Sentiment turned somewhat negative in the precious metals markets as the last session of the week drew to a close. As the euro and oil both capped a week during which they marked fresh records against the dollar, the gold market appeared a bit tired and currently unable to surge past the mid-$900's. Some disappointment was being expressed at gold not making its own record-related headlines. A portion of today's declines was likely due to the trade easing up ahead of the G-7 meeting, even though no dollar-supportive action is expected as an outcome of same.
New York equities trading certainly did not follow the example set by the Nikkei overnight, and as the earnings lights went out at GE (the world's largest industrial conglomerate) the Dow headed more that 229 points lower. That kind of day should have also helped gold to try to get past the $950 mark. Not to mention the lowest consumer confidence index level in 26 years, which should have further increased the appeal of a safe-haven asset.
New York spot prices were down about $4.50 at last check, touching the $925.00 mark on the bid side, as players were wrapping up a week during which they tried fairly hard to recapture some of last week's $23 loss. It appears they ended up with $10-$12 of those losses being reversed. Silver lost 24 cents to $17.71 but the noble metals diverged, with platinum dropping $18 to $2008 and palladium adding $8 to $471 per ounce, respectively.
Where to, next week? Here is a sampling of varying opinions from people in the trade, brought to you by Reuters S. Africa, Bloomberg, and Marketwatch:
We are trading in a range and there is no sign that we are going to break out of the current wide range in the near term, said Wolfgang Wrzesniok-Rossbach, head of marketing at Heraeus, a German precious metals trading group.
We have an all-time high in the oil price and a near record high in the euro-dollar, but gold is still $100 away from its own historic highs. Probably there are some more long positions waiting to be sold, once gold goes up again, he added.
The euphoria towards the precious metals complex, and specifically gold, in the first quarter of this year has turned sour over the past few weeks, Deutsche Bank said in a report. Before we recommend a long gold exposure, we would cite the G7 Finance Ministers' meeting this weekend as a possible event risk for the gold price, given the possibility of a statement concerning the extreme weakness of the U.S. dollar and consequently another pocket of U.S. dollar strength.
``Gold made its run, and now it's stalled,'' said Ron Goodis, a futures-trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``I don't see a reason to be in gold. A bull market has to be spoon-fed news every day, and the risk appetite just isn't there for gold. Gold may go to sleep for a couple of months.''
``We expected a bigger rally in gold on crude oil and the euro,'' said Nick Ruggiero a trader at Eagle Futures Inc. in New York. ``There are fewer investors in commodities now. We still haven't seen that momentum come back to gold.''
I'd expect gold to be trading much higher as now not only do we have price inflation here in the U.S., but we are now importing it at a rapid rate from China and other trade partners, said Zachary Oxman, senior trader at Wisdom Financial. Traders seemed hesitant to take long side positions today, Oxman said. With the dollar and stock market weak, I'd have expected to see a bigger buy into gold.
Not everyone agrees, however:
The $930-mark has proved a hard nut to convincingly crack in the past few days, but I think gold is in for a fresh push higher, said David Thurtell, metals analyst at BNP Paribas. U.S. consumer sentiment data was extremely weak, and the possibility is that the euro can touch $1.60 next week, dragging gold higher, he added. (Keyword: dragging)
Opinions are just that. But. We really need gold to take the lead here and show that given the current set of circumstances it warrants a higher premium. How likely this is, as far as the short-term is concerned, remains elusive.
Happy Trading. Pleasant Weekend.