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Gold Steady into the New Year

Gold Steady into the New Year

Commentary for Friday, Dec 28, 2018 – Gold closed up $2.50 today at $1279.90. Actually it looks a little sleepy – with typical holiday trading which was choppy around $1278.00. Still gold holds steady at 6 month highs and expectations for the New Year appear upbeat as Wells Fargo turns positive on the metals. A somewhat weaker housing number did not create much stir but the expectation of higher interest rates remains a threat to gold’s technically upbeat numbers in place since August.

Whether this market continues higher in the New Year is still a bit problematical but the mood these days is untypically upbeat. The conservative case for gold still poses the same old question. Is this relatively long support line going back to 2015 around $1200.00 breaking higher or are we still stuck in a pricing trough which presents huge overhead resistance at $1400.00?

The wobble in recent DOW pricing may set the tone one way or the other and underpin safe haven buying if indeed the Trump business rally has seen better days.

But as of now this is not clear – only a speculative possibility which provides some safe haven support. Of course the dollar will remain center stage and its strength in light of further interest rate hikes is hard to argue with but then there is that nagging notion that President Trump may be right and FOMC Chief Jerome Powell is the problem.

For some reason that escapes me Powell has gotten some bad press perhaps even stumbled in his early presentations. I don’t see it but it adds a dimension to the FOMC that may detract from that rock-solid veneer the group likes to project and support some of the Trump tweets.

At any rate this might turn into enough of a loose end to further support the conjecture that the FOMC will be dovish in 2019 especially if the DOW continues to melt.

For sure the coming year will be no different than 2018 in that there are plenty of cross currents to push both the bears and bulls. So look for volatility and while there are more bullish converts these days there are still plenty of folks looking to sell rallies and of late a few of these big boys have shown up across our counter.

But as 2018 draws to an end those who support the proposition that gold and silver bullion are a necessary financial tool in the modern age of leveraged buy-outs and fiat currency seem to be more upbeat about 2019 than they were just a few months ago. So let’s hope that the encouraging higher numbers we have recently seen are just the beginning of a new and stronger bullish trend.

Wishing you all a wonderful New Year. We will be closed the 31st (Monday) and 1st (Tuesday) for the New Year. This has been a tough year with Kenny’s passing but we are grateful for the Lord’s mercies and blessings! So all of us at CNI take a minute, bow our heads and wish you and your families a safe, healthy and joyful New Year!

This from Zaner (Chicago) – “Global equity markets overnight were positive with the exception of weakness in the TOPIX Index. Apparently the huge reversal and recovery in the US market on Thursday afternoon provided the impetus for the recovery in international markets this morning. Scheduled data released overnight included a flurry of data from Japan. Tokyo inflation readings came in right on expectations but softer than in prior reports. Japanese unemployment came in slightly higher than expectations while Japanese industrial production was not as weak as was expected. Also out from Japan were retailer sales which remained soft and foreign investment in Japanese stocks which contracted. From Europe the market was presented with import prices which came in softer than expected, inflation which also came in softer than expected and gross domestic product which matched expectations and matched the prior quarter. Euro zone consumer prices came in softer than expectations while the euro zone consumer price index contracted again. Also out from Europe overnight was the Swiss KOF leading indicator report for December which came in much weaker than expectations. From the UK, mortgage approvals for the month of November showed an increase. Other data points to be released later today include euro zone consumer prices, and EU harmonized consumer prices. The North American session will NOT include November readings on the goods trade balance, wholesale inventories and new home sales as their release has been postponed by the US government shutdown. The December Chicago PMI is forecast to have a moderate decline from November’s 66.4 reading. The November pending home sales report this morning is expected to rebound from October’s -2.6% reading.

The gold market is tracking in negative territory to start today but did forge a fresh higher high in a move early that should keep some sellers at bay initially. Certainly the massive afternoon recovery in equities yesterday and the follow-through gains throughout global equity markets overnight have cast some negative forces at gold to start today. Certainly the gold market will continue to draft support from rotation ideas but the bull camp might need some fresh assistance from a weaker dollar today to offset what feels like a slight improvement in overall equity market psychology. In other words the gold bulls will need to shift from a safe haven dominated focus to a currency related focus in order to avoid week ending corrective action. With open interest in gold sitting 100,000 contracts below the November high and the gold market in our opinion not excessively overbought until the net spec and fund long position exceeds 200,000 contracts, we suspect the market still has more buying capacity directly ahead. Similarly the silver market open interest is 46,000 contracts below its November high and its net spec and fund long positioning at 35,034 contracts remains significantly below what we would consider to be overbought at 75,000 contracts.

After some impressive action earlier in the week, the platinum market now appears to have lost its leadership capacity to palladium again. In fact, the palladium market forged a four day high and has returned to the $1,200 level in a manner that suggests new contract highs are in the offing next week. We suspect that the correction in palladium of $55 last week served to balance the overbought condition of the market and that uptrend channel support has now risen to $1,168.90. With the most recent positioning report in palladium showing a net spec and fund long of only 14,453 contracts, the market could have another 15,000 contracts of purchasing capacity before we classify the market as excessively overbought.

While the gold market has started the Friday action off on a weaker footing, it should derive some support from a four day downside breakout in the dollar. However it is possible that the main focus of the gold market will be the action in equities and the status of safe haven psychology. Our gut suggests that prices will fade this morning and then make a major trend decision in the afternoon as the equity markets enter their final hours of the week. Critical support in February gold this morning is seen at $1278.40 and initial resistance is seen up at $1282.70. Close in support in March silver is seen at $15.34 and resistance is seen up at $15.40.”

Silver closed up $0.13 at $15.33. Still lots of activity here – surprising considering silver touched bottom during the summer months in the low $14.00 range and the US Mint said a lack luster silver market turned into a “sold out” sign relative to Monster Boxes. So while the paper trade remains ambivalent the physical market gets very active in this price range.  

Platinum closed down $6.50 at $789.60 and palladium closed down $11.10 at $1240.10.

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 employees think: 5 believe gold will be higher next week 3 think 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: 43 people thought the price of gold would increase next week 46 believe the price of gold will decrease next week and 11 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Dec. 24 – Dec. 28

Gold Steady into the New Year

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