Gold Seeker Weekly Wrap-Up: Gold Gains While Silver Falls on the Week
The Metals:
Gold and silver held yesterday’s notable after hours access gains in Asia and London and rose to new session highs of $751.85 and $9.703 by about 8:40AM EST in New York before they backed off slightly by late morning, but they still ended with impressive gains of 5% and 7.8%.
Euro gold rose to about €584, platinum gained $31 to $838, and copper gained over 8 cents to about $1.70.
Gold and silver equities rose about 4% in the first half hour of trade before they were dragged over 2% lower by substantial weakness in the major indices by about 11AM EST and remained at about that level for most of the rest of the day, but they then fell back off even further in the last half hour of trade and ended over 5% lower.
The Economy:
Retail Sales, Import Prices, and Export Prices all fell by record amounts and Business Inventories fell the most in 3 years, but Michigan Sentiment actually came in better than expected to mark a very rare occasion in recent months.
Next week’s economic highlights include the NY Empire State Index, Capacity Utilization, and Industrial Production on Monday, PPI and Net Foreign Purchases on Tuesday, CPI, Building Permits, Housing Starts, and FOMC minutes on Wednesday, and Initial Jobless Claims, Leading Economic Indicators, and the Philadelphia Fed survey on Thursday.
Oil fell on more worries over demand after another round of mostly poor economic data from around the world.
The U.S. dollar index rose slightly as the euro fell on evidence that “the 15-nation euro zone had tumbled into recession for the first time since the single currency's introduction nearly 10 years ago.” The dollar’s gains shrank rather markedly after all of the mostly dismal US data was released, but it still ended with a small gain on the view that most of the rest of the world is even worse off than the US.
Treasuries rose as the Dow, Nasdaq, and S&P fell about 4% further on more evidence that the economy is facing some very serious problems.
Among the big names making news in the market Friday were Nokia, Sun Microsystems, Citigroup, Freddie Mac, J.C. Penney, Abercrombie & Fitch, Textron, Home Depot, and Honda.
The Commentary:
“The major driving force in the gold market over the past day has been the drop of the US Dollar versus the Euro. Gold neared some terrific support around $700 and with the strength in the Euro, it helped to motivate upside momentum. The $750 (spot) area is a formidable resistance so a close above this resistance area would open the short-term window to further upside moves.
There have been other positive factors emerging from the gold investment markets. We received news this week of an unprecedented surge in Saudi gold purchases in the prior two weeks with over $3.5 BILLION being acquired. At the same time, South African gold mine supply has taken another tumble, down over 17% year over year. A sharp rise in physical gold investments combined with a drop in mine supply are turning into key ingredients for a well supported gold price.
Going forward, the US Dollar is in its final mid-term leg higher, nearing the end of its massive short-covering rally while other short-term driving forces diminish. True long-term fundamentals do not support a strong US Dollar and as it begins to once again return back to its long-term secular bear market the gold price will accelerate its appeal among dollar, euro and other paper currency holders. We are just entering into the next stage of the global currency crisis which will ultimately drive gold prices significantly higher over the coming months and years.”- Peter Spina, www.goldforecaster.com
“December Gold closed up 37.5 at 742.5. This was 8.3 up from the low and 4.5 off the high.
December Silver finished up 0.69 at 9.49, 0.08 off the high and 0.01 up from the low.
With gold making a very impressive low to high recovery bounce of roughly $55 from the Thursday low and managing most of the recovery right in the face of weaker than expected US economic readings and a hard slide in US equity prices, it almost seemed like the gold market was picking up some fresh buying interest. In fact, the gains in the gold market from the prior session's low did not seem to come from weakness in the Dollar but from some other factor. However, with all the metals markets showing an upward tilt and managing that action in the face of outside market action that early in the week seemed to apply pressure to gold prices, there could have been some type of subtle shift in the markets focus.
Given the weaker than expected US retail sales figures and the downside pulse in the US equity market in the morning action Friday it was very surprising to see the silver market forge and generally maintain the gains Friday through a large portion of the trading session. While the Dollar at times was almost 200 points below the prior session's high, the silver market didn't specifically seem to be garnering its strength from the currency market action.”- The Hightower Report, Futures Analysis and Forecasting
