GOLD BREAKS LOSING STREAK

This week brought an upward change the Gold price hasn’t seen in weeks. Gold & Silver experienced a dip Monday morning, but quickly recovered as technical trading gained positive momentum. “As the market started to come up, it was hitting [short-seller] stops and then that old huge level of support [for Silver], that low [traders] would put all their buy stops there. Once [prices] hit that, that’s when it did that parabolic move up,” RJO Futures senior commodities broker Phil Streible said. “All those shorts that got in this morning, they’re all covering, and all the longs that got blown out get back in on the long side.” Gold is also regaining confidence as there have been considerable selloffs in both Japanese stocks and the global equity markets. Investor sentiment quickly shifted toward the safe haven asset once economic concerns began to brew in Europe and Japan. “I think the feeling on the market is at the moment — considering how there’s been almost like a one-way street for equities over the last few months — will this just be a couple of days blip and then the buyers will return?” Ole Hansen, head of commodities strategy at Saxo Bank, said in a phone interview from Copenhagen. Gold’s negative correlation to the stock market was on display this week, as the yellow metal is heading for its best week in the past month. Mitsubishi analyst Jonathan Butler said, “The conditions are favourable for a continued role for Gold. Those loose economic policies aren’t coming to an end just yet, though there are some voices in favour of a more hawkish stance in the United States.”

ALL EYES ON THE FED

This week loomed very large in the United States, as Chicago’s Federal Reserve President Charles Evans spoke Monday in front of Congress on the outlook of the economy. “This series of events certainly has the potential to overshadow what is likely to be a relatively quiet start to the week for fundamental macroeconomic indicators out of the US, but the big question is precisely when we’ll see the market react to the imminent tighter monetary conditions,” GFT Markets market strategist Fawad Razaqzada said. Many believed the Fed would announce the slowdown of their easing program which could drastically change the global economic landscape. However, after U.S. Federal Reserve Chairman Ben Bernanke spoke on Wednesday it was clear that the easing will continue for now. When Bernanke speaks, the Gold market listens. Wednesday was no different when he said it was too early to slow down the central bank’s easing program based on current economic conditions. “The correlation of the dollar with Gold has been quite strong lately, and today’s weakness in the U.S. currency after Fed officials said it may be too early to be pulling back of QE (quantitative easing) certainly helps the metal,” Societe Generale analyst Robin Bhar said. While Gold enjoyed a positive week, not all financial markets can say the same. Ongoing concern surrounding the future of quantitative easing (QE) and weakness in Asian markets weigh on equities markets as stocks continue to trade down heading into the weekend. “Positive durable goods sales were unable to bring in any lasting support and instead may be having the opposite effect, providing more evidence for the Fed to begin tapering QE,” CMC Markets’ senior market analyst Colin Cieszynski said. This week’s markets slump could disrupt a four week winning streak for both the S&P 500 and Dow Jones Industrial Average.

At 4:45 pm (EDT), the APMEX precious metals spot prices were:

• Gold, $1387.00, Down $7.80.
• Silver, $22.45, Down $0.17.
• Platinum, $1453.60, Down $5.10.
• Palladium, $730.30, Down $10.40.

For more APMEX reviews of daily and weekly Precious Metals market activities, visit our News and Commentaries page.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.