Market Updates

Precious metal prices have consolidated this week, with gold still battling to decisively reclaim the USD $1,300oz level. Silver has had a better time of it, rising nearly 2.5% in the last week, with industrial metals showing some relative strength, whilst futures market participants have stepped up their long exposure, adding further upside pressure for silver.

Sentiment for the sector as a whole is still incredibly low (more on this later), even though there is plenty of news flow that will prove supportive for precious metals, including the continued shenanigans in Italy.

Incrementum AG this week released their 12th annual “In Gold We Trust” report, titled “Gold and the Turning of the Monetary Tides”, a must read report for any follower of the precious metal market.

In any discussion of the Australian housing market, it’s impossible to avoid discussion of a catalyst. “We see no immediate catalysts for a crash,” has become the cry of the perpetual housing bull. But Dr Philipp Hofflin from the Lazard Australian Equity Team believes a catalyst is unnecessary.

A surging US dollar and a capital flight from emerging markets may lead to another "major" financial crisis, investor George Soros said, warning the European Union that it's facing an imminent existential threat.

COMMENTS / HIGHLIGHTS:

• After Wednesday’s release of the somewhat ‘dovish’ FOMC minutes from its most recent meeting in May, - with the US central bank’s monetary policy committee indicating that while it intends to stick to its rate hike trajectory, it is willing to allow some levity for inflation to overshoot, - the brakes were slammed on the Greenback and US 10 Yr Treasury yields, providing gold with some respite from recent downside momentum.

PRECIOUS METALS RANGES - Trade Date: May 15th

PRECIOUS METALS RANGES - Trade Date: May 11th

COMMENTS / HIGHLIGHTS:
A mixed bag on Friday as the week drew to a close. Europe took XAU/USD up to technical resistance at the USD 1325/1327 region before the market rolled over when US investors arrived who erased all of Europe’s gains in what was routine intraday, speculative trade.  The overall trend for the US Dollar on Friday was lower with losses pared into the close. Crude oil markets also retreated from last week’s 3½-year highs and US equity markets after drifting lower early, closed on a firm note.

PRECIOUS METALS RANGES - Trade Date: May 10th
 
COMMENTS / HIGHLIGHTS:
 
A mixed day’s trade saw the US dollar weaken, US equities strengthen, crude oil prices dip before recovering, US Treasury yields soften and the entire precious metals complex (XAU/AUD excepted) registering respectable gains.
 
 
Geopolitics remained at the forefront as Israel and Syria exchanged salvos albeit with muted market reaction. Consternation also remained surrounding the Trump Administration’s withdrawal from the ‘Iran Nuclear Deal’ earlier in the week.

Long dubbed ‘Woodstock for Capitalists’, or the Stockmarket Superbowl as we prefer, last weekends Berkshire Hathaway Annual Meeting offered plenty of insights for investors big and small.

My personal favourite came from Buffett's offsider Charlie Munger, who, when asked what Berkshire’s formula was to incorporate qualitative factors into their valuations, replied that none exist, and that if the questioner wanted such a formula; “you should go back to graduate school. They’ll give you lots of formulas that won’t work.

PRECIOUS METALS RANGES - Trade Date: May 9th

COMMENTS / HIGHLIGHTS:
The fallout continued yesterday from Tuesday’s decision by US President Trump to abandon the Joint Comprehensive Plan of Action (JCPOA) aka ‘The Iran Nuclear Deal’ and to reimpose even tougher sanctions than had existed previously, ostensibly to punish Iran for alleged transgressions and to force the country into renegotiating the deal.

PRECIOUS METALS RANGES - Trade Date: May 7th
 
COMMENTS / HIGHLIGHTS:
 
A quiet start to the week with a UK Bank holiday impacting liquidity and markets holding station within ranges.

Overnight the US President Tweeted “I will be announcing my decision on the Iran Deal tomorrow (Tuesday) from the White House at 2:00pm.” (this comes ahead of the May 12th deadline for the renewal of sanctions waivers in relation to the Joint Comprehensive Plan of Action (JCPOA) agreed with Iran that was signed in 2015). President Trump is widely anticipated to abandon the deal and to reimpose sanctions upon the Islamic Republic of Iran.

PRECIOUS METALS RANGES - Trade Date: May 4th
COMMENTS / HIGHLIGHTS:
Gold stayed away from its week’s lows on Friday after the eagerly awaited US Bureau of Labor Statistics April employment data came in softer than anticipated by the market at +164K jobs for the headline Non-Farm Payrolls figure (vs +192K expected) with the Unemployment Rate registering 3.9% (vs 4.0% expected). With February’s data being revised down marginally and the March data being revised higher, the BLS report noted that ”job gains have averaged 208,000 over the last 3 months,”.

Gold prices have largely stabilised around USD $1310oz this week, arresting a slide that has seen the yellow metal pull back from the USD $1360oz region over the past three weeks.

Dollar strength has of course been the primary driver of recent moves in the yellow metal, with the USD dollar index, which has been on an almost relentless move higher since the middle of April, pausing over the last couple of days.

Softer US Treasury yields, a softer US Dollar and weaker US equities on concerns surrounding the ongoing trade negotiations between the United States and China, assisted early precious metals bargain hunters in keeping support under gold at a crucial technical level.

Precious metals firmed on modest shortcovering ahead of the anticipated US Federal Reserve monetary policy announcement. Prior to its release however, was the release of the private ADP national employment report (April) which came in +204K (vs +190K expected), to which the precious metals markets reacted with a yawn.

PRECIOUS METALS RANGES - Trade Date: May 1st
 
COMMENTS / HIGHLIGHTS:
 
Thin, illiquid markets resulting from May Day / Labour Day holidays spanning China and most of Europe, saw XAU/USD trade to its lowest level since Jan 2nd this year as the metal rendezvoused with the technically all-important 200 Day moving average at USD 1305.

PRECIOUS METALS RANGES - Trade Date: April 27th
 
COMMENTS / HIGHLIGHTS:
 
Asian markets were the first to receive the breaking news on Friday that (following on from news a week earlier that the DPRK would discontinue nuclear and ICBM testing), the 1953 armistice between North and South Korea had been formalised into a peace treaty, the result of a meeting between the DPRK’s Leader Kim Jong Un and South Korean President Moon-Jae. The occasion of the first ever visit to South Korea by a leader from North Korea also resulted in statements of intent aimed at reducing nuclear weapons to zero on the Korean peninsula and the re-uniting of families divided by the border.
The remainder of trade on Friday was largely routine, gold firming during the US session on some end of week booksquaring after a better-than-expected result for the advance 1st Quarter GDP data (+2.3% actual vs +1.8% expected). Rumours also swirled about on Friday that the Trump Administration has its sights set on a trade war with the European Union.

PRECIOUS METALS RANGES - Trade Date: April 26th
 
COMMENTS / HIGHLIGHTS:
 
US 10 Yr Treasuries continued to lead gold by the nose, as yields at first rose above 3% before retreating on Thursday which triggered commensurate moves in the US Dollar and US equities.

US 10 Yr Treasury yields nudged 3% overnight, propelling the US Dollar Index higher again which weighed upon US equities and precious metals values.

News from the US Treasury that sanctions relief would be provided to Rusal (the world’s largest aluminium producer ex-China) on condition of a restructuring of its ownership (whom the sanctions were targeted at), triggered a Skylab-esque reversion to the averages by the white metals, palladium in particular.

US Treasury yields continued firming on Friday as President Trump Tweeted about Russia, China (currency manipulation and trade skulduggery), amongst other things. The US Dollar Index firmed, US equities were sent lower and precious metals values (in USD terms) slid as end-of-week book-squaring also kicked in.

A spike in US Treasury yields overnight on increasing expectations of a fourth interest rate hike by the US central bank in 2018, lent support to the Greenback, drove US equities lower and precious metals gains (in USD terms) accrued earlier during Far Eastern and European trade, were pared by the close of business in NY.

Gold prices have rallied this week, with the price of the yellow metal currently trading near USD $1,350oz. Silver, which has slightly lagged gold since the beginning of this bull market cycle in early 2016, was an even stronger performer.
 
A powerful move higher Wednesday night Australian time saw the ‘little cousin’ of the precious metal sector add close to 4% for the week, with the gold to silver ratio declining to 78:1.

A sterling performance from silver saw the white metal marginally edge out palladium as the star performer from amongst the precious metals complex on the day, as sanctions against the Russian Federation continue to underpin palladium in particular (debatable whether this had any bearing on silver’s surge on Wednesday, however).

Silver’s outperformance relative to gold swatted the gold/silver ratio lower.

Gold and silver were buffeted around within recent ranges predominantly on headline risk. Weakness during the Far Eastern and European sessions was largely reversed by the US close however, as dip buyers swooped and scooped.

Precious metals were sent lower at the open of Far Eastern trading on Monday on a “buy the rumour, sell the fact” reaction, after a coalition comprising France, the UK and the US (FUKUS), delivered a precisely targeted military spanking to Syrian President Bashar al-Assad (after the close of trading in Friday). The Syrian President, who stands right on the cusp of victory against ISIS terrorists within his country, allegedly carried out a chemical weapons attack against his own people, drawing the ire of the “international community” and a shower of 101 Tomahawk Cruise missiles. No deaths or injuries were reported. And the Russian Federation stayed its hand.