SPOT GOLD PRICES DRIFT LOWER

Cassie Bastien

1/24/2017 10:32:00 AM

Daily Gold & Silver Market Report – 01/24/2017

The yellow metal was unable to break key resistance levels Tuesday and drifted weaker as the U.S. dollar regained ground. Overall, however, the dollar, along with U.S. equity markets, declined in a more cautious environment. Tim Clayton with EconomicCalendar.com said, “U.S. bond yields also moved lower, which underpinned Gold and prices edging higher to test resistance near $1,220 [per ounce]. Late in US trading, there were reported comments from U.S. Treasury Secretary nominee [Steven] Mnuchin that there were dangers in the dollar being excessively strong on a short-term view.” After Mnuchin’s comments, the dollar dropped, dipping to seven-week lows below the 100.00 level. Clayton stated, “The dollar was resilient at lower levels and Gold was also unable to make further headway as resistance held firm. … The dollar was able to regain ground in Asian trading on Tuesday and U.S. bond yields also moved higher again with the 10-year yield at 2.43 percent.” Markets await policy statements from President Donald Trump, though current dollar and U.S. yield trends are likely to dominate. Clayton closed saying, “The U.S. PMI manufacturing data would need to be substantially away from expectations to have a significant market impact.”

SILVER PRICE IS STEADY AMID POLITICAL UNCERTAINTY

Silver prices edged lower Tuesday on political uncertainty surrounding both President Donald Trump and Brexit, the referendum for the UK to leave the European Union that passed June 23, 2016. Monday, Silver was on track for a fifth-straight weekly gain, adding more than 1 percent. Investors are hesitant to act following Trump’s protectionist comments made during his inaugural speech. EconomicCalendar’s own Sam Bourgi said, “The President on Monday formally withdrew the United States from the Trans-Pacific Partnership and said he would soon begin renegotiating the North American Free Trade Agreement, which involves the U.S., Canada and Mexico. Trump has yet to set forth his policies on infrastructure, taxation and deregulation, which were among the cornerstones of his presidential campaign.”

TRUMP AND THE BULLS LOOK SET TO RIP A HOLE IN OIL PRICES

While stock investors are awaiting signs from President Trump to get excited, or perhaps scared, MarketWatch reporter Barbara Kollmeyer says, “it is worth keeping an eye on other assets, which have triggered volatility for equities in the past.” She continues, noting, “The latest weekly Commitment of Traders report from the U.S. Commodity Futures Trading Commission (ending Jan. 17) showed hedge funds and other money managers placed more bullish oil positions than any week since 2006.” Raoul Pal, founder of the monthly publication Global Macro Investor, says, “it’s time to buck the big-money trend and short oil, because those who produce the black stuff think the price right now really should be at $30.” Bank of America Merrill Lynch analysts warn that oil prices in local currencies are nearing 2014 levels, which could affect emerging-market demand growth. Kollmeyer says some expect Trump to introduce measures supporting the U.S. oil and gas industry in order to halt dependence on foreign suppliers. Commerzbank told clients, “In view of the record-high optimism exhibited by speculative financial investors, we see a risk of falling prices.” Glenmede’s Director of Investment Strategy Jason Pride said, “Investors may get the urge to sell bonds in this environment, but shouldn’t give up on the asset class as they provide a good counterbalance during equity market selloffs.”