GOLD FUTURES CONSOLIDATE AS DOLLAR REBOUNDS

Cassie Bastien

1/19/2017 9:39:00 AM

Daily Gold & Silver Market Report – 01/19/2017

Economic Calendar’s Tracy Morganthall reported Gold prices cleared $1,200 per ounce Tuesday, on a sharp sell-off of the dollar, and followed with consolidation Thursday. Morganthall said, “A period of correction or consolidation appears warranted, given the overbought condition which developed as a result of the advance from the December low, over which time the Gold contract gained more than 7 percent. … At present, it appears the setback in Gold will prove temporary given the increase in open interest which has accompanied the advance from the December 23 closing low. Rallies driven by rising open interest often prove sustainable, while rallies accompanied by falling open interest are often quickly retraced, as the drop in open interest implies the advance was merely a product of short-covering.” Much of Thursday’s focus will be on Fed Reserve Chair Janet Yellen’s afternoon speech on the goals of monetary policy.

SILVER SPOT PRICES KNOCKED OFF 5-WEEK HIGHS

As the dollar rebounded against a basket of other major currencies ahead of the presidential inauguration Friday, Silver prices saw a decline earlier Thursday. The gray metal soared Wednesday to its highest level since mid-December when the Federal Reserve raised interest rates for the second time in 10 years . Reporter Sam Bourgi from EconomicCalendar.com said, “The dollar strengthened on Thursday, building off a solid rebound in the previous session, on stronger economic data and confirmation from Fed Chair Janet Yellen that she expects interest rates to rise ‘a few times’ this year. The dollar index climbed 0.2 percent to 101.09.” U.S. stock futures were trading lower in pre-market activity Thursday morning, pointing to a soft trading start. Bourgi said, “Wall Street wavered on Wednesday and finished mixed, with the S&P 500 rising 0.2 percent and the Dow Jones Industrial Average settling 0.1 percent lower.” U.S. equities are expected to experience instability ahead of Donald Trump’s inauguration Friday.

DOLLAR REBOUNDS

Fed Chair Janet Yellen signaled steady interest rate increases were likely, which rebounded the  U.S. dollar, lowered Asian and European shares and boosted government bond yields to multi-week highs. Reuters’ John Geddie reported, “Wall Street was set to open a touch lower with the S&P 500 set to give up some of Wednesday’s rise, which was led by stronger financial stocks. The U.S. currency recovered from Tuesday's decline, when it reached its weakest level since early December after President-elect Donald Trump expressed concern in a weekend interview about the effects of a stronger dollar.” Yellen is scheduled to speak Thursday afternoon, after European markets close, on the economic outlook and monetary policy. Societe Generale’s Currency Strategist Kit Juckes said, “As the U.S. economy approaches full employment, as wages rise but inflation rises nearly as quickly, how hawkish the Fed dares to be will determine how much the dollar rises.” The effects from Wednesday’s dollar gains appear to be wearing off as investors, who have received no real details on Trump’s plans to boost growth, remain watchful ahead of Friday’s presidential inauguration.

At 10:39 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,201.80 Down $13.10
• Silver, $16.89 Down $0.44
• Platinum, $953.80 Down $17.10
• Palladium, $750.90 Down $1.10

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