Gold & Silver News – Dec 15th 2014

Gold and silver saw moderate gains this week, despite bearish forces from outside markets such as the strong US dollar and falling crude oil prices. While the metals showed a steady corrective three-day decline during the the latter part of the week, both managed to end the week several percent higher overall.

Price and charts snapshot:

Source: NASDAQ

On Monday, gold ended the day with modest prices thanks to short covering in the futures market, bargain hunting in the cash market and some technical chart consolidation, and on Tuesday saw sharp gains, pushing prices to a six-week high. This was a resilient stance against bearish forces of the US dollar hitting a four-year high overnight (supported by last week’s positive jobs report) and crude oil prices hitting a five-year low^[1]. The gains began to retract on Wednesday due to some downside correction, with the precious metals ending the US day session lower^[2]. On Thursday and Friday, gold continued to fall, declining on Friday for a third day in a row as US growth limited haven demand. Downward forces included the Thomson Reuters/University of Michigan preliminary December index of consumer sentiment beating projections and increasing to 93.8 from 88.8 last month. Bullion also declined on Friday as crude futures retreated^[3].

Despite the falls, overall the metals both ended up for the week. Gold was 2.7% on the week which March-delivery silver was up 5.3% on the week.

In the Kitco News Gold Survey this week views were moderately balanced: out of 21 respondents ten see prices going up next week, while six see prices going down. The remaining five see prices staying sideways^[4].

The moderate gains this week have been surprising in the face of bearish pressure from outside markets, with various explanations offered such as bargain hunting and short-selling.  Kevin Grady of Phoenix Futures and Options said the strong buying remains under the market, keeping gold prices from falling alongside crude^[5]. Afshin Nabavi of trading house MKS in Geneva suggested gold found support from market participants closing their books ahead of the end of the year^[6].

Despite gold’s resilience in the face of plunging crude oil prices, other trades don’t envision gold holding these gains. For example, Miguel Perez-Santalla, a sales and marketing manager at Heraeus Metals New York LLC, said “The engine of the US market is continuing to improve, and that’s the biggest bear for gold”, and “The economy is booming. Jobs are starting to increase, and for the first time I think the US is starting to get off the ground.”^[7]

Looking ahead to next week, Japanese elections on Sunday may impact the yen while in the US, the last FOMC meeting for 2014 will be held on Wednesday^[8].

Author Lisa Casagrande | https://www.goldbullionaustralia.com.au