Gold Remains Surprisingly Firm
Commentary for Wednesday, June 6, 2018 (www.golddealer.com) – Gold closed down $0.40 at $1297.10. So gold remains Steady Eddie – yet at the upper end of its current range. The 30 day pricing chart is the best shorter term picture – the price of gold off its highs ($1320.00) a bearish plus yet holding the $1290.00 through $1305.00 range indicating the bulls are pushing back.
Today the dollar was somewhat weaker – the Dollar Index moving from 93.83 through 93.40 before bouncing higher 93.65. The weekly Dollar Index chart shows a similar pattern but the monthly chart might suggest a generally weaker index moving from about 95.00 through less than 94.00 so supporting higher gold prices.
The price of crude oil today was $64.87 a barrel today off from recent highs of more than $72.00 so this does not help the case for higher gold but keep in mind that we are still much higher than the $43.00 numbers we saw last summer. And higher oil means higher gas prices which helps support inflation talk coupled with tougher tariffs now coming from Mexico and Canada.
The close today ($1297.10) is still not enough however to create much excitement. That close is below the 50 Day Moving Average ($1317.00) below the 100 Day Moving Average ($1324.00) and below the 200 Day Moving Average ($1308.00). So gold remains kind of left-footed but with promise in that it still remains within striking distance of $1300.00.
I can’t say any geopolitical news has moved the needle much even the problems in China, Spain or Portugal. The retaliatory tariffs from Mexico and Canada have not even created much conversation. This is surprising really considering that gold moved aggressively higher when President Trump just talked about tariffs but now that both sides have used them it remains sleepy in the extreme.
Our across the counter business is quiet so current pricing support for gold is coming from overseas and investment hedging in my opinion. But the Asian trade remains quiet most likely because this segment of the market is price conscious they are willing to wait for a better deal.
Everyone is a bit anxious about the upcoming FOMC meeting on June 12th and 13th. There is the usual case made that higher interest rates will push gold lower but there is now some reasonable talk that gold prices will firm nicely after the rate hike. Perhaps a kind of relief rally and that is the reason prices are not drifting lower than the recent $1290.00 floor.
So for the present I’m bringing back the idea of a downstairs popcorn machine so we all have something to do while sweating out which way gold will break this next week.
This from Zanere (Chicago) – “Seeing the dollar fall to its lowest level since late May should be supportive to gold, but bonds and notes were lower as well, and the higher long term rates will have a tendency to pull buyers away from non-interest-bearing instruments like gold. This is the gold bulls’ chief dilemma – not enough conviction to lift the market higher even though the dollar is looking precarious at current levels. There was an unofficial report from India that their gold imports fell to 77.6 tonnes in May, down from 126.2 tonnes for the same period last year. This was the fifth straight decline. Gold did manage to trade back above $1,300 on Tuesday in an outside session that portended more sideway, choppy action ahead. The fact that dollar has not been able to fully benefit from mostly positive US economic data this week has the dollar bulls nervous and lends encouragement to the gold bulls. Freeport-MacMoran is in a dispute with the Indonesian government over environmental concerns at their Grasberg mine. While this is not a new issue, the fact that it is in the news again could raise concerns about gold supply, as Grasberg is said to hold the world’s largest gold deposit. The strong economic data of late seems to be paving the way for a rate hike at next week’s FOMC meeting, and this makes it hard to build a long term bullish case for gold, but given the dollar’s lack of follow through strength off of bullish news, we think gold could find enough support to trade back to the top of the recent trading range.
A new GFMS report is calling palladium supply “stable,” due to increased autocatalyst recycling and higher mine output in North America offsetting lower production in Russia and South Africa. This is despite recent reports that the global palladium production/usage deficit is expected to continue in 2018. The report also forecasted continued growth in auto industry demand and stated that palladium prices have not gotten high enough to encourage automakers to substitute other metals, although there are some manufacturers exploring options in case the gap widens. The report also put the 2018 platinum deficit to rise to 280,000 ounces in 2018, up from 54,000 in 2017 and the biggest shortfall since 2014. If this proves true, it should help platinum eventually find a bottom. September palladium recovered overnight, and it seems capable of testing the $1000 level as long as traders stay bullish on Chinese auto demand. Key support today comes in at $972.40. Support for July platinum comes in at $892.70 with resistance at $916.”
Silver closed up $0.15 at $16.64.
Platinum closed up $6.30 at $905.60 and palladium closed up $28.40 at $1027.10. The big gap between gold and platinum prices continues to generate investment interest in platinum bullion.
This is our usual ETF information – All Gold Exchange Traded Funds: Total as of (5/30/18) was 70,106,505. That number this week (6/6/18) was 69,536,427 ounces so over the last week we dropped 570,078 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 70,763,846 and the record low for 2018 was 68,169,590.
All Silver Exchange Traded Funds: Total as of (5/30/18) was 643,699,529. That number this week (6/6/18) was 650,807,745 ounces so last week we gained 7,108,216 ounces of silver.
All Platinum Exchange Traded Funds: Total as of (5/30/18) was 2,331,714. That number this week (6/6/18) was 2,335,593 ounces so over the last week we gained 3,879 ounces of platinum.
All Palladium Exchange Traded Funds: Total as of (5/30/18) was 1,028,161. That number this week (6/6/18) was 1,016,793 ounces so last week we dropped 11,368 ounces of palladium.
The GoldDealer.com Unscientific Activity Scale is a “3” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 3) (last Friday – 2) (Monday – 3) (Tuesday – 2). 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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