GOLD PRICES UNDER CUT BY DOLLAR RECOVERY

Cassie Bastien

1/13/2017 10:40:00 AM

Daily Gold & Silver Market Report – 01/13/2017

After hitting seven-week highs Thursday, a U.S. dollar recovery and firm tone in risk appetite undermined the potential for further gains in Gold prices with a retreat below $1,200 per ounce. Tim Clayton with EconomicCalendar.com said, “The dollar remained on the defensive early in the New York session with USD/JPY continuing to test support below the 114.00 level, while the trade-weighted index dipped to the lowest level for four weeks and below the level seen ahead of the December rate hike.” Although the latest Chinese trade data was worse than expected, Clayton reports, “there was no significant deterioration in risk appetite, which curbed potential Gold demand. … The US retail sales data will cause some short-term volatility, although the overall impact may be limited unless the data is substantially different from expectations. Gold will gain support if the data is notably weaker than expected, while very strong data would undermine precious metals.”

SILVER SPOT PRICE HAS NOT PEAKED

Peter Cooper with TheNational said Silver was his tip for 2016 with prices 15 percent year-on-year, “albeit well off its peak gains during the year of 50 percent.” Silver spot prices, which are typically leveraged on the price of Gold, should be spectacular, Cooper said. Like many others, Cooper was wrong thinking Gold would rally following Donald Trump’s election. However, some believe once his inauguration is over Jan. 20, financial markets may drop and Precious Metals could increase. A number of top analysts have several interest rates rises depressing the outlook for Gold and Silver. “But this may either not happen,” Cooper said, “or inflation could prove more rapid than expected and have the same effect. … Gold will always be the steady choice, but Silver is the natural outperformer when it comes to serious bull markets as we saw last year. Cooper added, “If you track the ratio of the price of Silver to Gold, you will find it fluctuates between an extreme of x80 and lows of x40. This ratio shrinks as a bull market accelerates and is just over 70 now,” making Silver a better buy.

OPEC CUTS

With sentiment worsened by concerns over the health of the Chinese economy after reporting its steepest export falls since 2009, oil prices are on track to end the week lower on lingering doubts over the extent of Organization of Petroleum Exporting Countries cuts. Traders said record Chinese crude imports of 8.56 million barrels per day in December helped buoy prices somewhat, but they couldn’t hide underlying fears over the overall health of the world's second-biggest economy. Ahmad Ghaddar with Reuters said, “Despite China's oil thirst, overall exports declined by 7.7 percent last year in what was the second annual decline in a row and the worst since the depths of the global crisis in 2009.” Hard evidence of export reductions has yet to arise two weeks into the month in which the cuts by OPEC and other producers, like Russia, were supposed to start. Ghaddar said many analysts expect compliance between 50 percent and 80 percent, at best. Stephen Brennock of oil brokerage PVM said, "As the Saudis hint at even deeper reductions in February, assumptions are rife that its enthusiastic approach to output cuts is an admission that cheating is expected on the part of other producers.” Even if OPEC cuts its output as discussed, traders believe rising U.S. shale output and increasing supply from OPEC members Nigeria and Libya, which were exempt from the pact, might offset any reductions.

At 11:40 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,196.10 Down $6.20
• Silver, $16.81 Down $0.05
• Platinum, $983.70 Up $0.00
• Palladium, $752.50 Down $13.80

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