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Gold Markets Report – Gold Ignores a Weaker Dollar

Gold Prices

Commentary on Gold Prices for Tuesday, June 27, 2017 (www.golddealer.com)

Gold Market Newsletter with Richard Schwary

By Ken Edwards and Richard Schwary of California Numismatic Investments Inc ……

Gold Prices closed up $0.50 today at $1,246.90 in what turned out to be an uneventful day. The domestic market opened higher ($1,250.00) – moved off that high and settled with no buzz on lows for the day. I expected higher numbers this morning especially because the Dollar Index is down almost a full point since Friday so today’s showing is disappointing. On the other hand yesterday’s fiasco might turn out to have a silver lining in that the gold market did not collapse.

Some traders might be watching for “health bill” progress – if Congress can get something acceptable through it might give Trump a legislative victory. And victory might imply that we are a step closer to tax reform and infrastructure spending. But you can see that the Trump administration is struggling – the glory days of “big change” talk might be fading.

This from Reuters – “Gold prices rose on Tuesday after hitting a six-week low in the previous session as bargain hunting set in and the dollar slid sharply before speeches by U.S. Federal Reserve officials. Fed officials have signaled that they plan to continue on their current trajectory of interest rate hikes despite a slowdown in inflation. But softer-than-expected U.S. data has given rise to some caution.

A huge sell order totaling 1.85 million ounces pushed gold prices to a six-week low on Monday, although the precious metal ultimately failed to break below the 200-day moving average.

“If yesterday gold wasn’t able to push below the 200-day moving average that’s a positive sign,” said ABN Amro analyst Georgette Boele.

“The market is skeptical about Fed rate rises this year and next. Overall we’re optimistic about the outlook for gold, we (see) a weaker dollar later in the year,” she added.”

What I see from this side of the counter suggests that the American public is waiting this current weakness out – which makes sense. This “back and forth” about what the Federal Reserve will do with interest rates is still not clear – they talk a good game and my bet is that they will raise rates again – which is all that is necessary to place a cloud over gold prices on the shorter term.

It is also hard to square just how the Federal Open Market Committee (FOMC) will raise rates and at the same time the dollar will get weaker. This counterintuitive scenario does have its supporters but my guess is that these folks simply don’t think the Federal Reserve will “normalize” rates for years – some actually think this is the new “normal” meaning sub-low interest rates is the only way to keep this system afloat after years of worldwide monetary abuse.

At any rate the US market is also facing the summer months and consumer confidence numbers out today indicate the public is optimistic. An optimistic public is likely to spend which supports the FOMC’s picture of improvement and therefore higher interest rates.

I have talked with a dozen large precious metals dealers about their business and they are not overly excited. There was some business to be done at the recent Long Beach and Baltimore Coin Shows but dealer turnout was poor – granted these are summer shows, which usually do not work well in a slow market.

This market may also be suffering from “over analysis” – the public and everyone else were totally focused on the interest rate picture. They finally got the expected “higher interest rate” news and the market did not move dramatically lower.

Gold prices did break down at $1,250.00 and the technicians looked for a test into the $1,220.00 range – they are still waiting. The market got the “big seller” news yesterday and gold still held its 200 day moving average ($1,235.00).

So what is going on here? It appears gold is still getting traction at the unlikely $1,240.00 range which might suggest continued bargain hunting. But this is not coming from the American side of the equation – they are having fun with the kids.

This small traction might be just how the rest of the world deals with their paper currency problems – it’s never a bad idea to hold real gold bullion for a bit of insurance in uncertain times.

In the meantime – it might be time to at least question why gold prices  did not break below its 200 day moving average. Some professional traders see this as a positive longer term sign that all might not be as rosy in quantitative easing business as the central banks might have you believe.

Silver closed up $0.02 at $16.59.Gold Ignores a Weaker Dollar.

Platinum closed up $2.10 at $918.70 and palladium closed down $5.60 at $858.35.

This from Zaner (Chicago) – “While Gold and silver prices started this week off on a noted and definitive washout prices have managed to throw off that mantle in the early Tuesday action. Reports of a 1.8 million ounce trade in gold was seen in the gold market in a very short period of time very early on Monday morning, and that apparently got the ball rolling on the downside. Some press outlets later on suggested that the sell orders in gold and silver might have been in error and were reversed but if that was the case, we would have expected gold and silver to have gained back ground quicker after the washout. A limiting factor for gold today includes news from yesterday that Hong Kong gold exports to mainland China fell in the latest monthly statistics. However, news that should serve to underpin gold prices from yesterday came from the IMF as they reported increased gold holdings by Turkey (+5.2 tonnes), Belarus (+2.5 tonnes), Russia (+19.47 tonnes), Mongolia (+30.7 tonnes) and Kazakhstan (+4.5 tonnes) in May. The IMF did report that Azerbaijani saw their gold holdings decline in both January and February by a cumulative of 20 tonnes. Going forward, we continue to think that the most important outside market impact on gold will be action in the dollar which is showing noted weakness this morning after exhibiting an uptick in two sided volatility in the Monday trade. In fact the Dollar has ranged down sharply this morning and has declined to the lowest level since June 15th probably because of soft data yesterday. It should be noted that the US trading session today will bring a robust wave of scheduled data flows and that is sure to roil the Dollar. All things considered the gold market rejected a significant liquidation blow and might be able to return to last week’s highs up around $1,260.00.”

The GoldDealer.com Unscientific Activity Scale is a “2” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 4) (last Thursday – 2) (last Friday – 2) (Monday – 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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Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.

The Gold Newsletter written daily by Ken Edwards and Richard Schwary of California Numismatic Investments Inc. ( www.golddealer.com) after the COMEX close. This commentary will look at the gold, silver, platinum and palladium markets and consider what happened to create these changes on the trading floor. It will also offer world class commentary from other sources in a balanced and straightforward manner. Our Almost Famous Gold Newsletter will include the GoldDealer Activity Scale which is a computer generated number between 1 and 10 providing an accurate measurement of CNI buying and selling volume.

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