Gold Surprisingly Firm
Commentary for Tuesday, March 12, 2019 (www.golddealer.com) – Gold closed up $7.50 at $1296.30 today and moved higher in the aftermarket another $5.00, so we are again flirting with $1300.00. The fact that prices were firmer today is surprising as the trade is beginning to question gold’s ability to hold the higher end of its current trading range.
This does not mean that its former buzz cannot return quickly but it does mean that enthusiasm is perhaps a bit more muted. Now that squares with the current technical assessment but here is something worth thinking about. While traders have been taking paper profits in gold (selling the rallies) since early January our across the counter sales of gold bullion have held up pretty well.
In other words the US public is buying this current choppy market. They are not in yet with both hands but they are nibbling around the edges. This could be of course just continued activity as price momentum slows but it is interesting that gold seems to be bouncing off the $1280.00 recent bottom struggling to gain back its momentum and move again above $1300.00. Time will tell here but as we have pointed out the first floor seems to be $1280.00 and if this does not hold up we would look to a range between $1220.00 and $1240.00.
But I think the jury is still out as to whether this latest choppy market between $1280.00 and $1340.00 is just that – a new and supported channel which allows gold to consolidate with higher prices in mind. Or this latest failure to hold $1340.00 is the end of the party for the present as gold figures out a way to hold its now bigger audience while the FOMC sorts out further interest rate increases.
The reason this latest deliberation about interest rates makes sense is that now the “old school” thinking that higher rates are a foregone conclusion as the economy heats up is being revised. Even the Fed deep thinkers ponder – “why mess with this configuration and perhaps stall both the economy and Wall Street”.
This is sound thinking with little inflation bubbling to the surface. And so gold will continue to carefully watch interest rates and react accordingly.
Silver is going along for the ride but the ranks of silver enthusiasts are beginning to once again grow judging by the number of questions I get from newbies interested. The great thing about silver bullion is that virtually anyone can begin a meaningful savings plan which is totally private and completely liquid. Couple this with the fact that silver is trading at a 70% discount from all-time highs and it does not take much to imagine a shiny future.
This from Zaner (Chicago) – “Reports that UK Prime Minister May had gotten some concessions from the EU regarding the Brexit terms ahead of today’s scheduled vote in the UK parliament supported the pound overnight. This pressured the dollar and supported gold and silver. However, as the session progressed the pound moved well off its highs, highlighting the uncertainty over today’s vote. The action overnight does indicate that a “yes” vote on Brexit today would support the precious metals, while a “no” would pressure them, merely on the currency action. Stronger global equity markets and a better-than-expected retail sales reading weighed on gold and silver on Monday. US retail sales rose by 0.2% in January, which was better than expected and a marked improvement over December. However, December sales, which were already weak, were revised down from -1.2% to -1.6%. That was the biggest decline since September 2009. Risk appetites improved yesterday, a sharp change from last week, but they have eased a bit overnight, which is supportive to the metals. Recent action suggests that the US economy and the dollar are the main determinants in precious metals pricing, which could meant that the Brexit vote may have only a limited effect. Barrick Gold has ended their hostile bid for Newmont and instead has agreed to enter into a joint venture with them.
Palladium was able to defy sluggish Chinese auto sales data on Tuesday to reverse Friday’s weakness and post a moderate gain, and it continued to push higher overnight. China’s auto sales were down 13.8% from year ago levels in February. This was the second straight month of double-digit declines. The market is probably looking beyond the recent data and is anticipating PBOC stimulus moves and China’s inevitable adoption of pollution controls in the automobiles, which will require more palladium. June palladium might even be close to breaking out to the upside of a bull-flag pattern, which could set the stage for another leg higher. Look for support at $1,455.60 and $1,423, with resistance at $1,516.80 and $1,525.80. April platinum traded to a new low for the move on Monday but bounced off those levels to close only slightly lower and followed that with a gap higher open and strong move upward overnight. It traded right to the 200-day moving average overnight, which was very close to the first retracement of the selloff from the February 28th high. A move through that level, $835.50, would leave $844.70 and $853 as the next upside targets. Look for support at $816.80 and $806.90.
A “yes” vote on Brexit could provide a quick rally for gold and silver, merely off of a rally in the British pound, while a “no” vote or a delay could have the opposite effect. A key resistance point in April gold is seen at $1300, followed by $1306.30, with support at $1280.80 and $1275.50. Look for resistance in May silver at $15.485 and $15.64, with support at $15.205 and $15.00.”
Silver closed up $0.14 at $15.34.
Platinum closed up $15.80 at $831.00 and palladium closed up $16.20 at $1519.90.
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