Gold Ponders its Future
Commentary for Friday, Nov 30, 2018 – 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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