Morning Market Update Nov 29

November 29th, 2012 by

Gold is recovering after the monster two million ounce (24 ton) sell-off by the mystery entity yesterday morning, as investors take advantage and buy into the massive dip. Not only individual investors, but central banks and especially gold ETPs have entered the market as buyers. ETP holdings expanded yesterday to a total of 2,615.89 metric tons of gold.  There doesn’t seem to be any follow-through selling on gold this morning, as the COMEX spot price slowly climbs over $1,720/oz.

Outside market factors remain bullish, as oil rises on news that an expected 350,000 barrel increase in U.S. oil reserves was instead a 347,000 barrel loss, meaning oil reserves are 700,000 barrels under expected levels. OPEC has signaled that there are no plans to increase production, further supporting a rise in oil prices. The euro is showing slight gains due to an increase in positive expectations over the overall EU economic situation.

Revised U.S. economic data for the third quarter shows that the economy grew by 2.7% rather than the initially reported 2.0%, indicating that the U.S. economy is in the best shape in 18 months. However, a good portion of that increase was due to exports and growth in inventory making up for weaker consumer buying. Accumulated inventories may pull Q4 growth back down to the 2.0% mark.

Positive noise out of Washington regarding the Fiscal Cliff and avoidance of recession, and expectations that the Fed will announce QE4 in December bring inflation scenarios back into the picture, sending the dollar weaker and supporting precious metals. More economic news is due today, namely weekly jobless claims, third quarter GDP, and the ICSC chain stores sales report.


by David Peterson