charting gold price

Gold Price Trending Up From Lows

March 28th, 2016 by

Markets are seeing low liquidity today, due to Australian, Hong Kong, UK, and European markets being closed for Easter Monday. Gold hit a low at $1,208 early in Asian trading, but began trending upward soon after. Spot gold is bumping up against the $1,220 mark as the dollar gives up early gains on disappointing economic data.

First support this morning is $1,216, followed by $1,208. First resistance is seen at $1,220, then $1,225.

The dollar is down moderately in New York this morning, giving up gains on disappointing economic numbers. Consumer spending in February was up a marginal 0.1%, and January’s number was revised down to 0.1% from 0.5%.

consumer-spendingPersonal Consumption Expenditures fell to a -0.1%, compared to a 0.% gain in January. Year-to-year, PCE for February was up 1.0%, falling from a y/y +1.2% in January. The core PCE, which strips out volatile food and energy prices, is the Fed’s favorite inflation gauge. Core PCE for February was up 0.1%, and up 1.7% year-to-year. This is the 46th month in a row that core PCE has come in below the Fed’s desired 2.0% level, despite all the Quantitative Easing and near-zero interest rates. Core PCE is used to calculate GDP, which is running at 1.4%, according to the Alanta Fed GDPnow forecast tool. The previous reading was for 1.9% growth in the US economy.

Stocks are attempting to stop a three-day skid this morning, but are being weighed down by a drop in oil prices that are dragging energy stocks lower.  Thin liquidity is hampering all markets this morning, with so many exchanges closed.

Gold may have been pressured  by the blitz of hawkish Fed statements last week, but money keeps flowing into gold ETFs. The SPDR Gold Trust, the world’s largest physically-backed gold ETF, closed the holiday-shortened week at a 27-month high of 26.48 million ounces. Gold ETFs as a whole showed a total of 1,770 metric tons, the highest level since December 2013. Thursday was the last trading day of the week, which saw gold ETFs adding to their reserves for the eighth straight day.

Even after last week’s drubbing, gold futures are still up 15% year to date.

russia-goldTraders looking to hedge their bets aren’t the only ones buying gold. Russian and Kazakhstani central banks increased their gold reserves in February. Russia added 11.1 metric tons to bring their total to 1,447 tons, while Kazakhstan purchased 2.7 tons to bring their total gold reserves to 22.6 tons.

Fed Chairwoman Janet Yellen is scheduled to speak before the New York Economic Club tomorrow morning. All ears will be straining for a clue on an April rate hike, and to see if she is as hawkish as some of the regional Fed presidents.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product

2 thoughts on “Gold Price Trending Up From Lows

  1. Stan

    “The SPDR Gold Trust, the world’s largest physically-backed gold ETF, closed the holiday-shortened week at a 27-month high of 26.48 million ounces.”

    This is highly questionable. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give your everyday investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. There are other issues as well that I’ve verified and welcome everyone else to do the same:

    “Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.

    I remember there was a well documented visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”

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