between 24 countries.” The largest Organization of the Petroleum Exporting Countries producer, Saudi Arabia cut production by 486,000 barrels per day to 10.06 million bpd in January. Gorodezky reports, “Saudi Arabia was struggling to cover their budget deficit last year due to low oil prices and they were aggressively looking for higher prices to shrink their deficit. Thus, it is highly expected that the kingdom will stick to their output cut plan and they will also force others to make cuts according to their agreed production quotas.” Several other key oil exporters recently indicated output cuts, indicating a strong upside potential for crude oil prices. Gorodezky said, “Crude oil prices are likely to gain further momentum amid the potential decline in supplies from OPEC and Russia. Several other countries will also announce their output cuts in the coming days, which could prop up prices to around $60 a barrel.”

At 11:38 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,173.90 Down $9.20
• Silver, $16.48 Down $0.19
• Platinum, $966.50 Down $8.40
• Palladium, $752.50 Up $13.30

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