Daily Gold Newsletter Archives - www.GoldDealer.com

Posted on December 10, 2018

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.

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Posted on December 6, 2018

Gold Settles – On the Sleepy Side

Commentary for Thursday, Dec 6, 2018 (www.golddealer.com) – Gold closed up $1.00 at $1238.10. So we finished in the green but the day was kind of a fizzle considering gold’s pop to higher ground in earlier trading. The shorter term technical picture remains upbeat in that we challenged October/November highs and there has been good interest since the early November low ($1200.00). But here is where this market remains dicey and basically controlled by dollar direction. The Dollar Index has weakened twice around 97.00 these past 5 trading days which has encouraged semi-bullish gold traders but on both occasions it managed to regain lost ground.

The theory here is that ruffled feathers between the US and China is making everyone nervous and the latest arrests over there amplifies this contention. The DOW reacted predictably – moving lower and there is no doubt that Wall Street is a bit nervous resulting in some safe haven buying but considering all the hoopla gold’s reaction has been modest. And more importantly I don’t see large dollar weakness anytime soon regardless of the China/tariff speculation.

So instead of making the case that gold is breaking out I think we are seeing a modest reaction. One in which the market is taking advantage of the summer sell-off from $1300.00. And at the same time is wondering if there is anything to the notion that the DOW is really overpriced and the best days of economic recovery are behind us.

This “feeling” for lack of a better word is hard to square with even a modest program of higher interest rates. So there you have it – uncertainty is creeping back into the financial world and underpinning the price of gold.

Whether this will eventually develop into something which will push prices back above $1300.00 remains to be seen – I think a more plausible outcome will be a continuation of the now in place consolidation pattern.

I actually think the best thing gold has going for it now is the notion that the FOMC could not possibly develop an aggressive interest rate agenda in 2019.

But gold traders do have their finger on the trigger – the negative talk of lower prices which was commonplace in late August has been replaced with a “wait and see” approach. There is still not enough fire in the furnace to create a panic but it’s worth noting that the latest World Gold Council numbers indicate world exchange traded funds are showing increased inflows.

This cautionary change is not reflected, in my opinion with the US trade yet but they too remain active. It was actually very busy across our counter yesterday for more than 3 hours and it was raining cats and dogs most of the day. The action was silver bullion related but there was plenty of buzz considering how wet it was outside and recent silver eagle production numbers from the US Mint show the public is once again interested in Monster Boxes.

Keep in mind we are right in the middle of the traditionally slower holiday season. And everyone still expects the FOMC to raise interest rates before Christmas – still there is a developing buzz and I’m not seeing much in the way of tax selling this year.

This from Zaner (Chicago) – “Until the dollar resumes its downtrend, we could see the precious metals consolidate and perhaps give up part of their recent gains. Gold was a tad lower overnight on what could be profit taking at the top of the 5-month trading range, while silver gave up even more. Equity markets were down sharply overnight, but the dollar was near unchanged, and so far the effect on the metals markets has been minimal. The arrest of the Huawei CFO throws the US/China trade relationship into even more turmoil, and it could lend some flight-to-quality support to the dollar and pressure the metals. The Fed is widely expected to raise rates at the December 18-19 FOMC meeting, and this prospect could limit additional gains in gold and silver until prices set back or until the meeting concludes. The chart of the dollar index shows coiling action, and a breakout in either direction would likely send gold and silver in the opposite direction. A disappointing employment report on Friday could quell rate hike expectations and send the dollar lower and lend support to gold.

Palladium sold off sharply overnight after trading to new contract highs for the 4th straight session yesterday. The stock market selloff overnight may have worried recent longs counting on a strong economy and strong auto sales. The market has been benefiting from expectations of strong automotive demand as more drivers switch to gasoline-powered vehicles and more nations adopt pollution control methods that use palladium as a catalyst. Platinum is also used as a catalyst, but primarily in diesel-powered vehicles, which have sunk in popularity in recent years. The industry expects record automotive palladium demand in 2018. If the market continues to sell off, we may not see support emerge in March palladium until the 21-day moving average, which is down at $1,131, some $22 below the overnight low. January platinum drifted lower overnight after falling below key support at $800 yesterday. The market is getting oversold and could see a bounce if the selloff in palladium leads to spread unwinding.

The steep declines in stock market could spill into the metals today, especially if the action leads to safe-have support in the dollar.

Look for support in February gold at $1,228 and $1,225, with resistance at $1,252 and $1,275. The silver chart looks a bit more negative, having already traded down near the 50-day moving average at $14.406. A break below there would leave the next target down at the gap open from Monday at $14.217-$14.28.”

Silver closed down $0.07 at $14.39.

Platinum closed down $12.40 at $787.80 and palladium closed down $44.10 at $1167.50.

This is our Thursday Chicago Mercantile Exchange report covering the last 5 trading days – so we are looking at the trading volume numbers for the December gold contract: Thursday 11/29 (288991) – Friday 11/30 (289349) – Monday 12/3 (297427) – Tuesday 12/4 (301362) Wednesday 12/5 (298075) and the trading volume numbers for the December silver contract: Thursday 11/29 (150360) – Friday 11/30 (150759) – Monday 12/3 (147534)- Tuesday 12/4 (146933) Wednesday 12/5 (145700).

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Posted on December 3, 2018 December 3, 2018

Gold Demand Hopes Push Prices

Commentary for Monday, Dec 3, 2018 (www.golddealer.com) – Gold closed up a surprising $13.70 at $1233.90 today. It actually woke up in overnight trading on the news that the China and the US have decided that bullying the other party does not work in their interests and makes the world nervous – so decided to play nice at least temporarily. The overseas and US markets embraced the news with green ink but some claim the Grinch is lurking – we will just have to wait and see if both parties are dealing in good faith.

In the meantime gold is stronger; improving the good news technical picture but as usual overhead resistance is a bit daunting going into the last FOMC meeting before Christmas. Gold will not only have to sustain numbers above $1230.00 but show strength while clawing its way back to $1300.00.

A tall order unless the dollar gets weaker which introduces the “Powell” factor. The FOMC Big Boss has now played down the hawkish 2019 interest rate scenario. He is his own man so I don’t think the President’s chastising really scared him but it did set the stage. And even the suggestion that interest rate hikes will not be aggressive was enough to have a financial party.

And all of this makes sense – in fact if inflation remains tame there is no reason to talk up interest rate hikes in 2019. Granted that is a big “if” but who would have believed with the financial leverage everyone has used since 2009 that inflation would still not be a problem?

This is the conundrum gold faces – prosperity is being talked up, stocks are back in the green, no fear factor and no inflation fear equals a quiet gold market. So I would expect pricing to remain stable – holding to either side of $1200.00 – which is a familiar and long price consolidation.

This “base” if you want to call it that is encouraged by free trade and reduced tariffs which puts more money into the hands of people who want to own gold. That same base is threatened by what could easily turn into another round of technically weak numbers if the dollar continues higher. So again place your bets – the world is generally expecting (eventually) a weaker dollar so gold enthusiasts remain if not emboldened at least very hopeful of higher prices.

This kind of “floor” for lack of a better term began in 2012 and it holds promise because that floor has stayed in place but also becomes boring for the rank and file. The good news is that gold bullion is really turning into a value play for investors – hold 10% of your financial worth in the metals in case this merry-go-round blows.

If nothing bad happens your downside is most likely not much and you can rest a bit easier that you have not bet the farm on good government intentions. If on the other hand this stew heats up it is easy enough to increase your position as time warrants – watching the price of gold carefully. The closer we get to $1300.00 the more you should question what is really going on – it’s a kind of canary in the coalmine scenario which works well when you are not sure who is telling the truth.

This from Zaner (Chicago) – “Gold and silver gapped higher overnight in reaction to the agreement over the weekend between the US and China to postpone any tariff increases and to re-engage in trade talks could lend support to the metals to start the week. While this may be viewed as “kicking the can down the road,” it was about as good as could have been expected from the meeting, and global equity markets rallied (and the dollar broke) on news of the deal. The gold market last week continued to build on a three-week consolidation pattern, and that in turn added to the even more significant five-month sideways consolidation between $1,200 and $1,250. The market did hold up against a rising dollar last week, and it should be underpinned going forward by the softening tone from the Fed. We remain committed to the idea that both gold and silver are physical commodity markets in need of a lifting of global economic headwinds from trade issues, and the news over the weekend certainly moves the needle in that direction. The dollar has generally received safe haven lift because of the trade fracas, having gained more than 5% since the tariff cycles were implemented, and a reversal of safe haven should be a big boon to the bull camp in gold. Friday’s Commitments of Traders report showed a relatively small spec and fund net long positioning of 11,553 contracts. Some analysts are suggesting that it could take an uptick in US unemployment readings to definitively put the Fed off their rising rate policy, and that in a strange way could provide gold with a substantial lift from a reversal in the dollar. Like gold, the silver market currently holds a very minimal spec and fund net long position and with the decline in prices after the report mark off date on Tuesday, the spec and fund net long positioning this week is clearly overstated. Friday’s COT report showed non-commercial and non-reportable traders combined holding a net long of only 8,520 contracts.

Platinum and palladium both reacted positively to the US/China trade “truce” over the weekend but not quite as strongly as gold and silver. Despite the breakneck rally in the palladium market, the Commitments of Traders report shows the net spec and fund position to be below the record net long registered in early August. The source of the rally continues to be expectations for a long term global supply deficit as a result of significant increases in auto catalyst emissions requirements in China and elsewhere. So far, talk of a rotation from palladium to platinum has been downplayed by General Motors officials, suggesting that changing auto catalyst feedstocks was not as easy as “flipping a switch.” The COT report as of November 27th for palladium showed non-commercial and non-reportable traders combined holding a net long position of 14,671 contracts. Obviously the longer-term projections for a world surplus of platinum have left it under pressure and perhaps under direct attack from long palladium/short platinum spreads. Friday’s COT report showed the spec and fund net long in platinum at 28,668 contracts, about half of the record level. The market has declined by $36 (4.3%) since the data was collected, which suggests that the net long could be quite a bit smaller at this point. Platinum might only see minimal support at $800, and any sustained risk-off condition could result in a spike down probe toward $780. The news over the weekend may have helped the market postpone that eventuality.”

Silver closed up $0.29 at $14.38. This is interesting in that silver buffs are not going crazy over these lower prices but they are steady buyers across the counter. The “big boy” days of a few hundred thousand dollars silver bullion deals have not returned but the steady mid-range and smaller buyer is steady and this adds up over time.

Platinum closed up $10.90 at $808.90 and palladium closed up $21.00 at $1189.60.

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Posted on November 30, 2018

Gold Ponders its Future

Commentary for Friday, Nov 30, 2018 (www.golddealer.com) – Gold closed down $3.90 at $1220.20 today. Still not much happening if you consider that gold closed Monday at $1229.80. The best aspect, as far as the gold community is concerned is simple and positive. For now the FOMC and Chair Powell seem to agree that another rate hike is right around the corner but more importantly they are backing away from aggressive rate hikes in 2019.

They are now talking about uncertain trade policy, slowing global demand, or higher interest rates as factors contributing to the slowdown according to Reuters. This is big in that such dovish talk was completely absent just a few weeks ago.

With this FOMC about-face and a flat Dollar Index you might ask yourself why is gold struggling? There are a number of reasons. Wall Street likes a more dovish FOMC, talk of stock shakiness has disappeared which does not help safe haven buying. A final interest rate hike this year assures solid dollar strength.

The possibility of last minute “play nice” with China and Russia in my mind takes some of the late year pressure off the international scene. But this conclusion is dicey – some commentary suggests a trade deal might weaken the dollar and support gold. What do you think?

Finally crude oil has basically collapsed – moving from $75.00 to $50.00 since October.

I appreciate all of these “changes” might be temporary but when you couple these changing dynamics with end of the year tax selling I think gold pricing will be left-footed. And technically we now look like a test of recent lows ($1200.00) might be in the cards.

That being said the most recent gold ETF numbers show decent gains in total holding which should suggest that when it comes to gold it’s always just a matter of price. Cheaper always encourages the bargain hunters and the world is a mess – so safe-haven buying is never really on the back burner for long. Finally the fact that Powell may be reassessing 2019 interest rate hikes will carry a lot more bullish weight once traders really believe the locker talk.

This from Zaner (Chicago) – “While the February gold contract showed positive divergence against silver prices throughout the trade yesterday and it also managed to remain positive in the face of minimal dollar strength, the market appears to be fading this morning in a fashion that might be telegraphing concern for upcoming trade dialogue from the G20. In the short term the gold market will benefit from positive scheduled data, strength in equities and from potential supply issues in South Africa. However, the gold market to start today has injured its charts slightly, equities overnight were off moderately and the Dollar is generally higher and therefore some measure of positioning balancing weakness is to be expected. Apparently some traders saw this week’s Federal Reserve news as a sign that December will indeed see a rate hike and that has at least temporarily limited gold and underpinned the dollar. In our opinion, US scheduled data continues to lean toward a softening track and that could keep up the pressure on the dollar. In fact, the combination of slightly soft US data and even a whiff of a restart of official talks between US and China could see February gold flashback above $1,250. However, in the event that trade talks fail to get off the ground and the door is temporarily slammed shut again, that could set the stage for a quick slide back down to $1,200 in February gold and down to $14.02 in March silver.

Not surprisingly, the divergence between palladium and platinum has continued with the markets this morning reaching an astonishing differential of $355! While the trade continues to suggest the surplus stocks situation in platinum and the deficit in palladium is driving prices in opposite directions, we have to wonder if palladium hasn’t partially shifted into a safe harbor instrument for those unwilling to hold treasuries and/or hold money in various currencies. In fact, given the relatively small size of the palladium market, a definitive risk on environment or a solution to trade could leave palladium rocketing to the upside. Critical support in March palladium is raised to $1,159.30 and a measuring count off the partial November consolidation range projects prices up to $1,250. On the other hand, the platinum market looks to remain under pressure like a classic physical commodity market and it could take a significant and fresh demand news story to alter further erosive action.”

Silver closed down $0.18 at $14.09. I would think at these lower numbers that folks would be standing in line but they are not – surprisingly activity has slowed. My bet is that next week business will roar back to life – consider $1000 face 90% bags and Alex’s next special on the quote line – this is a new feature which will save you money.

Platinum closed down $21.10 at $798.00 and palladium closed up $5.20 at $1168.60. Platinum is now trading for $422.00 less than gold and we are seeing some trading of gold and palladium bullion for platinum bullion – and there really is not much of that around.

This is our usual ETF information – All Gold Exchange Traded Funds: Total as of (11/7/2018) was 66,024,632. That number this week (11/28/2018) was 66,310,812 ounces so we gained 286,180 ounces of gold.

The all-time record high for all gold ETF’s was 85,112,855 ounces in 2013. The record high for Gold ETF’s in 2018 was 70,728,953 and the record low for 2018 was 64,791,549.

All Silver Exchange Traded Funds: Total as of (11/7/8) was 638,040,652. That number this week (11/28/8) was 836,287,141 ounces so we gained 198,246,489 ounces.

All Platinum Exchange Traded Funds: Total as of (11/7/18) was 2,261,416. That number this week (11/28/18) was 2,228,909 ounces so we dropped 32,507 ounces.

All Palladium Exchange Traded Funds: Total as of (11/7/18) was 827,463. That number this week (11/28/18) was 813,914 ounces so we dropped 13,549 ounces.

Our Patented Employee Survey – Gold’s Direction Next Week?

Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 6 believe gold will be higher next week 2 think gold will be lower and 2 think it will be unchanged.

Our Patented Customer Survey – Gold’s Direction Next Week?

Like the employees, our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 53 people thought the price of gold would increase next week 37 believe the price of gold will decrease next week and 10 think gold will remain the same.

Precious Metal Closes & Dollar Strength – Nov. 26 – Nov. 30

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As always we appreciate your business. Thanks for reading and enjoy your weekend.

Posted on November 28, 2018 November 28, 2018

Gold Draws Attention

Commentary for Wednesday, Nov 28, 2018 (www.golddealer.com) – Gold closed up $12.40 at $1223.60. Gold remains choppy and I’m afraid married to the dollar – this economy continues to shine and the FOMC has remained on point – another hike in interest rates is in the cards in late December. You might argue that Trump’s upcoming negotiations with China or troubles with the Russians are so problematic that international tension will support the price of gold but even these take a back seat to higher interest rates.

And what if the Republicans are right in that this economy is really just beginning to roar? This will dictate higher rates into 2019 and keep gold left footed in my opinion.

Now that does not mean that gold will remain in the rear view mirror – if you look at the bigger picture price weakness always produces bargain hunting and this typical reaction will amplify as we approach “cheaper” prices.

What works nicely for gold is its world audience. The US demand is really a small part of the picture and there are enough problems worldwide with currency devaluation and political trouble to create bouts of safe haven demand no matter what the FOMC does with interest rates in the shorter term.

So I remain ambivalent relative to gold on the short term but always positive on the longer term because the world monetary system is on the side of higher gold prices. Central banks will always manufacture more paper money – it’s just an easy answer to short term problems in the business cycle which favors inflation.

I would buy weakness in both gold and silver and not worry too much about what happens to price on the short term. It is still not clear as to whether the big blow off in gold prices which began in 2011 will present another down leg. We have stabilized around $1200.00 since 2013 while the bulls and bears fight it out.

But todays pricing should tell you something – never say never. Trading was quiet as a mouse just under $1215.00 – nothing going on and then bam! The gold market jumped up more than $10.00 in seconds. We can debate this jump in price – it was most likely Powell’s comments about drawing out the time frame for interest rate normalization and perhaps backtracking on promised rate hikes next year. But this new story or something to take its place can come and go with the wind – this situation is very fluid. What remains interesting is that the gold market – regardless of the building bad press continues to be very nervous – uncertainty rules – which is always a plus for gold.

This from Zaner (Chicago) – “Obviously the gold market was undermined yesterday as a result of the outsized range up action in the dollar and that pressure has extended into the trade today. In fact, with the February gold contract falling down to the lowest level since November 15th yesterday, the technical picture has shifted into the bear camp and since the breakdown comes after a sideways consolidation pattern, downside follow through should be expected today. In addition to the negative influence from the dollar, we also suspect that hawkish Fed dialogue will continue to weigh on prices (Powell is scheduled for a mid-day luncheon speech) as the markets appear to be factoring-in a December rate hike again. Despite suggestions from the Chinese that they want to get a deal done at the G20 meeting and despite US official acknowledgement of a dinner meeting between the two leaders at the conference, we still think the trade will continue to “sell the rumor of no deal” in many physical commodities like gold and silver. Fortunately for the bull camp, the net spec and fund long positions in both gold and silver could become mostly liquidated or short with a slight extension of yesterday’s action. It should also be noted that gold derivative holdings saw the seventh straight increase which brings this year’s net purchases to 419,793 ounces. With Goldman Sachs yesterday suggesting that commodities could see a 17% increase in value next year (because many commodities are below value/cost of production) that could keep money flowing into gold ETF’s.

It would seem as if the palladium market benefited slightly from periodic strength in US equities yesterday, but the palladium market has added to the strength yesterday this morning and is showing signs of climbing through overhead resistance from the charts at $1,137.90. While we think the GM news is negative to the PGM complex, the palladium market has shown the capacity over the last 4 months to ignore threats against demand and instead focus exclusively on estimates for a continuation of a deficit next year. The palladium market doesn’t seem to be concerned with this week’s initial speculation that the US will go ahead and raise tariffs next year but there was fresh hope for a deal following revelations that U.S. and Chinese leaders were scheduled to have a private dinner at the G20. While the palladium market continues to show strength today, we think the risks to the longs outweigh the rewards especially since PGM ETF’s have continued to see outflows and that suggests some investors are banking profits from the 2018 rally in palladium and that could rob the market of residual buying fuel at higher levels. The breakdown in the platinum charts yesterday has been solidified this morning with prices lingering near the Tuesday low and therefore it remains clear that the platinum “surplus” continues to pressure futures prices. Near term downside targeting in January platinum is seen at $829.10 and perhaps even lower if the G20 meeting trade deal hopes are busted with fresh dialogue today. A minor cushion for gold prices is seen from continued violence at a Sibanye-Stillwater gold mine in South Africa.”

Silver closed up $0.27 at $14.33.

Platinum closed down $8.40 at $824.80 and palladium closed up $6.90 at $1155.30.

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Posted on November 26, 2018 November 26, 2018

Gold Remains Distracted

Commentary for Monday, Nov 26, 2018 – Gold closed down $0.80 at $1220.20 in quiet trading. While gold pricing through Thanksgiving was enjoying that renewed bounce from $1200.00 traders are now showing caution as gold once again approaches $1230.00 and begins to flatten out.

This can be seen in the 30 day pricing chart – where on three occasions traders have tested the $1235.00 overhead resistance and failed. The good news is that gold remains well bid within the tight range in spite of weak oil. The fact that US stocks have regained their footing does not help gold pricing – today being a good example. Everyone is still wondering what the Fed will do in late December with interest rates so gold continues to have a number of pluses and minuses.

It is encouraging that the yearly pricing chart seems to be holding up at the lower end of the current price range. This past year gold gave up the $1350.00 level like yesterday’s newspaper and for half the year the bears ruled pushing prices lower by $150.00. But then something kind of interesting happened – safe haven demand woke up. Nothing big – this market is still defensive but there was enough to stabilize bearish market sentiment around $1200.00.

This support level has remained generally in place since last summer but as the initial buzz dissipated traders began to look for renewed weaker pricing as the hawkish FOMC touted higher interest rates.

Everyone is pretty much agreed that if the FOMC gets crazy in 2019 that gold will remain defensive without higher inflation numbers. But this scenario is also dicey – higher interest rates could turn the stock market on its head and in the end be a positive catalyst for the metals.

So for now traders are looking for that “value” number for gold – not too high and not too low. Good luck, anything from another round of shaky stock numbers to hot spots around the world to tariff grief can be the spark which pushes gold higher.

But this possibility is turning into the minority case for me – I don’t expect anything seismic. We will most likely see the usual “quiet” holiday trading including year-end selling for tax reasons – another minus perhaps offset with increased holiday buying. This market will need something fresh to push it significantly higher or lower.

This from Zaner (Chicago) – “The gold market has been somewhat impressive in its ability to stand up to classic deflationary psychology flowing from massive declines in crude oil prices, but this morning the market is being presented with modest tailwinds instead of headwinds. While the gold market has not been presented with much in the way of physical demand news lately, reports that Chinese October imports of gold from Hong Kong into the mainland doubled in October from September should provide a fresh measure of demand hope to the trade. Furthermore it should be noted that exchange traded fund holdings saw an increase of 24,279 ounces on Friday which was the fifth straight inflow of money into holdings and that in turn brings this year’s “net purchases” to 371,129 ounces. Similarly “net purchases” in silver ETF’s this year are 7.67 million ounces. In addition to positive demand news the gold market should draft minimal support from labor strife at a South African gold mine as a strike at three mines owned by Sibanye-Stillwater have been shut and a death has been reported from labor violence. In another supportive supply-side development Gold Fields LTD has apparently reduced its 2018 gold output forecasts because of labor issues and because of plans to cut jobs in a restructuring move. However the reduction in output is thought to be only 80,000 to 100,000 ounces. Some traders think gold and silver will be undermined in the event of something positive from US/Chinese talks at the G20 but we disagree as gold recently has been pressured as a result of safe haven Dollar strength and the market has also suffered at the hands of deflationary slowing fears. Furthermore the gold spec and fund positioning was net short 10,000 contracts as of the November 13th report and that should mean the liquidation threat is moderate and that buying fuel could be present on the sidelines. However, the markets are expecting the US/Chinese trade war to come to a “head” at the G20 summit this week and that could prompt a volatility event in prices. Unfortunately for the bull camp, open interest in gold has declined steadily on the rally off the November lows and a coiling pattern of sorts has settled in between $1,230.90 and $1,220.10. As for the silver market, the charts were damaged with last week’s range down five day low but the market appears to have rejected the spike down attempt this morning and therefore consolidation low support is given more credence. In the end we think gold has seen a definitive deflationary influence from the negative trade headlines recently and any hope of a deal could now be justification for a quick explosion up to $1,250.

While the palladium market damaged its charts at the end of last week the rejection of the sub-$1,100 level increases the chance of a near term low and could set the market up for a range trade early this week defined as $1,139 and $1,100. As in gold we think the risk off environment, noted commodity market weakness and the threat of a higher Dollar have played a large part in the November correction in palladium and therefore the G20 meeting could be a very critical junction for prices. In fact any glimmer of hope on US/Chinese trade relations could vault palladium prices back toward the November high up around $1,168. January platinum market suffered only minimal damage with the slide at the end of last week and the market would appear to have a close in pivot point to start the week at $842.80 and more significant support seen down at $840. However, given that the platinum market held up impressively to the recent physical commodity market washout wave an improvement in US/Chinese trade relations might see platinum lag behind palladium on a rally. Furthermore, the most recent positioning report in platinum showed a net spec and fund long of 27,000 contracts and therefore an escalation of US/Chinese trade tensions could result in a quick setback toward $832 on long liquidation.

As indicated already we think the gold market is a “physical commodity” and will likely benefit in the event of a positive transaction between US and Chinese officials at the G20. Fortunately for the bull camp the most recent positioning report in gold showed a “nearly leveled” spec and fund reading and that should cushion gold in the event that tensions escalate instead of improve. In short we think that gold and silver are facing a potential major pivot point this week but the risk to longs should be moderated by the markets technical position and given the relative proximity to very significant consolidation low pricing on the charts. After a flurry of long December gold recommendations throughout the August through early November timeframe we now suggest traders shift trades into the February contracts. In fact with February gold this morning sitting roughly $32 an ounce above the November consolidation lows and the potential for a volatility event this week, we suggest that position traders consider adding the purchase of three February gold $1250 calls for $14 each and then sell a February gold futures contract. Hopefully an expansion of two-sided volatility will allow us to capture some capital from the short futures component and ultimately allow us a longer-term leveraged look at long side.”

Silver closed down $0.04 at $14.18.

Platinum closed up $2.80 at $845.70 and palladium closed up $10.20 at $1141.30.

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Posted on November 19, 2018 November 19, 2018

Gold – Pretty Quiet Folks

Commentary for Monday, Nov 19, 2018 (www.golddealer.com) – Gold closed up $2.30 at $1223.10. It is a pretty safe bet to claim the metals are now in a holiday trading mode – or are they? Thanksgiving is a national holiday celebrated on various dates in Canada, the United States and the Caribbean. Similarly named festival holidays occur in Germany and Japan. So while stores and commodity markets will be closed on Thursday – some venues will be closed Wednesday, Thursday and Friday – the CME for example.

And some will trade a partial day on Friday while world and electronic commodity trading might be more colorful. This cabal also happens during the Christmas season so the time is ripe for all kinds of shenanigans. You know what I mean – that sale of 12 metric tons of gold that shows up on someone’s computer at midnight and gets talked about on the internet until morning.

Not that anything will happen – it will be most likely quiet but you never know and so you should discount what I call “midnight trading”.

We will be closed for Thanksgiving (Thursday and Friday) and wish you all the best.

That being said the world gold trade is still mixed but hopeful in that gold – for now looks like it may have put in a real short-term bottom at $1200.00 in early November. How this develops with the last FOMC meeting right around the corner remains to be seen.

The more traditional observers remain cautious as higher interest rates threaten the price of gold. The more hopeful simply can’t explain why gold is holding above $1200.00 since early August. The Dollar Index seems happy between 94.00 and 96.00 so they can’t make a case that a weaker dollar is helping support gold prices.

But the fear of a wobbly DOW does create trading angst and a good reason to seek a bit of safe-haven protection. The Dems want to make the case that the President is in trouble and nothing is going right but the numbers don’t bear this out. Employment remains steady to higher with higher wages in the pipeline. Wall Street projects record spending over the holidays so “immediate collapse” does not seem reasonable.

The rumor of higher gold prices before year end has been around since the summer months. Not that I would discount this completely but at the moment I just don’t see much fear factor.

The American public might just be looking forward to a nice holiday season as the Republicans and Democrats continue to throw food at each other. Who knows maybe this “gridlock” scenario makes everyone feel more relaxed. This kind of mood does not lend itself to safe-haven buying but like I said at the beginning it is a fair question to wonder why the price of gold is holding up?

This from Zaner (Chicago) – “The gold and silver markets look like they put in significant lows last week. Both markets ended the week on a firm note and appeared well positioned to test ether October highs. Last week, these markets were able to capture some safe-haven buying for a change after the Brexit deals lost support in the British parliament. Also, comments from several Fed members suggested that plans for a series of rate hikes in 2019 was far from settled sent the dollar lower after it traded to 16-month highs on Monday. The jury is still out on the Fed’s plans, but traders are becoming concerned about a slowdown in China and Europe, and they also worry about the effects that the trade war between the US and China is having on the global economy. The weak close in the Dollar Index on Friday below moving average support and a potential major high on the weekly chart could put gold and silver in a strong position to start the week.

The Commitments of Traders Futures and Options report as of November 13th for gold showed non-commercial traders were net sellers of 35,141 contracts last week, bringing them to a net short of 22,931 contracts, which means they went from a net long to a net short position. Non-commercial and nonreportable traders combined were net sellers of 43,925, bringing them to a net short of 10,034. Managed money traders were net sellers of 33,378, bringing their net short to 70,864. These traders have been net short since July, and their maximum net short position to date was 103,009 on October 9th. In silver, non-commercial traders were net sellers of 14,629 contracts, bringing them to a net short of 17,417. Non-commercial and nonreportable combined were net sellers of 14,251, bringing their net long position down to 6,371. Managed money traders were net sellers of 18,512 contracts, bringing their net short to 38,846. Their largest net short position was 47,480 on September 4th. The COT data was measured last Tuesday, which was the day both gold and silver put in significant lows. For silver, it was a new contract low with a key reversal day. Given the gains these markets have made since Tuesday, we expect that managed money have significantly reduced their net short positions.

December palladium broke out of a 4-week consolidation last week to trade to new all-time highs. This appears to be driven by strong demand from the auto sector, particularly in China, which is expanding its consumption of auto catalysts to alleviate a critical air pollution problem. Last week the Platinum Study Group forecasted a 290,000-ounce deficit for palladium this year, despite weaker car sales being reported in China and the US. Look for support in December palladium at $1,137.30 and $1,104.30, with the round number resistance at $1,200. Platinum also rebounded last week after putting in a 3-week low. Its low corresponded with the lows in gold and silver. January platinum has maintained a series of higher lows since establishing a contract low on August 16th, and this is bullish. Look for support at $835.30, with resistance at $855.20 and $861.40.

The Commitments of Traders Futures and Options report as of November 13th for platinum showed non-commercial traders were net long 23,227 contracts, a decrease of 3,128 on the week. Non-commercial and nonreportable traders combined were net long 27,994, a decrease of 3,780. Managed money traders were net long 10,221, a decrease of 354. These traders were net short a record 30,325 as recently as September 4th. For palladium, non-commercial traders were net long 13,720 contracts, an increase of 116 contracts on the week, while non-commercial and nonreportable combined were net long 13,694, a decrease of 23. Managed money traders were net long 12,837, an increase of 258. The record net long for these traders was 27,471 on January 9th of this year.”

Silver closed up $0.02 at $14.38. While silver prices remain cheap this area has calmed down considerably in the physical world. Perhaps just because of the holiday season.

Platinum closed up $1.30 at $843.60 and palladium closed up $17.20 at $1171.20.

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Posted on November 16, 2018 November 19, 2018

Gold Moves Higher into the Weekend

Commentary for Friday, Nov 16, 2018 (www.golddealer.com) – Gold closed up $8.00 at $1220.80. The Monday close was $1201.30 so on the week gold moved higher by almost $20.00 but more importantly created some real buzz in the process. So gold continues to surprise – or is this explanation just wishful thinking?

Of course the precious metals community look for higher prices based on traditional reasoning – that being that government prints too much paper money and gold is sensitive to this inflationary trend. But it is hard to make this reasoning work these days as higher interest rates threaten the bulls and a strong economy pushes stocks prices higher and gold lower.

This bearish scenario has been popular for a long time – since the beginning of 2014. Since that time gold has struggled with mixed signals – the bulls and bears fighting it out as it were on both sides of $1200.00. Personally I believe this back and forth trend will stay in place – perhaps well into 2019 as gold works on its shorter term footing – waiting for inflation to push prices higher.

But recent political angst, tremors in foreign currencies, ongoing issues between China and the US, the apparently unsolvable issues with Iran and trouble within the Trump White House and ongoing worries about the ability of the DOW to hold onto recent gains has perhaps redefined the bullish scenario. Note the word “perhaps” – this recent safe-haven demand has hung around for more time than most trade people had supposed.

To say this has redefined the shorter term gold pricing outlook is going too far because dollar strength is still waiting on the sidelines and will rain on the bullish parade.

Gold was basically firm today because the Dollar Index moved from 97.00 to 96.50. That is the real story and regardless of this week’s higher prices I think that technically this market is heavy and still favors lower prices.

But the “impossible” scenario of a lower dollar might become more of a consideration. Especially if Trump is in trouble and cracks in the Washington veneer begin to show.

The Trump Effect was much bigger than most believed – the DOW shot higher on the promise of a better tomorrow. If in the end the Republicans can’t deliver or gridlock sours the mood – the consequences for higher gold prices are obvious.

This from Zaner (Chicago) – “Gold was higher overnight, as safe haven buying that had emerged over the past couple of days continued. Worries that the UK would “crash out” of the EU without a divorce deal have supported the precious metals markets the past couple of day, and gold and silver were both higher on Thursday and overnight in the face dollar gains. A mixed set of US economic numbers on Thursday may have dampened 2019 Fed rate hike prospects and provided gold and silver with underlying support. Also, Atlanta Fed Presidents Bostic said that the Federal Reserve should “proceed cautiously” in raising rates and should keep a “keen eye” on the data. He also said the Fed is close to having a neutral policy, and he said that where they want to be. There are also rumblings in the press that CEOs are starting to worry that an economic slowdown is coming sooner than expected and that the current rate-hike plans by the Fed may need to be revisited. Reports that President Trump will meet with Chinese President Xi to discuss trade at the G-20 meeting could be supportive to metals on ideas that an agreement would support the global economy and boost demand. Gold bulls can find some encouragement by the fact that December gold has a series of higher lows on the charts, indicating that the modest uptrend is still intact. On Thursday the market closed above the 50-day moving average for the first time since November 9th. December silver was up sharply on Thursday, and for the first time in a long time it seemed to lead gold higher. The market followed through on a key reversal bottom from Wednesday. Stochastics have crossed positive in gold and silver, which is supportive.

December palladium traded to an all-time high of $1,161.50 on Thursday, as the market benefited from a rebound in Chinese equity markets and an improving outlook for the Chinese economy. The proposed meeting between Trump and Xi on trade creates optimism that the trade standoff will end, which would be supportive to palladium demand for auto catalysts. These ideas were reinforced on Thursday when the World Platinum Investment Council released a report stating that China’s new auto emissions standards will boost demand for PGMs. The next upside target for December palladium could be up around $1,250, while support is at $1,101. January platinum was higher yesterday as well. Its technical outlook has improved over the past couple of days by holding above the 100-day moving average on Wednesday, by the 50-day crossing above the 100-day on Wednesday, and by opening above the 50-day and holding above it on Thursday. Like gold, platinum has a series of higher lows on the chart that could be encouraging to the bulls. January platinum traded right up to $848.60 on Thursday, the 38.2% retracement of the November 8-14 selloff, and a move above there would project to $854.90 and $861.20.

December gold holding above the August, September and October lows on its recent correction is supportive. Gold also closed above the 50-day moving average at $1,213.80 and held that level overnight, and this may give the bulls hope that the market will test the top of the recent consolidation at $1,246. Look for interim resistance at $1,225, with support at $1,213.80 and $1,200. In December silver, a key reversal to the upside and a bullish crossover in the stochastics from an oversold condition could mean the market has finally put in a low. The next key resistance for December silver is $14.50, with support at $13.86.”

Silver closed up $0.12 at $14.36.

Platinum closed up $1.30 at $843.60 and palladium closed up $17.20 at $1171.20.

Our Patented Employee Survey – Gold’s Direction Next Week?

Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 7 believe gold will be higher next week 1 thinks gold will be lower and 2 think it will be unchanged.

Our Patented Customer Survey – Gold’s Direction Next Week?

Like the employees, our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 48 people thought the price of gold would increase next week 42 believe the price of gold will decrease next week and 10 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Nov 12 – Nov 16

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As always we appreciate your business. Thanks for reading and enjoy your weekend.

Posted on November 15, 2018 November 15, 2018

Gold Firms Up?

Commentary for Thursday, Nov 15, 2018 (www.golddealer.com) – Gold closed up $4.90 at $1212.80. A little excitement today – but not much – gold was firm, most likely because of safe-haven buying stemming from problems in England and Brexit. Actually the whole of Europe could use some good news – their economic picture and stock markets could use help and clarity. The US remains the world engine of commerce for now but consider that the DOW also blinked today off a few hundred points on problems in Europe but managed to recover.

At any rate gold did react in the sense that the breakdown at $1215.00 which threatened $1200.00 support has been given a reprieve. So gold has gotten more interesting but it remains to be seen if this renewed support will hold.

To me this market still looks dyslexic – last week a hawkish FOMC and higher interest rates pushed gold prices lower. Today we have a stronger dollar and gold still manages to push higher – we might be looking at some fear factor here or traders are just comfortable holding a tight trading range between $2008.00 and $2014.00 with uncertain headlines. Tomorrow we could be back to higher interest rates equals lower gold and a defensive market.

The big plus with the gold trade these days is that it is acting more like a reserve asset and less like a commodity even with a strong dollar. This “last resort” benefit has always made gold bullion a good counterbalance to world craziness. And with today’s extreme leverage I’m surprised we even need to have his conversation.

As much as I’m impressed with the solid US recovery the trouble in Europe continues to simmer and this might eventually rattle Wall Street. A nervous US equities trade is enough to provide some gold pricing support. Anything more than “nervous” can translate into higher gold prices reinforced by world safe haven demand. A bit of a stretch at this time but this scenario could easily develop and become a big plus in the physical gold market.

And while the US/China tariff issue is on the back burner for now it’s amazing how inept each side seems to be regarding what the other party wants. You would think that regarding these typically giant trade issues that each side would be doing something more than just “feeling” its way around in the dark – looking for what the other party will settle for – now that should make everyone feel a bit uncomfortable.

But like I said yesterday I still favor a generally back and forth gold market through the end of the year. And would not be too surprised to see gold hold up as the FOMC raises interest rates in late December – there is that much angst in the world at the present.

This from Zaner (Chicago) – “Gold prices were firm overnight despite a gain in the dollar. The market experienced its biggest one-day gain in nearly two weeks on Wednesday, and it was only the second time this month that it closed higher on the day. December gold appears to have rejected the $1,200 level, as it probed below there on Tuesday and Wednesday but managed to close back above it each of those days. The rate-hike theme may have played itself out. US CPI rose 0.3% in October, the largest gain in nine months, and yet the gold market rallied. This was in stark contrast to last Friday, when the strong PPI led to a soaring dollar and a steep selloff in gold and silver on ideas that the higher inflation figures only strengthen the Fed’s resolve to raise rates. Reports that the US will hold off on automotive import tariffs for now could be seen as a boost to free trade and therefore supportive to the global economy, and this is supportive to commodities in general. There were also reports of central bank buying, and as we have mentioned earlier this week, ETF holdings are at their highest levels since July, which is longer-term bullish. December silver staged a technical reversal from a new contract low yesterday, which is bullish as well, as long as it can hold above that low of 13.86.

Report yesterday that the US may be holding off on automotive import tariffs for a while was particularly supportive to palladium because of its usage in pollution control devices. December palladium broke out of a 2-day consolidation to trade to its highest level since November 8th on Wednesday. Fundamentally and technically, palladium appears to be the best-placed of the metals, as it is approaching its contract high, and it could be poised to test that level this week. Look for resistance at $1,124.40 and $1,137.30, with support at $1,077.70 and $1,054.40. January platinum continued to work lower on Wednesday, but it did find support at the 100-day moving average, which comes in at $827.60 today. Platinum was the only metal in the precious or PGM class that was lower on Wednesday, but we would expect it to eventually reverse that action if gold continues to work higher. The 50-day moving average recently crossed above the 100-day, which is supportive. Look for support at $827.60, with resistance at $875 and $881.50.

December gold respected the August, September and October lows on the recent correction, which may give the bulls hope that the market has enough strength to go back and test the top of the recent consolidation, which comes in at $1,246. Look for interim resistance at $1,221.10 and $1,225, with key support at $1,200. An outside reversal in December silver marks another attempt at putting in a low. Look for resistance at $14.45, with support at $13.86.”

Silver closed up $0.18 at $14.24.

Platinum closed up $11.50 at $842.30 and palladium closed up $27.20 at $1154.00.

This is our usual Thursday Chicago Mercantile Exchange report covering the last 5 trading days – so we are looking at the trading volume numbers for the “November” Gold contract: Thursday 11/8 (331550) – Friday 11/9 (328635) – Monday 11/12 (327376) – Tuesday 11/13 (327145) Wednesday 11/14 (320253) and the trading volume numbers for the ” November “Silver contract: Thursday 11/8 (142538) – Friday 11/9 (143527) – Monday 11/12 (141011) – Tuesday 11/13 (138926) – Wednesday 11/14 (136863).

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Posted on November 13, 2018 November 13, 2018

Gold Remains Quiet

Commentary for Tuesday, Nov 13, 2018 (www.golddealer.com) – Gold closed down $2.10 at $1199.20 in quiet trading today. It looks left footed to me – but there are still big questions regarding safe haven demand relative to possible big shifts in the DOW and more likely the notion of returning inflation. We have been mostly inflation free for years now and so have been blase when it comes to figuring this menace into our financial plans.

Still I’m like everyone else at this point, I don’t see inflation numbers rising but there are a few signposts. The roaring US economy is hiring and some jobs go unfilled – this is a reminder that employers will up the ante to get qualified workers and this pushes the inflation envelope. I have mentioned this before along with a feeling that the FOMC would not be so hawkish if they were not worried about returning inflation so while the numbers are not rising – rumblings are.

It always helps to remember the gold market thrives on fear. This was apparent not long ago when the DOW quaked. I’m still not a big fan of falling stocks especially now with the House in Democratic hands but you never know.

The DOW was around 19000 when President Trump was elected so today’s number at 25000 could provide a sizable downdraft. In fact if only half this difference turned into red ink gold would soar – so this remains a hidden threat.

For now the price of gold remains married to the dollar. The Dollar Index has pushed steadily higher this past week, moving from less than 96.00 to more than 97.00. This figures in that the economy is still moving along, the Dem win settles the water somewhat and the promised interest rate hike by the FOMC before Christmas helps.

Actually if you figure the negatives gold is holding better than expected – the big question being whether it will hold the important psychological support of $1200.00. I’m not convinced – safe-haven demand has been mild although the exchange traded funds seem interested again.

If $1200.00 really breaks down we could see a test of $1150.00 and perhaps a bear raid pushing $1100.00 but that’s about it – safe haven demand would quickly appear at these lower levels and folks have already begun to bargain hunt.

I think a more likely scenario will be a relatively quiet market with small price swings through the end of the year – but you never know these days.

This from Zaner (Chicago) – “Gold was a bit weaker overnight even though the dollar set back from its lofty gains on Monday. Crude oil continued its steep sell-off, which left commodity bulls little to hang onto. With the dollar reaching its highest level since June 2015 yesterday and bonds rallying on expectations of a Fed rate hike in December and more in 2019, the gold bulls were pushed to the sidelines. Even though last week’s US economic numbers suggested that inflationary tendencies may finally be starting to emerge, the market has been more focused on Fed action these days than on the possibility that inflation will push up commodity prices. Even a strong PPI number last Friday put the inflation bulls at bay, as it just seemed to bring interest rate hikes into focus. The CPI number is out on Wednesday, and a strong gain in that number could bring in more selling in the metals on the same theme, though we suspect that the rate hike expectations may have already peaked. From a longer term perspective, the gold bulls can take heart that ETF shares in gold continue to increase. Shares have risen for five straight weeks, and they saw a $156 million gain last week, the most since July. Gold and silver may be approaching short term oversold levels, but there is little for the bulls to hang onto at the moment, and technical indicators suggest that the bears have momentum. December silver fell to new contract lows overnight, and a close below those levels could bring on some more selling. However, the COT spec positions, while showing a net long, can hardly be described as burdensome. This could limit any long liquidation selling.

PGM markets recovered overnight after following gold and silver lower yesterday. Palladium enjoys fairly consistent industrial demand from the auto sector, and as India and China expand their anti-pollution efforts, we can expect demand for palladium to continue to grow. However, when the market hears bad news about China’s growth as it did last week, then the bulls can get a bit nervous. December palladium is still in a long term uptrend, but stochastics crossing negative and RSI divergence at the recent highs are negative. Look for support in December palladium at $1054.40, with resistance at $1124.40. January platinum support comes in at $831.10, with resistance at $870.30.

A close below $1197.20 today in December gold would set the market up for a test of the September low at $1184.30. Look for resistance at $1215.90. December silver made a new contract low overnight, leaving the next support down at $13.635, the December 2015 low on the nearby chart.”

Silver closed down $0.02 at $13.95.

Platinum closed down $4.60 at $837.10 and palladium closed up $6.50 at $1108.70.

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