Morning Gold/Silver Market Report While the gold market ranged down sharply in the wake of Fed commentary that was partially spun into a negative, the market has shown some signs of respecting the prior sessions low in the overnight trade. Apparently the Feds acknowledgment of minimal inflationary pressures combined with lackluster economic growth guidance left some investors cool toward metals prices. While the Fed seemed to provide the bears with justification for ongoing liquidation, the gains in the Dollar did not initially seem to be the primary driving force behind this weeks downdraft in gold and silver prices. On the other hand, the Dollar has ranged up sharply overnight and that could come back to haunt gold and silver bulls later today. In retrospect, the gold and silver trade seemed to be looking for an excuse to knock prices down this week, as the Fed Chair seemed to go to some length to avoid being pinned down on when US rates might rise. In fact, we think the second day of Fed testimony today will countervail the first day, as the new Fed Chairman has shown the ability to clarify or balance reactions to her statements in the past. Other issues that might provide some follow-through selling in gold and silver today are reports of an increase in Russian gold production and news that the BOJ was going to hold off on additional stimulus. Other issues that might favor the bear camp this morning is news of an expansion of the Indian trade deficit, as that could stall any noted reductions of the Indian gold import duty and there was also bearish news from the supply side of the equation as Fresnillo reported that 2nd quarter gold output rose over the prior quarter. Supportive news overnight comes from; a build in gold derivative holdings of 7,987 ounces, a slightly better than expected Chinese 2nd quarter GDP result and from reports that South African metalworkers union would continue to strike and that the union was calling for sympathy strikes. Silver derivative holdings also increased overnight by 217,000 ounces.
Posted on: Wed, 16 Jul 2014 12:37:50 +0000
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