Yesterday Turkey’s central bank hiked rates dramatically to bring about support for the Lira.

Yesterday Turkey’s central bank hiked rates dramatically to bring about support for the Lira. After a short rally, the Lira fell along with other emerging market currencies and the European markets. It seems as if investors don’t care if local rates go up, they just want to flee emerging markets. Turmoil in emerging markets didn’t stop the Fed from trimming its bond buying stimulus. Yesterday, the Fed announced a further $10 billion reduction in its asset purchase program. Beginning in February, the Fed will buy $65 billion of bonds per month vs. the current buying of $75B per month. Even if unemployment falls to the 6.5% threshold, Fed officials will continue to keep rates near zero as long as inflation stays within the 2% target range. Gold saw minimal gains from this news as markets expected this to occur. Perhaps if the Fed had taken a different course of action yesterday, the markets would be more befuddled. Initial Jobless Claims for the week ending 1/25 are up 19,000 with a result of 348,000. GDP (4Q) grew at 3.2% vs. third quarter’s rate of 4.1%. Have a wonderful day!

The equities market saw a sell off yesterday shortly after the opening due to disappointing manufacturing data in China.

The equities market saw a sell off yesterday shortly after the opening due to disappointing manufacturing data in China. China’s Manufacturing PMI fell to 49.6 compared to December’s reading of 50.6. A reading of 49.6 indicates that China’s manufacturing economy is in a declining state of mode. China’s poor PMI news was favorable to gold and silver as we saw some safe haven buying. Gold hit a 2 month high yesterday as the US Dollar hit a one week low. The USD fell .4% against the basket of currencies. In addition, there were talks about India trying to ease their import restrictions which gave gold a boost. Home Sales for December rose about 1% to 4.87M from November’s revised 4.82M. There’s not much news in reference to the AMCU strike except that the government will step in to settle disputes between the union and the 3 major PT producers. Have a nice weekend

The first gold fixing took place on September 12, 1919.

The first gold fixing took place on September 12, 1919. The 5 members, Barclays Plc, Deutsche Bank, Bank of Nova Scotia, HSBC, and Societe Generale meet for the fix twice a day at 10:30 am and 3 pm London time. The Chairman gives an opening price before the fix commences and the banks  either buy, sell, or show no interest. Based on this, the price increases or decreases until buyers and sellers are matched or the imbalance is 50 bars or less. Once this happens the price is “fixed.” This benchmark represents a point in time when the AU market is considered to be in equilibrium. Banks are considering to meticulously examine the process and look for ways to implement the fixing procedure.  According to Bloomberg News, there are concerns the markets are being manipulated and perhaps this process needs to be updated. Deutsche Bank plans to drop out of the AU & AG fixing altogether once a replacement for its seat is found since it is scaling back its commodities business.

Workers at Anglo American Platinum (the largest PT producer) have decided to go on strike along with Impala and Lonmin.

Workers at Anglo American Platinum (the largest PT producer) have decided to go on strike along with Impala and Lonmin. The Association of Mineworkers and Construction Union (AMCU) make up roughly 60% of the workforce in Anglo. The union is demanding entry level wages of at least $1,150 a month. If these demands are not met, the strike will go into effect this week. As a result, Platinum prices are seeing support and trading approximately $15 higher this morning. 

Gold continues to trade sideways and speculative data shows that the number of shorts and longs continue to rise. It’s difficult to predict the path gold is taking since it hasn’t broken through current levels and the Fed doesn’t meet until next week. It’s a very quiet day as the stock market is closed for Martin Luther King Day. Please note that since the electronic trading platform will close at 1:15 PM today, we will stop quoting prices as of 1:00 PM.

The Fed’s Balance Sheet has hit $4 trillion due to the monetary stimulus program, which was designed to keep long term interest rates low and encourage spending and hiring.

The Fed’s Balance Sheet has hit $4 trillion due to the monetary stimulus program, which was designed to keep long term interest rates low and encourage spending and hiring. Ben Bernanke made his last planned public remarks yesterday and reassured investors that if unemployment rates reach the 6.5% threshold, the Fed will continue to keep rates near zero as long as inflation remains below the 2% target level. This insinuates that tapering isn’t tightening! Bernanke made no reference to halt tapering so looks like we can expect the scaling back to continue and see a completion of the program late in the year. Two out of the three top producers of Platinum, Lonmin PLC and Impala, are likely to see the Association of Mineworkers and Construction Union (AMCU) strike. If wage demands are not met, Lonmin should see the strike take place on January 23^rd. If the strike happens, supply concerns could push PT prices to much higher levels.

Eight times a year the Fed publishes the Beige Book, which gives us a synopsis of the overall health of the U.S. economy.

Eight times a year the Fed publishes the Beige Book, which gives us a synopsis of the overall health of the U.S. economy. It’s available to the public and is released 2 weeks before the FOMC meeting. The snapshot illustrates the U.S. economy continued to expand at a moderate pace and saw an increase in hiring levels. There were general improvements in the real estate market as most districts cited a boost in residential home sales. Retail Sales are a very essential component of the report since consumer spending accounts for 70% of GDP and have showed gains since the last report. The districts had mixed views on leisure and tourist spending, but reported steady growth in the manufacturing sector. Based on the Beige Book, the outlook for the U.S. economy seems to be positive. Initial jobless claims for the week ending 1/11 is down 2,000 to 326,000 and Consumer Price Index (CPI) for December is up 3%. Have a great day!

Yesterday we saw a sell-off in AU and of course PT,PD & AG followed the yellow metal’s down trend.

Yesterday we saw a sell-off in AU and of course PT,PD & AG followed the yellow metal’s down trend. On a brighter note, the market had a good day with the DJIA trading on the upside after a week of declines. Richard Fisher, the President of the Federal Reserve Bank of Dallas and one of the most hawkish policy makers, supports a continuation in tapering even if equities take a hit. According to Fisher, tapering minimizes the risk of the formation of an asset bubble. He is in favor of paring bond purchases in increments of $20B vs. $10B just to speed up the completion of the program. Gold continues to trade in the negative territory for two days in a row due to a rally in the U.S. Dollar and the equities market. South Africa’s Association of Mineworkers and Construction Union (AMCU) announced launching a possible strike due to low wages, but PT did not show any reaction to this news. The Core Producer Price Index for December is up .3% vs.  .1% for November. Have a great day!

Gold saw some gains yesterday throughout the day due to short covering and index buying into the close.

Gold saw some gains yesterday throughout the day due to short covering and index buying into the close. Dennis Lockhart, President of the Federal Reserve Bank of Atlanta, suggested that an “accommodative monetary policy” should be enacted even though he expects to see further economic growth. Lockhart expects GDP to grow from 2.5% to 3% in 2014 and if this holds true, he believes the Fed should continue tapering at its current pace. Investors continue to remain bearish on the overall outlook of AU for 2014 as the shiny yellow metal loses its luster as an inflationary hedge. Core Retail Sales (excluding auto sector) are up .7% for December vs.  .1% for November. December Retail sales are up .2% vs. .4% for November. The Fed’s next meeting is scheduled for January 29-30 so we will have to wait two more weeks to see what the taper timetable will look like. Have a great day!

 

Gold saw some upside after the fixing as the U.S. Dollar softened.

Gold saw some upside after the fixing as the U.S. Dollar softened. The economy continues its momentum with weekly jobless claims exceeding expectations. Weekly jobless claims dropped to 330,000 vs. prior weekly claims of 345,000. Both the BOE and ECB have decided to keep interest rates unchanged. The ECB is keeping interest rates at .25% and the BOE is keeping rates at .50%. Today is the day investors have anxiously been waiting for because the Nonfarm Payrolls and unemployment numbers come out! The U.S. economy added 74,000 positions vs. expectations of 196,000. The unemployment rate dropped to 6.7%  vs. a forecast of 7% due to a dwindling labor force participation rate. Investors are surprised by today’s job report as the actual numbers seem to be very inconsistent with the robust ISM numbers, better than expected ADP Report, and declining weekly jobless claims. The precious metals complex views the weak job report as positive news and thus, all the metals are currently trading on the upside. Have a great weekend!

The Fed minutes for December’s policy meeting are finally out! Several officials discussed that the marginal effects of QE were diminishing and thus, tapering should begin.

The Fed minutes for December’s policy meeting are finally out! Several officials discussed that the marginal effects of QE were diminishing and thus, tapering should begin. We can expect to see a continuation in the reduction of QE in measured steps. Based on the minutes, majority of Fed officials foresee the wind down to be completed by the second half of 2014. Some officials expressed concern over the low inflation rate (since it is below the Fed’s 2% target)  and the low labor participation rate. Hence, not all officials were in favor of minimizing the bond buying program due to these factors. So far, we have seen positive economic data. The 238,000 jobs added to the private sector is at its highest point since Dec 2012. Economists expect Friday’s payroll numbers to be very good based on Wednesday’s strong data. The consensus forecast is that 203,000 nonfarm payrolls were added for the month of December, which is greater than the 196,000 jobs added in the month of November. The prospects for tomorrow’s numbers look very positive, but what if we see a poor NonFarm Payrolls report? This would indeed raise investor eyebrows about the Fed’s next move and perhaps they would consider putting the wind down program on pause. The strength of the USD and strong economic data is not favorable for AU. When investors see the dollar holding strong and the economy performing up to expectations, they  don’t see a need to flee to a safe haven asset, plain and simple as that! Have a great day.

Today is the first full trading week of 2014!

Today is the first full trading week of 2014! We have seen gold rally for the last couple of days, but can the shiny yellow metal sustain its rally? As we are approaching closer to the Chinese New Year, we expect to see an increase in demand for physical gold. Gold is often exchanged for gift giving amongst the Chinese as they enter the year of the horse. It is said that individuals born during the year of the horse are clever, cheerful, stubborn, and have great communication skills. The year of the horse represents good health and is the year for individuals to make the most out of opportunities given to them.  China surpassed India as the largest gold consumer for 2013. It should be interesting to see what direction gold takes once the Fed minutes come out on Wednesday and the Nonfarm Payrolls data is released on Friday. These numbers will give investors a signal about the pace of the economic recovery and how aggressive investors can expect the Fed to be with tapering. Have a great day!

First day back in the office after the New Year! Roads were pretty crowded this morning as everyone’s vacation has come to an end and children are back to school!

Good Morning,

First day back in the office after the New Year! Roads were pretty crowded this morning as everyone’s vacation has come to an end and children are back to school! It’s great to start the first trading day of the year with the metals trading on the upside. Gold is trading higher this morning due to physical buying from the Chinese markets. It’s nice to see gold trading above 1200, but investors still remain bearish due to an improving economy and the Fed scaling back its asset purchase program. We expect gold to see some temporary support during this time until we hear new information pertaining to monetary policy. We saw a jump in PT this morning due to shorts exiting their position. Jobless Claims for the week ending 12/28 are down 2,000 with a figure of 339,000 vs. previous claims of 341,000. Have a great day everyone!