Gold Commentary for Wednesday, March 28, 2018 (www.golddealer.com)
By Ken Edwards and Richard Schwary of California Numismatic Investments Inc ……
Gold closed down $17.80 today at $1,324.20 – finally deciding to settle and taking some of the recent buzz away from this market. Like I have been saying it’s no use getting too excited over higher prices until gold actually breaks above recent highs – in this case that would be something over $1,360.00.
For now a stronger dollar scared the long paper traders who were looking for a reason to take profits anyway and the bulls ran for the sidelines. It would appear that gold’s most recent attempt to break-out has been replaced by a sobering reality.
The dollar continues to hold sway regardless of a few reasonable arguments which suggest this may not always be the case. Today the Dollar Index moved from 89.25 through 90.11 as traders ponder solid US economic growth. This of course is an old story but one which has no problem reassuring itself whenever gold wakes up and decides to test old recent highs.
The reality of higher interest rates does pose an interesting question. “World stock markets have become wobbly again, as investor risk appetite is slipping away. Now, the technical clues the U.S. stock indexes have put in major tops are mounting again,” said Jim Wyckoff, senior analyst with metals trading firm Kitco. “If indeed the U.S. stock market has put in a major top, such would be a longer-term bullish development for the gold and silver markets, which are a competing asset class with equities.”
For the time being gold remains very much a paper trader’s market. Range bound with enough spread top to bottom to make some money.
I expect the bears will now push paper prices back to recent support numbers – something around $1,310.00 using the 30-day chart.
From that point on gold’s ability to hold this line will be the focus and a break below this number would suggest a test of $1280.00. As usual I feel that this lower level will hold nicely as traditional physical interest builds as prices get cheaper.
While this market gets more defensive there are pluses along the way.
It has shown a consistent bias for paper traders to buy the “dips”. And this builds a more reliable longer term base.
But most are asking a basic question. How long will we have to play this “when will gold break out” game?
It has been a long time indeed and that alone is enough to create boredom and lose investors.
Speculative cash is the new secret ingredient that gold needs to push through this predictable “up and down” pricing range. Fresh investor money creates price action and more importantly the price momentum everyone is looking for when considering a break to the upside.
I think this is inevitable given the recklessness of government oversight but it does sometimes require the patience of Job. Gold bullion sellers were the order of the day across our counter.
A reminder that we will be closed Good Friday – blessings and thanks for reading.
This from Zaner (Chicago) – “With the sharp break in the US stock market late Tuesday and follow through selling in stocks again this morning failing to rekindle economic uncertainty and in turn lift gold and silver, it would appear that the bear camp has an edge to start today. In fact some signs of modest strength in the Dollar and reports that the US cut a trade deal with South Korea one could suggest that general concern for global trading wars is slightly reduced, and that suggests the Trump Administration is content to work at trade issues on a country by country basis. Another issue that could have added more significant selling pressure than is being seen in the early going is reports that China and North Korean talks might have yielded some progress with North Korea suggesting they could agree to de-nuclearize. While the reversal down from the Tuesday high helps to correct the short-term overbought condition we doubt that technical considerations will be able to stand in the way of further weakness later this morning. In fact given a rebound in the Dollar from a new 3-week low and reports from Reuters that China’s net gold imports via Hong Kong fell from 51.569 tonnes in January to 33.245 tonnes in February gives the bear several bearish themes to start today. If there is a positive for gold today it is the fact that June gold appears to be garnering some support from the $1,340 level on the charts.
News that Chinese palladium imports in February, were down 7% from last year, weakness in global equities, a slightly higher Dollar and fresh damage on the platinum chart leaves the path of least resistance in the PGM complex pointing downward. Furthermore Platinum is also still absorbing the idea of a potential significant third year in a row of a global production surpluses and that leaves the bear camp with several themes operating in its favor. In fact with July platinum overnight forging a fresh downside breakout on its charts there might be little in the way of support on the charts until the $940 level. While the palladium market has avoided noted chart damage this morning the bias is also down and a minor tick down below $965.50 would probably provide some stop loss selling pressures.”
Silver closed down $0.29 at $16.21.
Platinum closed down $12.00 at $934.70 and palladium closed down $8.60 at $964.20.
This is our usual ETF information – All Gold Exchange Traded Funds: Total as of (3/20/18) was 69,170,664. That number this week (3/27/18) was 69,118,869 ounces so over the last week we dropped 51,795 ounces of gold.
The all-time record high for all gold ETFs was 85,112,855 ounces in 2013. The record high for Gold ETFs in 2018 was 69,263,532 and the record low for 2018 was 68,169,590.
All Silver Exchange Traded Funds: Total as of (3/20/18) was 651,526,053. That number this week (3/27/18) was 649,659,237 ounces so over the last week we dropped 1,866,816 ounces of silver.
All Platinum Exchange Traded Funds: Total as of Total as of (3/20/18) was 2,415,949. That number this week (3/27/18) was 2,416,618 ounces so over the last week we gained 669 ounces of platinum.
All Palladium Exchange Traded Funds: Total as of (3/20/18) was 1,142,122. That number this week (3/27/18) was 1,142,026 ounces so over the last week we dropped 96 ounces of palladium.
The GoldDealer.com Unscientific Activity Scale is a “5” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 3) (last Friday – 4) (Monday – 3) (Tuesday – 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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