Gold has rallied more than 1 per cent after US President Donald Trump’s failure to push through a healthcare reform package raises questions over his ability to deliver promised tax cuts and spending plans.
That knocked the US dollar to a four-month low versus a basket of currencies. Stocks and US long-dated bond yields slipped but recovered lost ground as investors hoped Trump will still be able to bolster the economy.
Spot gold was up 1 per cent at $US1,256.02 an ounce by 2:28 pm Monday EDT (0528 Tuesday AEDT), having touched a one-month high of $US1,261.03 and failing to hold above the 200-day moving average for the second time in a month.
US gold futures for April delivery settled up 0.6 per cent at $US1,255.70.
“This is entirely driven by the weaker US dollar,” Commerzbank analyst Carsten Fritsch said. “The Trumpflation trade is being priced out after the failure to repeal Obamacare.”
Gold had already rallied sharply from its March 15 low after a less hawkish policy statement than expected from the Federal Reserve, which dampened expectations for near-term increases in US interest rates.
The precious metal is highly sensitive to rising US rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
A close above the 200-day average, now at $US1,259 an ounce, could trigger follow-through buying, analysts said.
The world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares , reported an outflow of 1.8 tonnes on Friday.
US Commodity Futures Trading Commission data showed on Friday, however, that hedge funds and money managers boosted their net long positions in COMEX gold in the week to March 21 after two weeks of cuts.
“Tactical investors increased their exposure to gold after the FOMC (Federal Open Market Committee) meeting, primarily by establishing fresh long positions as well as further short-covering activity,” said Standard Chartered in a note.
“However, positioning is still relatively light, suggesting room for additional exposure to gold.”
China’s net gold imports via main conduit Hong Kong rose 50.8 per cent month on month in February to 47.931 tonnes, data showed.
Silver was up 1.8 per cent at $US18.06 an ounce, off an earlier three-week high of $US18.12.
Spot platinum gained 0.5 per cent to $US965.50, after rising to $US982.60, a three-week high and around the level where the 50-day and 200-day moving averages nearly converge.
Palladium was down 1.7 per cent at $US795.10 after hitting a two-year peak of $US815.40 on Friday.
SILVER PRICES jumped through $18 per ounce Monday lunchtime in London, outstripping the rising gold price as US stock markets opened sharply lower and the Dollar sank after President Donald Trump abandoned his attempt to repeal Barack Obama’s Affordable Care Act – a key plank of his election pledges.
Despite House Speaker Paul Ryan working “very, very hard” to garner enough support to replace Obamacare, Trump said he will now move onto pushing tax reform instead.
Major government bond prices jumped, pushing 10-year US Treasury yields down to 1-month lows at 2.36%.
Gold touched $1260 per ounce – up 1.4% from the start of Asian trade to its highest Dollar value since 27 February.
Silver prices added 2.0% to touch $18.13 before easing back 10 cents per ounce.
Priced in the Euro the “devil’s metal” made only half that gain, touching a 3-week high at €16.64.
Silver’s gains were more muted again for UK investors, as the British Pound rose fast on the FX market ahead of this Wednesday’s Article 50 notice triggers 2 years until the UK formally quits the EU.
“Gold [just] posted a second straight weekly gain,” says Australia bank ANZ in a commodities note, “as the USD continued to weaken under concerns that the failure to scrap Obamacare would hinder Trump’s pro-growth policies.”
“Investor activity will remain key to [silver’s] trend,” said a separate note last week from specialist analysts Metals Focus, “[and] should remain supported by healthy safe haven buying.”
While the failure of Geert Wilders to win the Netherlands’ election this month “has dampened expectations of a growing far right movement across the continent,” Metals Focus goes on, “the forthcoming French presidential election could see these fears rekindled.
“Even though gold will be the main beneficiary, there will also be spillover benefits for the silver price.”
Looking at Comex futures and options contracts, latest data say the number of bullish derivatives held by Managed Money traders shrank for the third week running in the week-ending last Tuesday, taking the total loss to one-in-six contracts since the Fed’s policy team announced their clear intention to raise rates at the March meeting at the start of this month, reaching a 6-week low.
The number of bearish silver bets has meantime swelled by one quarter, reaching its largest size in 8 weeks and pulling the Managed Money’s net spec long down 23% to a notional equivalent of 10,119 tonnes.
Chart of silver Comex futures and options net positioning by Managed Money category of traders. Source: BullionVault via CFTC
Equal to more than 4.5 months of total global silver mine output, that Managed Money net spec long is two-thirds of July 2016’s all-time record, some 180% greater than the last 10 years’ average.
“Unlike most other commodities, gold is often viewed as a safe haven asset as well as a pseudo-currency asset,” says a note from US finance giant Citi.
“Exemplifying the divergent trend in recent weeks, Comex gold open interest declined 38% versus record highs of August 2011. Conversely, robust Comex silver open interest is currently just 17% shy of the all-time high in August 2016.”
Year-to-date, Citi’s analysts also “note an increase in [Comex trading] turnover of 18% and 33% for gold and silver respectively – indicative of rising liquidity, largely through speculative interest.”
Bullion holdings to back the giant iShares Silver Trust (NYSEArca:SLV) were meantime unchanged last week at 10,342 tonnes.
Gold holdings for the SPDR Gold Trust (NYSEArca:GLD) shrank by 1.5 tonnes to 832 – almost exactly matching the GLD’s average holdings since the exchange-traded gold fund launched in November 2004.
Speculative Managed Money betting on Comex gold contracts rallied hard last week, recovering one-third of the previous week’s 46% plunge – the sharpest drop since November 2015 saw the speculative position amongst money managers turn net negative on gold for the first time in almost 10 years of data.
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Gold prices declined at the bullion market here today due to weak demand from jewellery stockists while silver firmed up further on persistent buying by industrial users.
Standard gold (99.5 purity) declined by Rs 45 to finish at Rs 28,860 per 10 gram, from its overnight closing level of Rs 28,905 per 10 gram.
Pure gold (99.9 purity) also slipped by a similar margin to end at Rs 29,010 per 10 gram compared to Rs 29,055 per 10 gram previously.
Silver (.999 fineness) rose by Rs 310 to finish at Rs 42,465 per kg from its yesterday’s close of Rs 42,155.
Globally, gold prices held steady near one-month highs supported by political and economic uncertainty in the United States and expectations of a lower dollar.
Spot gold was little changed at USD 1,253.41 an ounce at early trade, after touching its highest in a month at USD 1,261.03 on Monday.
US gold futures inched down 0.2 per cent to USD 1,253.30. Spot silver fell 0.2 per cent to USD 18.04 per ounce.
(This article has not been edited by DNA’s editorial team and is auto-generated from an agency feed.)
Compared to gold, silver is the more volatile precious metal. The overall sentiment in the market for silver is positive, as it recently crossed the 50-day, 100-day, and 200-day moving averages.
Silver has performed slightly better than gold and platinum on a year-to-date basis. Silver had a year-to-date gain of 8.8%, while gold and platinum have risen 7% and 7.4%, respectively, as of March 20. Palladium, however, has outperformed the other three metals with a rise of 14.7% during the same timeframe.
These Factors Have Been Driving Silver Prices
Precious and industrial metals
The fluctuations in the price of silver since 2015 are shown in the above chart. As silver is considered both an industrial as well as a precious metal, the rises and falls in its price are dependent on many global indicators.
When Brexit concerns surfaced in mid-2016, the haven bids caused silver to rise. Similarly, after Trump won the US election, the haven bids impacted the metal. The increase in the interest rate on Treasuries caused non-yield-bearing assets like gold and silver to suffer. In a similar fashion, the overall industrial market performance can also impact silver, as silver is frequently used as an industrial metal.
Silver funds and miners
The fluctuations in silver prices are evident in the iShares Silver Trust (SLV) and the Silver Trust ETF (SIVR). These two funds have risen 9.2% each due to the rise in silver prices.
Silver mining stocks like Hecla Mining (HL), Coeur Mining (CDE), Pan American Silver (PAAS), and Silver Wheaton (SLW) have fallen over the past month due to the fall in silver prices.
Later in this series, we’ll look at the performance of silver miners along with technical details.
This week has seen a sluggish Dow Jones Industrial Average struggling to break even while the price of gold looks poised to hold on to its gains. But what’s been lost in the shuffle is the price of silver, which has made some progress against gold, inching up above $17.50 and entering the realm of 1/70th the price of gold.
Is this uptick in the price of silver a sign of things to come, or merely the tip of the arrow for the precious metals market?
Tracking The Price Of Silver
With the stock markets not showing much, if any, signs of life this week, a spotlight has shifted to precious metals. The most obvious precious metal is, of course, gold, which has performed well enough to move above previous positions. But some websites have pointed out how silver prices are following gold with plenty of momentum, much like an object in space using a gravity boost from a larger object to increase its speed.
Traditionally, the ratio of silver to gold has been a good indicator of silver’s potential—if silver is currently underperforming this ratio, as it has been in recent years, then that points to upward momentum for the gray metal should precious metals take off. This week has shown signs of that, as gold has moved above $17.50 and even to $17.60 per troy ounce.
Finding Better Returns With Silver
One of the reasons silver can be such an attractive choice to investors is that it often represents a chance for greater returns on investment by percentage. Although many investors will flock to gold in these scenarios, the savvy precious metal investor will look at silver as well.
Silver may be currently undervalued relative to gold—but when compared to the stock market, the difference becomes even more pronounced. Those who currently believe stocks to be overvalued might see silver as an interesting alternative if they’re not completely comfortable with the price of gold. This could potentially lead to a greater demand in silver if the entire precious metals market starts rising, though identifying such a bull market will take more than a week, even for the savvy investor.
A Unique Investment When Stocks Seem Too High
There is plenty of optimism in the silver markets right now. Those already with some presence in silver will find this week’s returns encouraging; the true question is how long this will last.
For those who have looked too much to gold as a hedge against stocks, silver can be a comforting alternative: it provides exposure to precious metals while also having a tremendous degree of upside. There is plenty of volatility in silver, of course, but a fully diversified portfolio can handle this volatility with ease.
What remains for the market this week? Silver may continue to inch upward. Whether or not this represents a slow buying opportunity before a bull market for silver remains to be seen, but for now, silver’s price is experiencing a great degree of optimism.
Rise to three-week high also follows Fed caution on rate hikes
TOKYO — International gold prices are on the rise, driven by falling U.S. stock prices and a weakening dollar as doubts about U.S. President Donald Trump’s economic agenda begin to proliferate.
Gold futures in New York climbed to the highest in three weeks, surpassing $1,250 per troy ounce at one point Wednesday and hovering in the $1,240 range in pre-market trading Thursday.
The U.S. Federal Reserve decided at its March 14-15 meeting to raise interest rates, prompting speculators including funds that had been short-selling gold immediately prior to the announcement to begin buying. According to the U.S. Commodity Futures Trading Commission, funds were net-long by 106,038 contracts as of March 14, the lowest level since Jan. 3.
A lack of hawkish language by Fed Chair Janet Yellen about accelerating the pace of rate hikes made it seem safe to buy the yellow metal. High interest rates tend to weaken gold prices by making interest-bearing investments relatively attractive in comparison, but Yellen suggested the Fed would raise rates three times this year, as previously stated, and gave no indication that the pace would quicken.
The market’s concerns now seem focused on the feasibility of the policies touted by Trump, including infrastructure spending, large tax cuts and easing of financial regulations. One view that has emerged is that headline policies may have to be scaled back in future budget addresses and actual budget proposals. Gold could gain further strength if the correction continues in the dollar and U.S. stock prices, both of which had risen in anticipation of Trump’s policies.
While expectations that the Fed will raise rates again in June would tend to be a drag on gold prices, market analyst Itsuo Toshima says that “the market’s appetite for buying gold will remain strong through May.” Anticipated U.S. policies that set the stage for the Trump rally are becoming risk factors for the market, raising the profile of gold as a safe haven.
One other factor on which gold markets will be fixated is the first round of voting in the French presidential election on April 23. If no one wins a majority of the vote, the top two candidates will have a run-off on May 7, the results of which could roil gold markets.