Gold & Silver News – 17th Nov 2014

Both gold and silver were down for the week until Friday, where a short covering boost rallied the precious metals, with gold seeing its biggest rally since June and silver its biggest since February.

Gold and silver prices snapshot:

Source: NASDAQ

On Monday US markets were closed due to the Veterans Day holiday. On Tuesday, Gold prices ended moderately higher due to some short covering and bargain hunting, as well as a weaker US dollar^[1]. On Wednesday gold prices eroded again, ending moderately lower near the daily low, driven by a US dollar rally and weaker crude oil prices^[2]. On Friday however, gold futures jumped, seeing the biggest two-day gain since June, after a rally in oil damped previous concern over inflation remaining low. Silver surged its most for nine months.

By Friday afternoon on the New York Comex gold futures for December delivery rose 2.1 % to USD$1,185.60 (AUD$1,354.99). Earlier in the day, the price had reached $1,192.90 (AUD$1363.33), the highest since Oct 31, while in the last two days the price climbed 2.3%, the most since June 20. Silver futures for December delivery surged 4.4% to USD$16.314 (AUD$18.64) an ounce, its biggest gain since Feb 14.

Overall gold futures have dropped 1.4% this year with prices reaching USD$1,130.40 (AUD$1,291.90) on Nov. 7, the lowest since April 2010. The dollar is trading near a five-year high, and continued US economy gains have accelerated bets the Federal Reserve would raise interest rates after ending its quantitative easing program, cutting demand for bullion^[3].

This week, as with past weeks, the majority of Kitco News gold survey participants expect lower prices next week. In the survey, of 19 respondents five see prices up, 11 see prices down and the remaining three see prices remaining flat.

The US greenback remains a strong factor in the precious metals market. Dan Heckman a consultant for US Bank Wealth Management said “We are still in this environment where inflation will remain low and the Fed will start raising rates as the economy shows signs of improvement, and both are not good for gold”, “There are very few fundamental reasons to hold gold.”^[4]. Tim Rudderow, president and chief investment officer of Mount Lucas Management Corp said “The world believes in the dollar. Expectations of higher interest rates in the U.S. are moving more and more investors away from gold.”^[5], while Ken Morrison of online newsletter Morrison on the Markets said “Given the strengthening dollar here at week’s end combined with the bear-flag-like pattern in gold futures, the risk/reward favors the bears for at least a retest of the (Nov. 7) $1,130 (AUD$1,291) low sometime in the next few days. “