Commodities: Precious Metals Rally, Silver + 4% + Commentary
Both Feb Gold and Mar Silver lifted from session lows of 1217.20 oz, and 19.15 oz, and trended higher on the session. Both metals gained momentum in afternoon action and pushed to new session highs.
Gold settled 2.2% higher at 1220.70, Silver closed at 19.83,posting a solid 4.0% gainer.
Jan Crude Oil extended gains for a 4th session running as it gained support from strong inventory data and the weaker USD Index.
Wednesday the EIA reported that for the week ending 29 November, Crude Oil inventories had a draw of 5.585-M bbls when consensus was between a draw of 0.5-M and a build of 0.3-M bbls.
The energy component dipped to a session low of 96.30 in late morning pit trade but regained momentum, went up to a session high of 97.54, and settled with a 1.2% gainer at 97.18 bbl.
Jan Nat Gas extended Tuesday’s losses after pulling back from a session high of 4.01 per MMBtu set in the morning, then faded to Red into the close and finished 0.3% lower at 3.96 per MMBtu.
Gold and Silver prices finished the US session with sharp gains Wednesday on Short covering, bargain hunting and position evening ahead of 2 days of major economic data points coming.
Bargain hunters stepped in, bought the dip, and Gold pushed back above unchanged.
The ADP report shows that the trend of US economic data is upbeat in here.
Feb Gold was last up 23.60 at 1,244.30 oz.
Spot Gold was last quoted up 1.50 at $1226.25 oz.
Mar COMEX Silver last traded up 0.725 at 19.79 oz.
Wednesday the monthly ADP national employment report for November came in at a strong 215,000 rise in workers. That beat market expectations of a rise of around 170,000.
The Gold and Silver markets saw immediate selling pressure following the ADP report, although that pressure was not strong and then the bargain hunters stepped in and bought the dip.
Next came the US Federal Reserve’s Beige Book. The report contained nothing new and did not affect the market.
The European Central Bank’s (ECB) monthly monetary policy meeting is Thursday and the US jobs report is Friday. The 2 reports are the biggest on the week for the market.
In the near-term Gold Market Bulls may see this action, as money flows in the market have been largely to stocks and the major stock indexes have risen to record or multi-year highs other assets like Gold and Silver have suffered.
So, now that this Bull Market run in stocks that began on 9 March 2009 is mature in its 53rd month (the average is 57 months) that means the most of the upside pricing is in. And, participants will be looking for a market top that may not be too far in the future, that + a Fed “paring” of its QE-3 program thought to be coming sooner rather than later could set tops for the major stock indexes.
Then when the money begins to rotate out of the stock market it will seek other assets, including the raw commodity sector, that includes Gold and Silver.
History shows the pendulum tends to swing between hard assets like Gold and Silver, and paper assets like stocks, for the past 5 yrs that swing has been to the paper asset side.
Another early clue that is potentially Bullish for the precious metals Bulls and the raw commodity Bulls in general: NYMEX Crude Oil futures prices this week have seen Bullish Northside technical breakout from a sideways trading range on the daily candlestick chart.
This suggests that Crude Oil prices have put in a bottom.
For the raw commodity sector to gain a sustainable Bullish model, the Crude Oil market had to see is price downtrend on the daily chart broken (Key reversal), that has just happened.
The Gold and Silver Bulls have a lot to do here to suggest their price down trends are finished, and to also suggest price uptrends on the charts can continue.
What analysts are looking for now in Gold and Silver prices is a few continuous strong up days , and/or prices closing at or near their weekly highs at a Friday close. Keep an eye on those charts.
The European Union’s (EU) latest batch of economic data released Wednesday was mostly downbeat, as GDP stagnated, consumer spending slowed, retail sales declined and manufacturing activity declined, from their prior reads.
The reports suggest the European Central Bank (ECB) will keep its monetary policy very accommodative for some time to come as the latest EU economic data suggests the upside is limited for the Euro currency, that is a Bullish development for the USD IMO.
The London PM Gold fix is 1,227.50 Vs the prior PM fix at 1,217.25.