Gold Prices Slowly Strengthen

Cassie Bastien

7/13/2017 1:18:45 PM

Daily Gold & Silver Market Report – 07/13/2017

After Federal Reserve Chair Janet Yellen signaled the Fed is moving toward a slower path to higher interest rates, Gold prices managed to slowly worked their way up. Investing.com says, “The Dow [Jones industrial average] – along with many global equity markets – registered new record highs on the outlook of more available liquidity, propping the high valuations of stocks.” Typically when equities rise, safe-haven assets such as Gold fall. However, in this scenario, Precious Metals, bonds and even the Japanese yen all rose. After Yellen’s dovish testimony Wednesday, “Gold futures for August delivery rebounded from a loss, headed for the biggest gain in five weeks on the Comex in New York.” The problem is, “if equities should continue to rise, capital will likely flow out of havens [such as Gold and Silver] and back into stocks.”

Commodity Upturn to Help Precious Metals Prices

As a rising stock market reinforced investor optimism, the safe-haven demand for Precious Metals came in soft through the first half of 2017. GoldSeek Reporter Stefan Gleason says, “U.S. stocks are expensive by just about every valuation measure you can think of. ... Even [Federal Reserve Chair] Janet Yellen remarked recently that equity valuations appeared “rich.” Keeping in mind that commodity markets are always cyclical in nature, Gleason said “No matter how bullish or bearish the outlook happens to appear at any given time, prices will eventually turn and trend in the opposite direction.” Furthermore, Gleason said, “Mines already have to process more and more tons of earth to extract ounces of Precious Metals.” Metals Analyst Steve St. Angelo says, “The global Silver mining industry will continue to process more ore to produce the same or less silver in the future. While the cost of energy has declined over the past few years, falling ore grades will continue to put pressure on the silver mining industry going forward.” Bottom line is, Precious Metals remain volatile, but there are two main changes that could alter the prices significantly: either another interest rate hike before the year end or a reduction of the central bank’s QE-bloated balance sheet, which could cause longer-term bond yields to increase.

Oil Prices Continue to Slip

Three years into what is seen as the biggest downturn for oil in a generation, industry bosses are watching the recovery slip further away. Bloomberg Reporter Rakteem Katakey says, “It could easily take until the end of the decade for better times to return to an industry that’s already endured a longer slump than most people expected, according to Total SA Chief Executive Officer Patrick Pouyanne and Weatherford International Plc Head Mark McCollum.” Katakey said executives will gather at the World Petroleum Congress in Istanbul to focus on repairing battered finances and resetting operations to withstand low prices. Dinesh Kumar Sarraf, chairman of India’s state-run Oil & Natural Gas Corp., said companies should be prepared for a “lower forever oil price.” Nonetheless, India's Minister of Petroleum and Natural Gas Dharmendra Pradhan said in an interview at the Congress, ““The new normal has emerged… This price will stay. This is a reasonable price for everyone.”

• Brent crude, the international benchmark, traded for about $47 on Thursday, less than half the level of three years ago (Bloomberg.com).

At 2:18 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,220.80 Down $1.50
• Silver, $15.83 Down $0.18
• Platinum, $910.10 Down $11.00
• Palladium, $862.30 Down $7.30

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (ET)! Or call us Fridays until 6 p.m. (ET)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.