Gold Drops Below $1200, Silver Advances

by CoinNews.net on July 6, 2010 · 0 comments

Bullion update ...U.S. gold prices fell $12.60 to below $1,200 an ounce on Tuesday, marking its lowest level since late May.

Other precious metals gained, however, with silver, platinum and palladium posting respective increases of 0.8 percent, 1.0 percent, and 3.2 percent.

In other markets, crude oil ended down for a sixth straight session while U.S. stocks ended their five-day losing streak.

New York precious metals figures follow:

  • Gold for August delivery fell 1.0 percent to $1,195.10 an ounce. The yellow metal ranged from $1,189.50 to $1,215.10.

  • Silver for September delivery advanced 13.8 cents to end at $17.857 an ounce. It ranged from $17.615 to $18.035.

  • October platinum climbed $15.10 to $1,518.70 an ounce. It ranged from $1,489.00 to $1,530.80.
  • September palladium gained $13.50 to $440.40 an ounce. It ranged from $427.85 to $444.70.

In notable bullion quotes of the day:

 

 "A slice of the pie is going toward stocks at the expense of gold today,"  Richard Ross, technical analyst at Auerbach & Grayson in New York, was quoted on MarketWatch. Gold plunged 3.2 percent on July 1. With such a loss, "it takes a couple of days to regain your legs," Ross added. "Investors are showing a little reticence in stepping back in."

"With gold touching its lowest close in over a month, we see these levels as a good entry point for fresh long positions," Hussein Allidina, the head of commodity research at Morgan Stanley, said in a report cited on Bloomberg.

"Gold prices spent Monday’s overseas sessions on the defensive and although a bit of a recovery was attempted prior to the opening of the NY session this morning (spot prices climbed as high as $1214 in early dealings), the tilt in the market appeared to still point towards lower value," noted Jon Nadler, senior analyst at Kitco Metals, Inc.

"Indian buyers made a more-than-tentative return to the local gold markets in the wake of recent price declines. Stockists and local bank bullion desks were delighted to be able to tell tales of hundreds of kilos leaving the shelves at $1210 and under per ounce as buyers appeared to stock up for August festivals." [Read Nadler’s full morning commentary.]

 

In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,195.00 an ounce, falling $13.00 from the price on Monday. Silver remained unchanged at $17.85 an ounce. Platinum settled at $1,509.00 an ounce, rising $3.00. Palladium also rose $3.00, and ended at $432.00 an ounce.

In bullion coin news of the day, United States Mint gold and silver coins moved slower in June than in May, but soared as compared to previous June months. For more information on major sales, read:

In ounces of gold and silver sold by the U.S. Mint in June, American Silver Eagles added 3,001,000; American Gold Eagles advanced 151,500 and American Buffalo Gold pieces climbed 33,500.

Oil and gasoline prices

Crude oil prices retreated "with a modest loss, unable to regain ground after a mid-session reversal that coincided with U.S. stocks paring gains," wrote Claudia Assis and Deborah Levine of MarketWatch.

 

"Crude has come under a bit of pressure because of worries about the global economy," Peter McGuire, managing director of CWA Global Markets Pty in Sydney, was quoted on Bloomberg. "Sentiment is negative. Looking at mature markets, it’s pretty bleak. Europe is looking terrible."

 

New York crude oil for August delivery slipped 16 cents, or 0.2 percent, to close at $71.98 a barrel.

The national average for regular unleaded gasoline remained unchanged at $2.724 a gallon, according to AAA fuel data. The current average is 3.1 cents lower than last week, three-tenths of a cent down from a month back, and 11.3 cents higher than the average from a year ago.

U.S. Stocks

U.S. stocks rose, "finishing a volatile session with gains and breaking its seven-session losing streak as investors scooped up certain shares hit in the recent bloodletting," wrote Alexandra Twin of CNNMoney.com.

 

"If you don’t believe in a double dip, valuations are very attractive, but obviously some portion of the market believes in a double dip," E. William Stone, who oversees $104 billion as chief investment strategist at PNC Wealth Management in Philadelphia, was quoted on Bloomberg.

 

The Dow Jones industrial climbed 57.14 points, or 0.59 percent, to 9,743.62. The S&P 500 Index added 5.48 points, or 0.54 percent, to 1,028.06. The Nasdaq Composite Index gained 2.09 points, or 0.10 percent, to 2,093.88.

Gold, Silver, and Metals: Prices and Commentary – July 6, 2010

by Jon Nadler, Kitco Metals Inc.

S.A.F.E. From Harm

Good Morning,

The extended break from trading came to an end this morning as market participants returned from one set of fireworks hoping that they would not witness a return engagement of same in the markets they follow. The US dollar weakened somewhat, the euro gained a bit of additional ground, and European and Asian shares rose.

Gold prices spent Monday’s overseas sessions on the defensive and although a bit of a recovery was attempted prior to the opening of the NY session this morning (spot prices climbed as high as $1214 in early dealings), the tilt in the market appeared to still point towards lower values as trading resumed. Gold may yet "slip" to $1,172.10 after closing below its 55-day moving average.

So says Axel Rudolph, a technical analyst at Commerzbank, who, in a July 2 report citing technical trading patterns wrote that "the dip [beneath the 55DMA] “makes us question our previously bullish forecast.” Commerzbank remains bullish on gold for the medium-term provided that the support line near $1158 is not demolished in a sell-off scenario.

Another Commerzbank analyst, Eugen Weinberg, observed that "most of these [recent gold] purchases were driven by fear, and fear seems to be leaving the market…and it appears measures by the ECB are enough to hold the crisis for the next month.’ Mr. Weinberg’s firm still envisions a possible $1,300+ gold price, come Q4. A scenario for that price development was not offered. Probably safe to assume it has to do something with the euro crisis re-igniting however. TD Securities over in Toronto envisions a $1.08 euro by the end of this year…

New York spot precious metals prices opened mixed, on this, the two-year anniversary of the date when a major slide in various assets began to take its toll on the markets and on investors. The liquidation wave eventually grew into a tsunami and culminated with the Lehman collapse and the near ‘breaking of the buck’ events in the fall of 2008. Gold was not immune from the frenzied quest for cash that summer; it fell from its March 17 high of $1035 to the $680’s by October of that year.

Spot gold started the session at $1205.50 the ounce, down $3.40 this morning. Shortly after the open, the yellow metal sagged and tested the $1200 psychological support level once again. Closing beneath the $1195 area could usher in more weakness in the precious metal. Silver showed no change, opening at $17.81 per ounce basis spot bid. It too, suffered chart-based technical damage during last week’s sell-off.

At the time, reference was made to the ‘very few’ who range the alarm bell on a possible sell-off in the making. We identified Active Trading Partners’ David Banister as one of the cautionary voices. However, also not to be overlooked are the June 24 and June 29 analyses from HardAssetInvestor.com, as written by Brad Zigler. While neither author argues that the gold party is finished, they make observations that –at least for some who trade the stuff actively-have proven valuable. Just when euphoric chatter was hitting an all-time decibel level.

If you prefer your gold-oriented decibels at a more moderate, but still quite ‘loud and clear’ level you have no further to look than Amazon.com. Or, Wiley & Sons for that matter. They both carry the newly published book by Jim Gibbons entitled "The Golden Rule." The book is a compendium of two dozen essays about gold. Jim’s book answers many questions, including: How do you purchase gold and in what form? Why gold now? When should you buy? And, most importantly, from whom? Throughout the book, Gibbons puts gold in perspective and shows you why it belongs in every investor’s portfolio.

Platinum and palladium each gained $6 per ounce at the open this morning, with the former starting at $1513.00 and the latter opening at $435.00 while rhodium was quoted unchanged at $2430.00 an ounce. Eskom’s union workers agreed to a 9 percent pay hike offer even as other unions (representing state workers) threatened to stage strikes within two weeks. Still, it appears that –for now– neither the World Cup nor mine output in the country will be disrupted by labour action.

Indian buyers made a more-than-tentative return to the local gold markets in the wake of recent price declines. Stockists and local bank bullion desks were delighted to be able to tell tales of hundreds of kilos leaving the shelves at $1210 and under per ounce as buyers appeared to stock up for August festivals.

Over in Beijing, China’s State Administration of Foreign Exchange fired back at domestic and overseas critics of its policies this morning. The agency defended its allocation strategies and pointed to a clean investment record; one that managed to avert hefty losses during the global financial crisis.

Reaffirming that it is not in the habit of making rash decisions based on the wishes and perhaps agendas of others, the agency stated that it envisions Europe making it through the crisis, and that it is not fretting about what might happen should the US dollar return to a period of relative weakness.

In so many words, SAFE does not fear paper (unrealized) losses as it would only have to mobilize any held assets under dire circumstances (global war, a mega-crisis, etc.). Internet forums and ill-informed commentators can now go back to that which they do best: propagating urban myths. Of course, the mere fact that SAFE has spoken and that it said what it said, will be characterized as ‘propaganda’ or as something intended to mask the ‘real’ position of the agency.

Happy Trading.

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America 

Websites: www.kitco.com and www.kitco.cn
Blog: http://www.kitco.com/ind/index.html#nadler

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