Commentary for Friday, February 17, 2017 (www.golddealer.com)
By Ken Edwards and Richard Schwary of California Numismatic Investments Inc ……
Gold closed up a surprising $18.40 at $1,295.80. This really unexpected rise in the price of gold might be oil related. Reuters “OPEC will meet on Nov 30th to discuss policy, including a deal with producers to limit oil production. Concerns are growing over Russia’s support for extending output cuts.” If you dig a little you might find that this entire region is once again moving towards “increased tensions” – either because of political turmoil with the Saudi hierarchy or radical Islamic unrest. This region is impossible to figure – but never underestimate how dangerous it might become.
Crude oil prices on the day creeped higher moving from $55.80 through $56.50 so something is going on but if you look at the monthly price chart it would appear oil might be overextended – meaning it might give up these gains quickly leading to a volatile gold pricing scenario. But with the Middle East you never know – and the big deal being made about American oil independence in 10 years might turn into a pipe dream so stay tuned.
The Dollar Index is off its high (93.84) trading at 93.70 but looks choppy to me and the technical picture is actually breaking down – look at the 30 day price graph and you will see that typical “mountain” picture – the index struggling to hold something approaching 95.00 and finally moving lower.
This might be the real support for gold today – perhaps traders fear the tax deal will more than falter (not likely) – this would push the dollar even lower and support the price of gold nicely.
Today’s rise in the price of gold looks impressive given the markets have a generally negative feel – gold having tried a few times this month to show strength above $1,280.00 and failed.
For now traders have pushed pass this psychological overhead resistance – moving from $1,280.00 into $1,290.00 territory. But gold must show momentum above $1,300.00 before more people will join what is – most likely – a small but aggressive group willing to push the price envelope in the bullish direction at least for the short term.
From a price standpoint gold has been stuck – these past two weeks its price has moved between $1,272.40 and today’s high close of $1,295.80.
Usually when prices flat-line for a longer period of time traders expect a breakout – either higher or lower – traditionally the longer the narrow price range the more veterans expect lower prices but in this case the opposite happened so something is stirring.
The best you can do at this point is wait for confirmation this coming week – if gold holds you might find that the dollar is trending lower (the likely scenario) because of some fundamental reason which is not clear at this early stage or inflation fears are coming back into the picture. One thing is clear – we won’t have long to wait – gold will not remain sleepy for long.
This from Zaner (Chicago) – “More talk from Fed officials on Thursday seemed improve the odds of there being several rate hikes in 2018, in addition to the one that is widely anticipated for December. In separate talks on Thursday, San Francisco Fed President John Williams cited improved growth prospects for 2018, and Cleveland Fed President Loretta Mester mentioned that she feels inflation is poised to pick up, and which would clear the way for the Fed to gradually raise rates. Earlier this week, the PPI came in much stronger than expected, and while the CPI did not overwhelm, the “goods” sector of the index was viewed as strong. This suggests a longer-term bearish picture for gold and silver. However, the metals got a boost overnight from reports that the Mueller investigation had issued new subpoenas to the 2018 Trump campaign regarding Russia. On another bearish note, Indian wholesalers are reporting disappointing gold demand during this year’s festival season. The market chopped around on Thursday as it responded positively to negative US economic data and negatively to the news that the US House of Representative had voted to approve their tax cut plan. The Philly Fed Survey came in at 22.7, down from 27.9 last month and below expectations calling for 24.5. This suggested slower growth that would undercut the case for higher rates. The next “hurdle” for tax reform is with Senate bill, and the vote on that is far less certain, and so we can expect more choppy action in the metals until the bill is signed (or not). The world’s largest gold ETF have holdings near their lowest level since mid-September, indicating that speculative interest has been muted during this week’s occasional flare-ups in risk anxiety. Both gold and silver have been trading in ever-narrowing ranges for more than a month, and they could be heading towards a decision point. It is difficult to build a bullish case if the Fed embarks on a rate-hike course. However, the precious metals could garner support if equity traders move to the sidelines into the end of the year and once the December rate hike is out of the way.”
Silver closed up $0.30 at $17.36.
Platinum closed up $18.40 at 951.40 and palladium closed up $8.05 at $994.30.
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 GoldDealer.com employees think: 9 believe gold will be higher next week 1 thinks gold will be lower and no one 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: 58 people thought the price of gold would increase next week 27 believe it will decrease next week and 15 think gold prices will remain the same.
Precious Metal Closes & Dollar Strength – Nov. 13 – 17
The walk-in cash trade and phones were quiet today – but if today’s run turns into momentum over $1,300.00 next week all bets are off. The buying public has been quietly waiting for lower prices for months – but everyone appreciates these markets are cheap relative to old highs so there is much more pent up buying energy now than selling energy which might be left from old liquidation.
The GoldDealer.com Unscientific Activity Scale is a “2” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 3) (Tuesday – 2) (Wednesday – 4) (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.
* * *
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.
