Gold Hangs Out
Commentary for Friday, June 1, 2018 (www.golddealer.com) – Gold closed down $5.30 at $1294.80 so we are below the psychologically important $1300.00 number again. But on the week we are unexciting in the extreme – the high to low spread being $6.70. The most recent manufacturing index numbers beat expectations today and the job’s created number for May exceeded expectations – gold was weaker.
It actually dropped below $1290.00 in early trading but managed to recover somewhat before the close in typical slow summer trading. It is interesting that amid this quiet the number of US Gold Eagles produced by the Mint in May were up dramatically and according to Reuters the figures were the highest since 2015.
For sure there are plenty of cross-currents floating around to support gold like problems in Italy, Iran and Spain and renewed worries about Korean denuclearization.
Gold is ignoring tariff concerns. The countries subject to US tariffs is growing and so is the blow-back as Canada, Mexico and the European Union impose tariffs on US goods. I’m still not sure how serious each side is in this debate but it could get out of hand – push the dollar and stock market lower and provide more support for gold at these higher levels.
The dollar was trading higher today but the weekly dollar index picture is the story teller. The Dollar Index was as high as 95.00 this week and is now trading near 94.00 – weaker which is providing some support for gold.
Whether gold will hold up with another FOMC meeting right around the corner remains to be seen – the June 12th and 13th meeting and solid economic news suggest a rate hike is in the cards. But relatively speaking money is still cheap.
There are two schools of thought about rising short term interest rates – the first being that because the price of gold is choppy to technically weak it will test that $1280.00 support shelf which has been in place since late last year.
The second school is more optimistic and feels that once the next FOMC meeting is behind us and traders get more clarity gold will break into higher ground – the continuation of a rising bottoms pattern which began in the summer of last year around $1220.00.
So for now place your bets – which way do you think gold is going to move?
And have some fun in the process – it is after all National Donut Day which started in Chicago in 1938 as a way to raise money for the needy and yet another reason for us to visit Randy’s.
But keep in mind over your deserved donut that owning gold bullion makes sense. It provides virtually anyone an iron clad way of protecting wealth against world loose money policies which can only defy gravity for so long.
And keep in mind there are unrecognized advantages working in your favor especially when gold is back footed. First the price is discounted from recent highs – everyone enjoys a better deal. Also consider that the price of gold is actually going up relative to many other foreign currencies. This is not the case relative to the dollar but the world is a big place and collectively selling weaker paper currencies and buying gold bullion is not a bad idea.
This from Zaner (Chicago) – “The gold market spent the majority of the Thursday trading session in negative territory, and that has to be disheartening to the bull camp as the US Dollar at times was significantly weaker and at the lowest levels since May 25th. Clearly the gold market continues to face a lot of crosscurrents as the situation in Italy has definitively improved which should tamp down safe haven interest for gold and the Dollar, but that development is also likely to pressure the dollar lower as the trade removes further safe haven premium from Dollar pricing. On the other hand US trade relations continue to deteriorate as US trading partners retaliate against the US tariffs. In our opinion, the gold market has been hostage to the action in the dollar and while the trade issues are catching the headline coverage this morning the Dollar and therefore gold might shift focus to US Non-farm payrolls. With US scheduled data this week showing at best mixed results, the Dollar should continue to be off balance unless US payrolls meet expectations just under 185,000. However, the Fed’s Brainard overnight suggested that the Fed needs to take rates above neutral to a modestly restrictive level and that has given the $ a minor bid early today. Fortunately for the bull camp the Italian news should ultimately be seen as bearish for the Dollar which should support gold around the $1,300 level. A negative development for gold came from Societe Generale yesterday as they released a slightly bearish outlook on gold, with a price targeting into the 4th quarter that is roughly $20 an ounce below current price levels! Countervailing the negative gold price forecast is news overnight that US Eagle gold coin sales leaped sharply higher in May!
The PGM complex performed impressively yesterday in a move that was probably the result of the favorable Chinese economic information released Thursday morning. Both PGM markets are showing some follow through gains this morning perhaps because of a return to risk on in global equity markets In other words classic physical demand has helped palladium (in particular) rally against the tide of disappointment in the rest of the metals complex yesterday. As opposed to gold, the palladium market saw a bullish price forecast from a trading firm that predicted palladium prices to rise to $1,025 in the next six months. In short with a five day upside breakout in palladium yesterday and any weakness in the Dollar today, the market might forge a further rise to the next resistance point up at $996. However, to engineer a rally straight away probably requires signs of a tempering of trade tensions and persistent positive global sentiment. While the July platinum contract also managed an upside breakout and the highest trade since May 14th yesterday, it was unable to hold that pulse up and performed miserably relative to palladium in a fashion that suggests it might be locked into a range bound by $906.10 and $916.”
Silver closed down $0.01 at $16.39.
Platinum closed down $3.40 at $904.70 and palladium closed up $13.20 at $1002.10. Platinum is now $390.00 less than gold and renewed investor interest continues.
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: 8 believe gold will be higher next week 1 thinks gold will be lower and 1 thinks 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 30 believe the price of gold will decrease next week and 17 think prices will remain the same.
Precious Metal Closes & Dollar Strength – May 29 – Jun. 1
The GoldDealer.com Unscientific Activity Scale is a “4” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – Memorial Day) (Tuesday – 2) (Wednesday – 3) (Thursday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”. Our “activity” is better understood from a wider point of view. If the numbers are increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
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