Gold – Interesting but Quiet
Commentary for Monday, Dec 10, 2018 (www.golddealer.com) – Gold closed down $3.10 at $1243.70 today. Pricing action today for gold was subdued – typical holiday stuff. With the dollar pushing higher – the Dollar Index moved above 97.00 and the last FOMC meeting a few weeks off we could be doing worse. You have to like the technical picture also in that over these past 60 days gold has managed to close above recent highs ($1230.00) and we are also trading above the 50 Day Moving Average ($1221.00) and the 100 Day Moving Average ($1211.00) while threatening even the 200 Day Moving Average ($1256.00).
I will leave it up to the reader as to whether gold has the price momentum to continue higher however when you consider that gold’s last serious price consolidation was earlier in the year between $1300.00 and $1350.00. The drop to current levels happened during the summer months and was sudden and steep – we lost $150.00 before prices stabilized.
Not that I’m too worried about that drop it’s healthy for the market. And I think even the pessimists will agree that gold continues to build its base being helped by Presidential conflict with China over tariffs and a host of other problems in Europe. The delay in the Brexit vote today likely helped support prices and the DME FedWatch Tool today claims there is a 30.2% chance that the Fed will not raise and a 69.8% chance that it will. Now this may sound positive toward that rate hike but not long ago this same estimation pointed toward virtual certainty.
And it’s probably more important that the Fed is now walking backward relative to possible rate hikes in 2019. But like everything related to this unprecedented monetary expansion the current plan is subject to change at any moment. I think what they are really looking for is a way to quietly continue to unwind this monster but they may find that there are limits to what can be accomplished with monetary policy.
I would not discount DOW weakness – not that I think stocks will tank but there is a different feeling out there going into 2019. And today’s close below 24,000 (a 7 month low) does not help matters. This is not a “darkness” scenario. Our economy is still moving forward but that inverted yield curve adds to the tension. And weaker stocks help support the metals.
Recent Reuters news claims Chinese copper demand might be in peril – not good for all the metals if true but China has bigger worries on her hands.
I don’t see any big possibility of gold making new highs in 2019 but at the same time there is enough world discord to keep everyone on their toes. And finally the latest Wells Fargo release seems to indicate they are now turning bullish on the metals.
This from Zaner (Chicago) – “With precious metals overnight initially building on the strength Friday the bull camp should remain somewhat confident into this week’s FOMC event. Clearly the Fed’s recent dovish policy shift and a lower than expected non-farm payroll results have dampened US rate hike prospects beyond the widely anticipated December hike on Tuesday afternoon. However, after an initial lower low/downside extension overnight, the Dollar was able to shake early pressure and that has capped off the initial bid higher in gold. However, the gold bull camp should continue to draft off last week’s breakout of a five month sideways consolidation to the upside. In fact with February gold reaching the highest level since the major washout down on July 17th it is possible that some Index buyers will step forward! Not surprisingly, the US nonfarm payroll result for November reduced interest rate hike prospects for 2019 and in turn that undermines the dollar which provides support to gold and other physical commodities. On the other hand, the market saw negative internal fundamental news from signs last week that Indian gold demand fell off because of the rally in prices. Yet another internal limiting fundamental for gold was seen from reports that Russian January through October gold output increased. While the upcoming holiday delayed positioning report will understate the magnitude of the net spec and fund long in gold, it should generally remain at minimally long levels and that turn should leave residual speculative buying fuel in the offing. While December silver did not forge a significant breakout up last week, it has a generally positive chart set up and should be dragged higher if gold provides solid bullish leadership this week.
While a large portion of the August through early December rally in palladium was fueled by expectations for even larger stocks deficits in 2019 and that story line was built on Chinese clean-air efforts, the palladium market this week should behave like a physical commodity market this week. In other words palladium will probably see increased volatility off the Fed and it will probably tighten its correlation with equities. However, the lack of a solution on trade could make the recent $1,200 print a solid top. Therefore, the palladium market should begin to track tightly with global equities and inversely with the action in the dollar. In the bull’s court is a double bottom at $1,135.80 in the March palladium contract and we suspect that palladium will able to draft some spillover buying support from any further upside in gold. In other words, instead of gold being a weight on the back of the PGM complex, gold could become a benefit to the palladium bull camp. Unfortunately for the bull camp in platinum, the fundamental track provides little incentive to halt the current downtrend pattern, with strength in gold and palladium simply unimportant to the platinum trade. However, the platinum market appears to have found some semblance of value around the $800 level and it could find even more significant support down at $785.
As indicated already, the gold bulls will need to see the dollar index fall below 96.30 and/or see further evidence that the US Fed is on hold after this Tuesday’s hike in order to extend the upside breakout from last week. In fact, the FOMC meeting decision is due out Tuesday afternoon and that could produce a volatility event in the dollar and therefore volatility events in gold, silver and PGM prices. However, after a couple selling events in November from the widely anticipated December rate hike, we suspect a December hike is mostly factored and the Fed will cushion market sentiment by indicating they will now become heavily data dependent. Uptrend channel support in February gold is seen at $1,236 while uptrend channel resistance is seen at $1,258.55. Critical support in March silver today is seen at $14.41 and resistance is seen at $14.745. The technical picture is still pointing upward, but the bulls will need to see further bullish fundamental headlines to entrench a definitive upward track in gold and silver prices ahead.”
Silver closed down $0.09 at $14.48.
Platinum closed down $8.30 at $780.30 and platinum closed down $12.10 at $1184.30.
When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and that your computer will accept our email (no spam). Thanks for letting us know when you move or change your email.”
We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.
Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.
In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).
Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.
As always we appreciate your business. Thanks for reading and enjoy your evening.
Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisors. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.