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Gold Turns Surprisingly Choppy

Gold Turns Surprisingly Choppy

Commentary for Friday, July 6, 2018 ( – Gold closed down $3.00 at $1254.30 today in another round of quiet yet somewhat choppy trading which held a tight $3.00 range ignoring the solid job numbers.

Gold also yawned over the increasingly stressful China/US trade problems – now growing worse as each country initiated promised trade sanctions today.

The Dollar Index at 94.06 lost a half point today – the weekly drift was also lower moving from 95.00 to 94.00 so this helped support gold prices.

Crude oil pushed higher ($73.00) and there is talk of higher prices.

This from Tom DiChristopher (CNBC)  – Big oil is sowing the seeds for a ‘super-spike’ in crude prices above $150, Bernstein warns – Oil prices could top all-time highs as energy companies invest too little money in new production, Bernstein Research. The underinvestment could cause a super-spike “potentially much larger than” $150 a barrel. Reinvestment in oil reserves is the lowest in a generation, while the amount of time those reserves will last has shrunk since 2000.”

Now that dynamic would super-charge the bulls – but for now they are resting. No doubt in quandary as to why Thursday’s release of the June 12-13 FOMC minutes also created a yawn in spite of the fact the governors discussed whether a recession lurked around the corner and global trade tensions were a threat according to Reuters.

Actually gold may just be taking an extended vacation with the domestic markets being closed for the 4th – but one thing is sure – expected price fireworks this week were a no-show. Still our walk-in trade was approaching hot today believe it or not the public had business to transact. Areas of interest being all over the place including the platinum group metals.

Reuters is not particularly happy – “The tariffs were already priced in,” said RJO Futures’ Josh Graves. “Gold needs more than a trade war to push it higher. It needs volatility in equities, weaker economic data, a dovish Fed.”

Surprising how “stable” pricing is considering the bearish sentiment – would you not agree? Yes the price of gold is off $42.00 this month but the yearly price chart is getting some traction in the $1240.00 through $1260.00 range.

India’s gold imports fell for the sixth month in June to 44 tonnes while the gold backed exchange-traded funds saw outflows in North America and Asia but inflows in Europe during June according to the World Gold Council.

This from Zaner (Chicago) – “We think the action in the gold market yesterday was mostly technical short covering and position squaring ahead of the tariff implementation deadline. Not surprisingly the gold and silver markets are showing some fresh selling this morning off of the widely anticipated fear of slowing physical demand in the wake of the actual trade war escalation. In fact gold and silver might have been sharply lower given the prospect of increased global economic headwinds off the trade situation if it were not for the weakness in the dollar. However overnight news reports suggested this week’s sharp decline in gold prices has sparked some evidence of Indian gold demand but that good news is tempered by suggestions that further Indian buying might require significantly cheaper pricing to offset declining purchasing power (due to weakness in the Indian currency). Since the last COT report into the low on Tuesday, the gold market fell another $19 and that should have brought the net spec and fund long down even further for the upcoming COT report. Unfortunately for the bull camp, it would appear that the bulls need “very” anxious market conditions to transition gold and silver into flight to quality instruments. We think both silver and gold are vulnerable to further erosion directly ahead as trade dialogue is showing signs of worsening.

Given the recovery action in the PGM markets from recent lows, one might suggest that a moderate amount of a trade war kickoff/crimped Chinese demand has been priced already and value might be seen at $800 in October platinum and at $925.30 in September palladium. However, it is also clear that palladium is less deflated off the trade issue than platinum, as prices have basically consolidated for nine trading sessions while platinum has seen a decline of $72! In fact, as indicated in prior coverage this week, adjusted to the low on Tuesday, platinum was probably net spec and fund short. As in gold and crude oil prices, the direction of PGM prices ahead should correlate tightly with global equity prices as the prospect of further tariffs (especially from and toward Europe) should rekindle deflationary selling of most physical commodities. Near term downside support in September palladium off the bottom of the recent consolidation is seen at $931.30 with similar support and a pivot point in October platinum seen rather close in at $836.70. In summary pushed into the market we are a seller of platinum at current levels and a seller of palladium on a bounce back up to $952.10.”

Silver closed down $0.03 at $15.98.

Platinum closed up $7.10 at $844.20 and palladium closed up $4.90 at $955.00.

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: 6 believe gold will be higher next week 1 thinks gold will be lower and 3 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: 39 people thought the price of gold would increase next week 33 believe the price of gold will decrease next week and 28 think gold will remain the same.

Precious Metal Closes & Dollar Strength – July 2 – July 6

The Unscientific Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 3) (Tuesday – 2) (Wednesday Closed for the 4th) (Thursday – 3). 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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