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Precious Metals Touch 1-Month Highs

"We are neutral until we see a clear break of $1694."

Gold hovered around $1690 per ounce Friday morning in London, having touched a one-month high in earlier Asian trading, while European stock markets opened slightly higher after gains in Asia, following the release of the latest economic growth figures from China.

"[Gold] support is at $1625, the January 4 low," say technical analysts at bullion bank Scotia Mocatta.

"We are neutral until we see a clear break of $1694."

Heading into the weekend, gold was up 1.6% for the week by Friday lunchtime in London.

Silver meantime also touched a one-month high this morning, before easing back to $31.72 an ounce, a 4% weekly gain.

"It can only be a question of time before buoyant [exchange traded fund] demand causes the Silver Price to rise," say commodities analysts at Commerzbank, noting that yesterday saw the largest inflows into silver ETFs since December 2010, taking total ETF holdings to a new record of nearly 20,000 tonnes.

"Gold ETFs, by contrast, have recorded outflows of 16 tonnes since the start of the year," Commerzbank adds, "which points to reduced interest in gold."

"We are still in a period of trial, trying to rebuild the confidence into the gold market," says Ole Hansen, head of commodity strategy at Saxo Bank.

"While we still stay above the 200-day moving average around $1662, there is a lot of nervousness in the market."

"Momentum matters a lot in the gold market, and its absence is a major reason for a rising sense of unease," adds a note from Australian investment bank Macquarie.

"On 27 March 2013, assuming gold does not spike higher in the meantime, 406 trading days will have passed since gold hit its record (nominal) high of $1921 an ounce in September 2011. That will mark gold's longest period without setting a new all-time price high since it exceeded its (infamous) $850 an ounce 1980 high in January 2008."

The Macquarie analysts add however that if the US Federal Reserve continues its current policy of buying $85 billion a month asset purchases to the end of the year, and gold's historical relationship with quantitative easing remains, "the by the end of 2013 gold should be well over $2000 an ounce".

The US Mint meantime has suspended sales of its 2013 silver American Eagle bullion coin, produced specifically for investment purposes, as it has run out of stock. Just over six million ounces of silver American Eagles have been sold so far this month, close to the amount sold over the whole of January 2012, last year's biggest month.

"There is always a big boom in the new year when the new issue comes out, and you will see a drop in the next month," BullionVault's Miguel Perez-Santalla told newswire Reuters earlier this week.

China's economy grew at 7.8% over the course of 2012, the slowest rate since 1999, official data published Friday show. Fourth quarter growth however was 7.9% year-on-year, up from 7.4% in Q3 and following seven quarters of slower growth.

"Overall the economy has been stabilizing," says a statement from China's national statistics bureau.

In September last year, China's government announced 1 trillion Yuan of new infrastructure projects.

"[Friday's data release] reinforces our view that the growth recovery is on track," says Zhiwei Zhang, chief economist China at Nomura.

"As growth recovers and inflation rises, the likelihood of cuts to the reserve requirement ratio or to interest rates declines. We expect authorities to focus more on controlling the risks from inflation and shadow banking."

The Bank of Japan meantime will consider open-ended asset purchases and has agreed to a new inflation target of 2%, double the rate currently targeted, Reuters reports, citing "sources familiar with the BoJ's thinking".

Gold imports to India, traditionally the world's biggest gold buying country, could fall by a quarter if the government raises import duties from 4% to 6%, according to Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Federation.

IMF Warns Extended Debt Ceiling Battle Could Be Catastrophic To Global Economy

"Last year, the lead up to the holiday was characterized by steady double-digit volumes (on exchanges) from mid-December all the way through to the week before the celebration. So the fact that Lunar New Year this year falls a few weeks later suggests that more buying could be involved in absolute terms, given the pick-up in Shanghai Gold Exchange volumes started around the same time in December," said UBS.

International Monetary Fund (IMF) Managing Director Christine Lagarde, in her first news conference of 2013, warned U.S. lawmakers that an extended battle over raising the nation's $16.4 trillion borrowing limit could be "catastrophic" for the global economy. "I very, very strongly hope that all parties, all views will converge in the national interest of the U.S. economy and in the international interest of the global economy," said Lagarde. "To imagine that the U.S. economy would be in default, would not honor the payments that it owes, is just unthinkable.

Meanwhile, House Speaker Boehner took a moment from relaxing at a House Republican retreat on Friday, to deliver prepared remarks that urged lawmakers to pass a budget that includes spending cuts before agreeing to a "long-term debt-limit increase." Many thought Boehner would call for a temporary hike in the nation's borrowing cap, a strategy that was floated Thursday by Rep. Paul Ryan of Wisconsin, but Speaker Boehner merely warned that the U.S. could face a credit downgrade if a long-term increase in the debt ceiling is not preceded by spending cuts. Protect your wealth and your retirement, during these times of economic and geopolitical uncertainty, invest in Gold and invest in Silver and protect your wealth in 2013.

Gold falls as weak consumer sentiment figures 

spark profit taking

Gold prices retreated in U.S. trading on Friday as investors sold the yellow metal for profits after weak consumer sentiment data hit the wire earlier, catching markets off guard.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 0.14% at USD1,688.35 a troy ounce in U.S. trading, up from a session low of USD1,685.35 and down from a high of USD1,695.05 a troy ounce.

Gold futures were likely to test support USD1,666.55 a troy ounce, Thursday's low, and resistance at USD1,696.25, Thursday's high.

The Thomson Reuters/University of Michigan's preliminary index of U.S. consumer sentiment fell to 71.3 in January — its lowest level since December 2011 —from 72.9 in December, disappointing expectations for an improvement to 75.0.

The numbers sent investors snapping up safe-haven dollar positions, which sent gold falling as the two assets tend to trade inversely from one another.

Solid housing and employment data released in the U.S. earlier this week sent the metal gaining, and the surprisingly soft consumer sentiment figures brought in profit takers on Friday.

Solid Chinese growth figures gave the precious metal support, however.

China's gross domestic product rose 7.9% in the fourth quarter from a year earlier, compared with expectations for a 7.8% rise, after a 7.4% increase in the previous quarter.

Meanwhile on the Comex, silver for March delivery was up 0.31% and trading at USD31.908 a troy ounce, while copper for March delivery was up 0.35% and trading at USD3.675 a pound.

Analysis and Recommendations:

Gold was flat today trading at 1688.95. With the US fiscal cliff extended ongoing concerns over the US debt ceiling and spending and budget cuts continue to weigh on the markets as US lawmakers make no progress. On the other side of the coin positive eco data in the US and China show both economies recovering nicely. The U.S. dollar index is higher Friday on short covering. The greenback bears still have the overall near-term technical advantage and that’s an underlying supportive factor for the precious metals.

The crude oil bulls still have upside near-term technical momentum and that, too, is a bullish underlying factor for the metals markets. If crude oil prices continue to trend higher in the near term, that could spark fresh speculative money to flow into the raw commodity sector, including the precious metals.

Yesterday, gold surged to one-month high on weak dollar and renewed safe haven appeal on the back of positive US job and housing data. Gold skyrocketed again in earlier trading heading towards the 1700 price range today but then turned and declined on poor consumer sentiment in the US and returned to trade flat.

 

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No one knows tomorrow's price or circumstance. 
 I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader. 
I do not accept responsibility for being incorrect in my speculations on market trend. 

 King Regards