Gold Prices Recover Ground Following US PMI Disappointment

Cassie Bastien

2/22/2017 8:12:41 AM

Daily Gold & Silver Market Report – 02/22/2017

Although Gold prices saw pressure Wednesday from a strengthening dollar in Asia, a weaker than expected PMI and political uncertainty triggered a reversal in trends with Gold. EconomicCalendar.com reporter Tim Clayton said, “The dollar pushed higher in Asian trading on Tuesday following comments from Philadelphia [Federal Reserve President Patrick] Harker that he was not taking a March rate hike off the table.” Clayton reported U.S. Treasuries lost ground as 10-year yields rose to 2.44 percent, “triggering downward pressure on Gold prices with a retreat towards $1,232 per ounce.” Furthermore, strong global equity prices continue curbing potential Precious Metals demand, even with an offset from demand connected to political uncertainty surrounding both the Euro-one and U.S. With the British sterling unable to make an impression, Clayton said, “there was a significant advance in the dollar’s trade-weighted index which maintained downward pressure on Gold.” Trends in the dollar and bond yields, along with political developments, will be in close watch ahead of Wednesday’s Fed minutes.

• The U.S. dollar maintained a firm tone early in New York with USD/JPY testing the 113.80 areas and Gold hit a low just below $1,228 per ounce.
• Weaker-than-expected PMI data pulled the dollar off its best levels as USD/JPY retreated to the 113.50 area and Gold bounced back to $1,235 per ounce as U.S. yields also failed to hold above 2.45 percent.

Silver ETFs Keep Their Shine Amid Rate Hike Concerns

Even with concerns the Federal Reserve could raise interest rates in March, Silver prices remain calm for more near-term upside. Along with other Precious Metals, Silver enjoyed safe-haven demand as the equities market plunged into a correction. ETF Trends reporter Brenton Garen said, “The metal also maintained its momentum as the Federal Reserve lowered its interest rate forecast to only two hikes this year from a previously expected four rate hikes.” Along with rallying with Gold as a safe haven, Garen said, “Silver bullion may be strengthening on increased industrial demand while global economies rebound.” ETF Daily News reports, “Precious Metals’ rally this year so far has been fueled by a flight to safe-haven assets, even as equities markets continue to hit fresh all-time highs, amid rising interest rates and geopolitical uncertainty.”

• The iShares Silver Trust and ETFS Physical Silver Shares nudged higher last week, bringing their year-to-date gains to about 13 percent.
• Silver’s surge is also boosting mining ETFs, which are among this year’s best-performing non-leveraged ETFs.

Oil Slips on Dollar Strength

Fox Business analyst Sabina Zawadzki said, “Global oil prices slipped on Wednesday as the U.S. dollar rose but they traded broadly at multi-week highs after OPEC signaled optimism over its deal with other producers to curb output.” Organization of the Petroleum Exporting Countries Secretary General Mohammad Barkindo told a conference Tuesday that January data showed conformity from member countries in the output cut at above 90 percent. Adding to this bullish sentiment, Zawadzki said, “hedge funds raised their combined net long position in the three main derivative contracts linked to Brent and WTI by 51 million barrels last week, holding a net long position equivalent to a record 903 million barrels of oil.” According to a research note to clients, both Barkindo and Goldman Sachs expect global inventories to fall, which would boost oil prices. With that in mind, several analysts and market players have noted the near backwardation of both Brent and WTI  as investors begin to reduce future hedges. “In the meantime,” Zawadzki said, “crude oil inventory data from the United States will potentially guide the markets for the rest of the week.”

• Brent crude was down 35 cents, or 0.6 percent, at $56.83, having touched its highest since February 2 at $56.31 in the previous session.

At 10:42 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,240.10 Down $0.30
• Silver, $18.12 Down $0.01
• Platinum, $1,005.40 Down $0.40
• Palladium, $773.50 Down $7.70

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