Market Updates

Precious metal prices have consolidated last week’s strong gains, with gold currently trading at USD $1,225oz, whilst silver is sitting at USD $14.55oz. In Australian dollar terms, gold and silver are sitting at $1,728oz and $20.60oz respectively, with the AUD again falling below USD $0.71. Overnight, we saw more volatility creep into equity markets, with the S&P 500 down nearly 1.50%, whilst the NASDAQ fell over 2%. European stocks were also in the red, with the DAX down 1%, whilst losses were also seen in Asia.

Gold prices soared overnight, with the price of the yellow metal last trading at USD $1224oz, whilst silver is now sitting at USD $14.66oz, with the yellow metal now on track to close up for the week, after a sharp decline saw the price pull back below UDS $1185oz just three days ago. In Australian dollar terms, gold has well and truly reclaimed the AUD $1700oz level, and last traded at AUD $1722oz, whilst silver is back above AUD $20.50oz, with the local currency fetching USD $0.71.

Gold continues to battle the USD $1,200 level this week and we saw Silver catch a bid and hold the US$14.00 level comfortably. Eyes are on the Australian Dollar as it fell through key support this week and continues it’s bearish trend lower.

Until last nights price action, gold and silver had remained largely stuck within its recent trading range, and on track to a record a flat monthly return for September. However, after a sharp fall overnight (seen on the chart below in green), the yellow metal is currently trading at USD $1184oz, whilst silver is at USD $14.40oz, with the yellow metal now down close to 1% for the week.

Gold is currently trading at USD $1203oz, whilst silver is at USD $14.30oz, with the precious metal market continuing its recent consolidation. In Australian dollar terms, gold is trading at $1673oz, whilst silver is sitting just below $20oz, with the local currency sitting at USD $0.719, boosted of late by stronger than expected GDP and employment figures. 
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With the recent dramatic sell-off in the silver spot price, we no doubt have many investors scratching their heads as to what is happening in the silver market, and questioning whether the sell-off will continue. Gold has finished the week higher and at the time of writing sits at AUD$1,674.00 per ounce. Silver, though, has continued to go counter-trend and finished the week lower at AUD$19.89 per ounce – $14 per ounce in US dollar terms.

The gold price in USD fell by 3% in the first half of August, declining below critical support at USD $1200oz, though it has since bounced back above this level. The savage sell off represented the culmination of a four month drawdown for the yellow metal, with the gold price declining from near USD $1350oz over this period.

Depending on how you look at it, given what’s happened to precious metal prices in the past five weeks, as a gold market commentator, I either picked the very best or very worst of times to take several weeks away from work.

Precious metals have had a volatile week with the gold price in USD breaking south of 1,200 per ounce and absolute chaos in Forex markets saw the AUD/USD plummet to around US 72.00c. Gold in USD is currently in capitulation mode and dropped as low as $1,165 during the week.

Gold remained heavily oversold this week with a favourite long-term indicator well and truly in the buy zone with gold in the $1630 range.
 
The longer-term chart in AUD is above, and there are only a few times each calendar year where the Williams% oscillator will hit an oversold level -80 or less, on a weekly chart (circled at very bottom of above chart). About as simple as technical analysis gets, but if you look back on previous years where this oscillator was in the oversold zone, it is quite reliable for providing good price points to buy, or top up ones portfolio.
 
Not a crystal ball for predicting the future in any way, but what it does highlight are times of excessive price weakness, which usually provide short to medium term lows for the calendar year and the best price points to average in.  Signals occur only when the price rapidly deviates from a recent trading range, and the last time we were in this zone was back in July 2017 at $1,550AUD per ounce, and the best buying spot of the year.

Despite the Federal Reserve keeping interest rates on hold, Gold prices continued to ease this week, with further falls in our currency providing somewhat of a floor for AUD prices. The Federal Reserve indicated that the US would see two more rate hikes this year, with the most probable months being September and December. We saw some USD strength on the back of the announcement, which has the AUD/USD back at 0.7363.

In news this week the International Monetary Fund (IMF) has warned that the inflation rate in Venezuela could top 1,000,000% by the end of the year, as the country is in the midst of a hyperinflationary episode that trumps the Weimar republic episode post WW1.

Gold prices have fallen by over 1% this week, re-testing the USD $1240oz level, whilst silver has also declined, trading closer to USD $16oz, as renewed selling pressure hit the entire commodities complex this week.

Gold prices have rallied this week, with the precious metal complex possibly having completed its multi-month corrective period. The yellow metal, which had fallen by approximately USD $130oz since early 2018 (see chart below), found important support after trading as low as USD $1,238oz on the 3rd of July, and is now sitting closer to USD $1,260oz.

It’s been a difficult two weeks for precious metal bulls, with gold failing to hold support at the all important USD $1,300oz level late last week, before plunging to USD $1,275oz on June 15th, which you can see on the chart below.

The plunge, which took place about a day and a half after the Federal Reserve had gone ahead with a fully anticipated rate hike, erased any 2018 gains precious metal investors had been sitting on for the year, with both gold and silver now down in USD terms year to date.

David Stockman, director of the Office of Management of Budget under President Reagan and mas­ter of mazy budgetary arithmetic, joins Jim Grant for a scintillating discussion of fiscal and monetary matters, and a look at Central bank tightening in years to come.

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.