Gold Continues to Find Traction
Commentary for Wednesday Feb 15, 2017 (www.golddealer.com) – Gold closed up $7.70 today at $1233.10 in choppy trading – the market opened flat sold off to $1216.00 and then recovered into the $1230.00 range so the action today was similar to yesterday. Traders are buying this market on weakness which is interesting considering the generally popular idea that our economy and Wall Street are doing just fine and a Fed rate hike is just around the corner. Also note the Exchange Trades Fund totals for gold last week – we gained 807,816 ounces.
Yesterday I mentioned that the CPI numbers were pointing toward rising inflation and our new president is creating a certain amount of angst especially in the European community. And still the price of gold struggles because of feared higher interest rates.
From a technical viewpoint prices this past year have been supported at the $1200.00 level until mid-December when gold broke down – tested $1100.00 support and quickly bounced higher – once again holding on to that long term $1200.00.
Normally this would mean we are probably in another downtrend which began last summer and is working its way through another consolidation. But this last bounce to higher ground came to be known as the Trump Effect for obvious reasons and it remains to be seen just what new surprises might be in store for us and Europe. It is not like everyone is scared to death – if that were the case this market would not have any trouble moving above $1250.00. But at the same time the usual sources of real physical demand China and India are underperforming.
So we may be stuck in a market which will continue to hedge its bets by moving sideways. The next big piece of news on the horizon will be a March decision from the FOMC about interest rates so in the meantime we are back to having “patience”.
But keep in mind that Wall Street thinks there could be as many as three interest rate hikes this year. This line of reasoning is formidable and may be an overreaction to the improving US economy. Let’s say the FOMC raises a quarter point in March – Wall Street and the bond market are already prepared for that so it would probably not be a big deal. The price of gold may falter somewhat but would not fall out of bed. But two further rate hikes would be seen as preemptive in taming inflation. Wall Street would not like that – it would be a cooler for stocks and no one is talking about the inflationary consequences of trade wars.
So while gold traders are up late at night worrying about higher interest rates this overzealous position may be another paper tiger. If the stock market gets some of the wind taken out of its sails this will benefit the gold trade. Finally 2017 will be a long year in sweating out all the possible land minds for gold but we are just getting started – there is plenty of time for the China and India inactivity to reverse itself and surprise.
Silver closed up $0.07 at $17.96.
Platinum closed up $7.07 at $1009.90 and palladium closed up $5.30 at $786.20.
This is our usual ETF information – Gold Exchange Traded Funds: Total as of (2-8-17) was 63,968,726. That number this week (2-15-17) was 64,776,542 ounces so over the last week we gained 807,816 ounces of gold.
The all-time record high for all gold ETF’s was 85,112,855 ounces in 2013. The record high for Gold ETF’s in 2017 was 64,776,542 and the record low for 2017 was 62,348,156.
All Silver Exchange Traded Funds: Total as of (2-8-17) was 645,905,704. That number this week (2-15-17) was 645,930,413 ounces so over the last week we gained 24,709 ounces of silver.
All Platinum Exchange Traded Funds: Total as of (2-8-17) was 2,331,696. That number this week (2-15-17) was 2,360,641 ounces so over the last week we gained 28,945 ounces of platinum.
All Palladium Exchange Traded Funds: Total as of (2-8-17) was 1,526,912. That number this week (2-15-17) was 1,522,825 ounces so over the last week we dropped 4,087 ounces of palladium.
The walk in cash trade and the phones were on the quiet side today.
The GoldDealer.com Unscientific Activity Scale is a “3” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 4) (last Friday – 4) (Monday – 4) (Tuesday – 4).
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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