Market Updates

This week, I took advantage of a temporary pullback in precious metal prices to Top Up my ABC Bullion Gold Saver account. I normally use the ABC Bullion Gold Saver to invest a small amount in both gold and silver every week, a process that is fully automated. The process saves me time as I don’t need to make bank transfers or place individual orders each week, as it’s fully automated.

Good morning,
 
Unsurprisingly, investors have swum to the side of the pool ahead of Wednesday’s FOMC monetary policy statement by the US Federal Reserve at which it is anticipated that the central bank will keep interest rates unchanged.
 
A skinny AUD 1664 – 1672 XAU/AUD range was seen yesterday with movements driven entirely by AUD / USD fluctuations (XAU / USD flat lining).
 
Not much more to add presently. The geopolitical flame for the moment has been turned down from ‘heat’ to ‘simmer’ with US President Trump engaging with Russian Federation President Putin via telephone overnight to discuss North Korea, Syria and US - Russian relations.
 
Once the FOMC announcement is dispensed with the markets will turn their attention to Friday’s US employment data release and the onto the second round of the French Presidential election at the weekend. Whilst I hold no strong view one way or the other regarding the outcome, the punditry, (discredited) pollsters and bookies are all showing candidate Macron as an unbackable short-priced favourite in the two-horse race against the National Front’s Mme Le Pen. What could possibly wrong after witnessing Brexit & the election of Donald Trump under similar circumstances (i.e. rank outsiders given next to no chance of success)? The situation brings to mind the following trading pearl from ‘the man who broke the Bank of England’ that; “Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.”
 
From a technical perspective, XAU / AUD flirts with the first potential area of support at the Fibonacci retracements of the AUD 1578 to 1712.75 move. Respectively those are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%). The 200 Day Moving Average at AUD 1656.00 will also be a closely watched - a potentially critical inflexion point. In XAU / USD terms, gold continued to push towards the bottom of the triangular congestion and held just above the technically important 200 Day Moving Average at USD 1251.00 with trendline support beneath that at USD 1242.00.
 
The Gold / Silver ratio continued higher reaching its highest level since June 28th last year.
 
Good luck.
 
Regards,
Andre

Good morning everyone.
 
The entire precious metals complex was driven lower on Monday, commencing during Far Eastern trading when news began to filter through that the US Congress had reached a bipartisan agreement to keep the government open through until the 1st of October by increasing the ‘debt ceiling’ (having only agreed last Friday to funding for a week). Included amongst all the horsetrading were increased funding for the military and border security, a rejection of funding for a wall on the U.S.- Mexico border (with $1.5 billion allocated towards investment in new technology and upgrades to existing infrastructure to make the border more secure).
 
The US dollar immediately surged on the back of this news and precious metals values (particularly in AUD) were consequently driven lower.
 
With much of Europe absent due to May Day / Labour Day holidays, the reduction in liquidity meant that there was little by way of support to arrest the decline.
 
From the US overnight, equities remained buoyant in the face of a slew of seemingly disappointing economic data releases, thereby keeping precious metals under pressure right though until the close. Data included;
 
·         A significant upward revision to Feb Construction Spending (potentially influencing Q1 GDP revisions). U.S. Construction Spending (Mar) -0.2% (vs +0.4% expected & vs Feb positive revised +1.8% (was +0.8%)).
·         U.S. Manufacturing ISM (Apr) 54.8 (vs 56.5 expected & vs 57.2 in Mar)
·         U.S. Personal Income (Mar) +0.2% (vs +0.3% expected & vs +0.3% Feb negative revised).
 
All economic data releases however will take a back seat to the two major economic events this week;
·         The meeting of the US Federal Reserve’s FOMC on Tuesday & Wednesday (with a monetary policy statement at its conclusion which is expected to leave rates on hold but the wording of which will receive significant scrutiny from investors)
 
·         The Bureau of Labor Statistics monthly release of Non-Farm Payrolls / Employment data on Friday.
 
Geopolitical / geostrategic concerns remain but have receded somewhat for the moment.
 
From a technical perspective, yesterday’s price action registered an ugly (from a bullish perspective) bearish engulfing candlestick with potential areas of support now emerging at the Fibonacci retracements of the AUD 1578 to 1712.75 move. Respectively these are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%). The 200 Day Moving Average at AUD 1656.20 will also be a closely watched, potentially critical demarcation point. In XAU / USD terms, gold dropped deeper within the triangular congestion and the main support areas to watch will be the 200 Day Moving Average at USD 1251.00 and trendline support at USD 1241.00.
 
The Gold / Silver ratio continued higher to 74.72 as silver was dealt with more harshly comparative to gold on the day.
 
Good luck.
 
Kind regards,
Andre

Good morning everyone and I trust you had a good weekend.
 
Sideways, range-trading was seen ahead of Friday’s US GDP data release but price action turned extremely volatile and choppy post GDP figures.
 
US GDP registered its weakest 1st Qtr result since 2014 at a +0.7% rise (vs +0.8% to +1.0% expected) due to a government cutback on defence spending according to the Commerce Department. 4th Qtr GDP came in at 2.1%
 
Gold finds itself caught in a tug-of-war between supportive sentiment derived from geopolitical / geotstrategic events and the negative sentiment driven by a generally strong US Dollar and a roaring equities market that presently shows no sign of abating (the Dow Jones Industrial Index flirting with record highs).

USD precious metal prices have weakened over the past several trading days, with the price of gold currently trading at USD $1,264oz, down close to 2% from their temporary run up toward USD $1,290oz. Silver has also weakened, with the price dropping close to 3% in the past week, currently trading at USD $17.40oz.
 
Australian dollar investors in precious metals have been cushioned by the fall in the local currency, which has fallen vs. the USD over the past few trading days. AUD gold is trading just above $1,690oz, whilst silver is trading at AUD $23.30oz.
 
The biggest developments in markets over the past week or so were in France and in the United States, where President Trump unveiled his proposed tax reforms that, if enacted, would among other things, reduce the current multi-tiered personal income tax system to just three tax brackets, and reduce the corporate tax rate from 35% to 15%.

Gold was largely confined to an AUD 1690 – 1700 range on Thursday, while in USD terms the metal chopped around between USD 1262 – 1270 (albeit with a modest ‘offered’ tone) as consolidation remained the order of the day. ECB

Good morning everyone.
 
A choppy day as far as XAU/USD (gold in USD) was concerned with the prices staging a late rally on US dollar and stock market weakness but in XAU/AUD (gold in AUD) after some early price weakness in the Far East, prices staged a textbook channel uptrend on the day (largely an almost 100% inverse correlation to the move in AUD/USD on the day) (charts attached).

Good morning everyone.
 
The investing ‘herd’ eschewed safe haven assets and piled back into ‘risk-on’ assets (stocks) and currencies which resulted in lower precious metals prices overnight. Geopolitical tensions (temporarily?) took a back seat to a number of other factors that drove the shift in sentiment.

Good morning everyone.
 
The investing ‘herd’ eschewed safe haven assets and piled back into ‘risk-on’ assets (stocks) and currencies which resulted in lower precious metals prices overnight. Geopolitical tensions (temporarily?) took a back seat to a number of other factors that drove the shift in sentiment.
 
Namely, these were (in no specific order of importance);
 
·         A resolution to the perennial US ‘debt ceiling’ charade which had the potential to see sections of the US government shutdown (and the US government default) by the weekend, if Congress refused to increase the ceiling.
This has been averted by President Trump’s willingness to kick into the long grass, his beloved ‘Great Wall of Mexico’ project until September.
 
·         The result of the first round of the French Presidential elections at the weekend with the clairvoyants pollsters placing the establishment pro-Europe ‘centrist’ Emmanuel Macron 20 points ahead of the National Front’s Marine Le Pen and some institutional analysts giving Mr Macron a 99.9% probability of securing the Presidency (what could possibly go wrong in a two horse race?).
 
·         US dollar strength on the back of President Trump pressing legislators to move swiftly on reducing the US corporate rate of tax to 15%. Reports in the WSJ indicate that Trump has given orders to get it done and not worry about effects on the deficit (what difference does it make saddling US taxpayers with a mere estimated 2 trillion additional US government debt that this so far unfunded policy will add to the already gargantuan USD 20 trillion tab?). Additionally, the President’s Secretary of Commerce, Wilbur Ross announced a 20% retroactive tariff on Canadian softwood lumber as a reprisal for the dumping of allegedly ‘subsidised’ Canadian lumber onto the US market causing the Greenback to soar against the Loonie.
 
Elsewhere;
 
·         The arrival of a US nuclear submarine in South Korea was met with a series of live-fire military exercises from North Korea but this had little impact on precious metals values for the aforementioned reasons.
·         Gold bullion imports into China reportedly reached their highest level since May 2016 at approximately 112 tonnes as gold priced in CNY remained flat after two consecutive months of 3% average gains.
 
·         In the ETF space, the SPDR Gold Trust (the world’s largest ETF) saw inflows of 1.5 tons on Monday taking total holdings back to the 2017 high of 860 tonnes registered last week.
 
·         While market consensus is that further US Federal Reserve interest rate increases are probable this year, with the rest of the worlds central banks reportedly printing 200 billion a day in aggregate, many believe that inflationary expectations and negative real interest rates in those countries engaging in that form of financial alchemy will continue to underpin gold demand over the medium to longer term.
 
·         The Platinum Group Metals (PGM’s) have seen platinum in USD terms trading at an over $300 discount to gold for the past 2½ weeks whilst palladium at $800/oz narrows the gap to platinum.
 
Technically, gold in AUD terms continues to see mean reversion back at the AUD 1670 level and as mentioned last week GOLD/AUD could easily find itself consolidating back within the AUD 1660 – 1675 region. While in USD terms, gold has dropped back into the triangular congestion region and some consolidation within the USD 1245 – 1265 zone would provide a better base from which gold bulls might regroup and attempt a fresh assault on the psychologically important USD 1300.00 level eventually.
 
Good luck.
 
Kind regards,
Andre

Good morning everyone and I trust you had a pleasant weekend.
 
As expected, gold went into a holding pattern as the week drew to a close on Friday, there was little to propel the metal outside of its AUD 1690 - 1710/15 (USD 1275 – 1295) trading band.
 
Of course, most investors decided that the prudent course of action was to take a “wait and see” approach ahead of the outcome of the first round of the French Presidential elections yesterday.
 
This morning, Gold/AUD has gapped AUD 20.00 lower on the open and Gold/USD approximately USD 10.00 lower as centrist Independent candidate Emmanuel Macron pipped National Front’s Marine Le Pen (23.8% vs 21.6% with approximately 92% reported), both of whom will now square off in the second round of voting on May 7th. The result was the first time in 60 years that an establishment candidate from either the Republican or Socialist parties has failed to make it through to the second round.
 
With Madame Le Pen’s nationalist, protectionist and decidedly hostile European Union policy platform (she has promised to offer French voters the opportunity of ‘Frexit’ and a withdrawal from NATO should she prevail) running a close second to Mr Macron’s more moderate European Union policy (he believes the project needs reformation but does not want to take France out entirely), investors have (for the moment) assessed that the existential threat to the EU has suffered a setback, hence a sharp rally in the Euro (and general USD weakness) on the open this morning transmitting through to precious metals weakness. Furthermore, it is expected that the majority of supporters of the failed first round candidates are likely to swing in behind Mr Macron on May 7th making it extremely difficult for the Nation Front leader to secure the Presidency.
 
Technically, we noted in Friday’s commentary that a break on the downside through the AUD 1690 level would likely open the way to some mean reversion back towards AUD 1670 and that is precisely what we have seen this morning whilst Gold/USD also traded down to the top of the USD 1245 – 1265 zone (this morning’s low USD 1265.75 to this point in time), that we mentioned might be a better base from which gold can attempt to scale the USD 1300.00 eventually.
 
It should be noted that silver was pressured heavily to the downside in Friday’s trading with market sources suggesting that this was due to First Notice Day for the May futures contract on COMEX this week. The May EFP has been hit and the May/July spread has moved out with the outright May futures driven lower. Buyers are expected to emerge today when the May-July rolls / liquidations are complete.
 
Have a great week.
 
Kind regards,
Andre

Good morning everyone,
 
A jobbers / range traders market in Gold/AUD at present as AUD 1690 & 1710/15 continue to remain the demarcation lines.
 
While the situation in North Korea remains firmly on the radar (a subject we will return to in the moment), of more pressing concern will be the outcome of the first round of the French Presidential elections on Sunday and (all things being equal) the markets are likely to remain in a holding pattern ahead of the outcome.

Good morning everyone,
 
Gold continued its consolidative price-action in AUD terms yesterday, hitting resistance in the ‘sticky’ AUD 1710-1715 noted in yesterday’s commentary but holding above AUD 1690. Speculative re-balancing on profit taking and the tipping out of some of weaker ‘late to the party’ longs creating intraday price weakness, while shortcovering and bargain hunting provided the support.

Good morning everyone and I trust you had a good long weekend.
 
Investors (and I would venture, most people in general) remained on edge as major geopolitical events continued to unfold while the markets were closed for the Easter break.

Good morning everyone,
 
Whether he’s raining down Tomahawk Cruise missiles on airfields in Syria or slapping the US Dollar down with comments to the WSJ that he prefers a weak US Dollar and low interest rates, President Trump’s pirouettes on previously stated beliefs and promises would do a prima ballerina proud and have proved a boon for gold investors.

Given the community concern about housing affordability, and the vested interests at play, the reaction to the latest rumours that the government may allow Australians to use superannuation monies as a first home deposit should come as no surprise.

There have been numerous critics, including a handful of thoroughly researched and no doubt well-meaning economic commentators who have noted the risks in the Australian housing market, including our sky-high private debt levels.

Good morning everyone,
 
Reasonable each-way interest was evident throughout Far Eastern trading yesterday as gold drifted lower from the TOCOM open before finding support when Chinese investors arrived and the metal then consolidated for the remainder of the Far Eastern session and into European trading.

Good morning everyone.
 
Notwithstanding that geopolitical developments remained front and centre in investor minds vis-a-vis the Trump Administration’s surprisingly muscular foreign policy statements and actions recently, early firmness during an otherwise somnolent Far Eastern session gave way to profit taking & speculative rebalancing driving GOLD/AUD values lower during European trading before US investors arrived to “swoop and scoop” the dip. GOLD/AUD bottoming out at 1665 on the day.

Good morning all,
 
By now everyone would be aware of the US missile strike against Syria on Friday, a geopolitical development that we flagged in Friday morning’s comment but the rapidity of escalation which still managed to cause a good deal of surprise.

Whilst not as headline grabbing nor as strong a start to the year as we witnessed in 2016, Q1 of 2017 has been kind to precious metal investors, with gold and silver prices rising by 7.88% and 13.20% in USD terms respectively.
Given the over 6% rise in the value of the Australian dollar vs. the US dollar over the quarter, price growth was more contained for precious metal in AUD, with gold rising 1.50%, whilst silver was up by 6.50%.

A subdued session in the Far East yesterday and during European trading saw gold drift lower as Chinese investors returned to their desks and were on the offer for much of the day.
 
A strong ADP jobs report from the US drove the U.S. dollar index and stock markets higher, weighing further upon metal values. The U.S. ADP national employment report (March) showed a higher than expected rise of 263K jobs vs 180K expected.

Good morning all,
 
Chinese participants remained absent yesterday during Far Eastern trade as they observed Tomb Sweeping Day but AUD/Gold took a leg higher when the AUD was pushed lower after the 2.30pm RBA announcement which left interest rates on hold at 1.50%.

Good morning all,
 
AUD/Gold caught a bid in Asian trading yesterday in spite of reduced liquidity due to the absence of Chinese participants who are out for ‘Tomb Sweeping Day’, Monday and Tuesday of this week.

If you are to taking your cue from the market as to what will happen next with Australian interest rates, then you’d come to the conclusion that the RBA has reached the end of its rate cutting cycle, with the official cash rate set to rise toward 1.80% by the end of 2018.

The precious metal market has had a mixed week, with gold pushing up toward USD $1,263 per troy ounce, approaching the 200 day moving average, before pulling back toward its current level around USD $1,235.00 per troy ounce.
 
Silver has been under even more pressure, with the metal falling over 3.50% overnight, currently trading at USD $17.72 per ounce. The move happened rapidly too, with some USD $2 billion of notion silver exposure dumped unceremoniously onto the market.
 
Prices in Australian dollars have been supported by the fall in the local currency overnight, which fell a full cent. This helped limit the fall in precious metal prices for local investors, with the AUD gold and silver price sitting at $1,632 and $23.62 per troy ounce respectively.

The precious metal complex has continued its solid start to calendar year 2017, with gold currently trading at USD $1,238 per troy ounce, whilst silver is sitting at USD $18.15, with the two metals up 7% and 14% respectively this year.

In this week’s market report, we look at the latest developments in the precious metal market, the outlook for the Australian dollar, and a handful of other economic and market factors relevant to investors, including:

• A look at the Australian housing market

• Alan Greenspan’s thoughts on gold

• Insights from the latest Credit Suisse Global Investment Yearbook

Last week, ABC Bullion participated in the SMSF Association’s National Conference in Melbourne. To coincide with the Conference, we are proud to release our latest research report, titled Exter’s Pyramid and the “End of Easy Money”.