GOLD SPOT PRICE RISES TO EIGHT-WEEK HIGH

Cassie Bastien

1/16/2017 9:31:00 AM

Daily Gold & Silver Market Report – 01/16/2017

Gold prices touched their highest level in about eight weeks Monday as analysts prepare for worries about both President-elect Donald Trump and Brexit. Trump’s comments in recent interviews touched on China, Russia, the European Union and more. Writer Victor Reklaitis with MarketWatch said Trump “suggested he would be open to lifting sanctions on Russia and wasn’t committed to a longstanding agreement with China over Taiwan. He [also] predicted more departures from the EU and reiterated his past criticism of NATO.” In the meantime, investors are preparing for U.K. Prime Minister Theresa May’s scheduled speech Tuesday, when she is expected to reveal her country’s plans to exit the European Union. Reklaitis reported Gold gained 1.9 percent last week, getting a boost from the dollar-and-stock retreat. Commerzbank analysts cited Commodity Futures Trading Commission data, noting, “Speculative financial investors have built up net long positions in [Gold] for the first time in nine weeks.”

SILVER’S DOWNTREND TO RESUME

Silver prices continue to navigate their bearish trend, which could signify another large slip for the gray metal. Conversely, Blackwell Global and Investing.com report, “There is also scope for a little more upside potential in the near-term which means the likely reversal is still a number of sessions away from materializing. … The well-tested bearish channel is quite clearly still in place and Silver is beginning to inch closer to the upside constraint.” A shift in sentiment back toward Gold and Silver suggests the structure cannot weather another breakout attempt. Fortunately, according to Blackwell Global, “the evidence still seems to suggest that even with its increased uptick in popularity, Silver spot prices should reverse relatively shortly.” The effects of the numerous interest rate increases expected in 2017 cannot be ignored. Also, Blackwell Global notes, “the [Federal Reserve’s] general rhetoric and stated opposition to [Donald] Trump’s inflationary policies should counteract much of the headline risks posed by a Trump presidency. Ultimately, these fundamental factors provide fertile ground for further slides in Silver prices, which could make the current downtrend a long one.” What does this mean for Silver in the near-term? Chances of an upside breakout are fairly low, leaving the Precious Metal with little choice but to go down.

INVESTORS ARE BRACING FOR A MASSIVE STOCK-MARKET SELLOFF

MarketWatch reporter Jospeph Adinolfi said “stocks are in for a wild ride in February. … Demand for one-month call options tied to the CBOE Volatility Index, a popular gauge of stock-market volatility, has spiked in the past week, a sign that some are bracing for a sharp downturn following the inauguration of President-elect Donald Trump.” According to Brian Bier, head of Sales and Trading at Macro Risk Advisors, “investors have purchased 250,000 VIX call options with a strike price at 21, and another 100,000 with the strike at 22,” believing that it would take a massive selloff to make these options even profitable. Adinolfi explains, “Investors frequently use VIX futures and options as a hedge against volatility. That way, if stocks tank, they can offset some of those losses with the profits from their options trades.” Despite increasing uncertainty regarding fiscal and monetary policy direction, stock-market volatility has been relatively passive so far in 2017. Bier added, Aside from the beginning of Trump’s first 100 days in office, … there are no clear market-moving catalysts.” Adinolfi  closed saying, “Stocks have struggled to build on their gains this week, and some Wall Street analysts are saying that the inauguration could mar near-term top.”

At 10:31 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,206.40 Up $7.70
• Silver, $16.92 Up $0.11
• Platinum, $988.10 Up $2.70
• Palladium, $752.90 Up $2.70

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