Gold Steady – A Plus for Now
Commentary for Wednesday, Feb 6, 2019 (www.golddealer.com) – Gold closed down $4.70 at $1309.50 today. We closed Monday at $1314.30 so in the last few days we have drifted somewhat lower but have held a tight range. The 30 day gold price picture remains bullish in that we have pushed into higher ground moving from $1280.00 through $1320.00 but the shorter term view is that gold has paused – waiting for what I’m not sure but there has been no reaction to the political football still in place and the late sell-off today was not encouraging.
The short term Dollar Index is somewhat stronger moving from 95.25 through 96.25 and gold is still holding up which is a plus. Stocks moved lower after Trump’s State of the Union address but this did not produce much in the way of fireworks and the closed Chinese market over the Lunar holiday decreases trading interest.
So for now I still think gold is subject to an older trading paradigm – the 1 year pricing charts will show that it is subject to that pesky overhead resistance at $1350.00 which amazingly goes back to 2014.
Unless gold can break to the upside and maintain numbers above $1350.00 it appears to be stuck at least for the shorter term. That being said we are seeing some interest in physical buying in the mid-range to big boy range. This is relatively new and so is encouraging from the US side.
The world side continues to encourage bullish hopes. This from the World Gold Council – Global gold-backed ETFs continued their strong growth in January – “Holdings in global gold-backed ETFs and similar products rose in January by 72 tonnes(t) to 2,513t, equivalent to US$3.1bn in inflows, marking the fourth consecutive month of net inflows. Notably, total holdings have not been this high since March 2013, when the price of gold was 22% higher. Global gold-backed ETF holdings have grown 6% over the past two months, driven by market uncertainty and a shift in sentiment that drove the price of gold 3.5% higher in January alone. Global assets under management (AUM) rose by 6% in US dollars to US$107bn over the month.”
Today’s gold close ($1309.50) also encourages the bullish technical position relative to its moving averages. The 50 Day Moving Average ($1274.00) the 100 Day Moving Average ($1244.00) and the 200 Day Moving Average ($1246.00).
But I think that gold traders are still fearful of a stronger dollar even though the latest FOMC inside information seems to suggest they are at least turning less aggressive. So we are back to shifting through small pieces of information on a daily basis – which makes the bigger picture more difficult to see. I think the gold community would sleep better if they simply refocused on the bigger picture. Who is going to pay back all this borrowed money and when?
Generally speaking the world gold market has had its finger on the trigger for about three years which resulted in a back and forth market mostly between $1200.00 and $1350.00. I will leave it up to the reader to decide whether this latest “awakening” in gold will ultimately produce the “big bang” some are looking for but ultimately dollar direction will decide who gets the cigar.
This from Zaner (Chicago) – “Global equity markets overnight were mostly lower with the exceptions the Australian and Spanish markets. With the Chinese New Year holiday continuing to limit action in Asia, the focus of the trade sits squarely on upcoming data from the US. However, it is possible that news of a high level meeting between US and Chinese officials next week will serve to deflate safe haven interest in the markets and perhaps rekindle risk-on. It would not appear as if the US State of the Union address resulted in a definitive market reaction but there would appear to be increased chances of another US government shutdown over the “wall”. Overnight the markets were presented with German factory orders for December which fell surprisingly by 1.6%. However year-over-year declines in German factory orders were really startling with a decline of 7%. The North American session will start out with a weekly private survey of mortgage applications, followed by a November reading on the international trade balance which is expected to show a moderate decline in the monthly deficit. Fourth quarter non-farm productivity is forecast to have a modest decline from the third quarter’s 2.3% reading, while fourth quarter unit labor costs are expected to have a moderate increase from the third quarter’s 0.9% reading. The January Canadian Ivey PMI is forecast to have a moderate decline from December’s 59.7 reading. Fed Chair Powell and Fed Vice Chair Quarles will speak late today. Earnings announcements will include Eli Lily, GlaxoSmithKline, General Motors and Boston Scientific before the Wall Street opening while MetLife and Prudential Financial report after the close.
Despite a bit of renewed safe haven psychology from weak U.S. and European data, renewed fears of another US government shutdown, forecasts of expanding central bank gold demand and upbeat silver Institute projections for silver, prices have started out under pressure. Obviously strength in the dollar remains the primary bearish force but the charts appear to have settled into a lower high and lower low pattern. Unfortunately for the bull camp total gold derivative holdings fell again in what has become a recent trend and a major fund manager (BlackRock) indicated the Fed could still raise interest rates twice this year. In the end, the primary driving force for gold and silver will likely remain the Dollar and the Dollar looks capable of further gains! In the event the March Dollar Index manages to settle in above 96.00 that could be a psychological inflection point for a fresh wave of currency related selling of gold and silver. The delayed Commitments of Traders Futures and Options report as of December 31st for Gold showed Non-Commercial and Non-reportable combined traders held a net long position of 166,647 contracts. The delayed Commitments of Traders Futures and Options report as of December 31st for Silver showed Non-Commercial and Non-reportable combined traders held a net long position of 58,864 contracts.
Once again, divergence returned to the PGM complex yesterday with the palladium market regaining control over platinum and while that is usually a bullish condition for the complex, the bull case appears to be lacking this morning. Apparently favorable equity market gains kept the hope for favorable palladium demand in the forefront yesterday and one might expect palladium and platinum to garner some support from industry comments overnight predicting South African production of palladium will not be enough to correct the world deficit condition. In fact some PGM/Mining stocks have shown some strength recently because of consolidation in the gold mining sector but also because of the idea that demand will consistently overcome palladium supply for “years”. Close-in support in March palladium is seen today at $1,316.40 and resistance isn’t seen until $1,351. On the other hand, the platinum market faltered yesterday, closed poorly and has damaged its charts again this morning and that leaves critical pivot point support today at $816.40. The delayed (old) Commitments of Traders Futures and Options report as of December 31st for Palladium showed Non-Commercial and Non-reportable combined traders held a net long position of 14,679 contracts. The Commitments of Traders Futures and Options report as of December 31st for Platinum showed Non-Commercial and Non-reportable combined traders held a net long position of 19,920 contracts.”
Silver closed down $0.13 at $15.66.
Platinum closed down $6.00 at $809.80 and palladium closed up $10.40 at $1390.00.
This is our usual ETF information – All Gold Exchange Traded Funds: Total as of (1/29/2019) was 70,437,430. That number this week (2/6/2019) was 70,210,305 ounces so we dropped 227,125 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 2019 was 70,515,544 and the record low for 2019 was 68,732,549.
All Silver Exchange Traded Funds: Total as of (1/29/2019) was 613,124,185. That number this week (2/6/2019) was 614,978,173 ounces so we gained 1,853,988 ounces of silver.
All Platinum Exchange Traded Funds: Total as of (1/29/2019) was 2,367,497. That number this week (2/6/2019) was 2,425,580 ounces so we gained 58,083 ounces of platinum.
All Palladium Exchange Traded Funds: Total as of (1/29/2019) was 785,540. That number this week (2/6/2019) was 780,546 ounces so we dropped 4,994 ounces of palladium.
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