Gold price finds support after precious metals closed weak yesterday

Mar 28, 2014 - 7:20 AM GMT
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Precious metals prices were weaker yesterday and were down an average of 1.3 percent with the palladium price off 2.6 percent at $758, gold and palladium were down one percent at $1,292.70 and $1,397 and the silver price was off 0.5 percent at $19.71.

Precious metals are up slightly this morning with platinum and silver up 0.5 percent at $1,404.40 and $19.80, while the gold price is up 0.2 percent at $1,295.15 and palladium is up 0.1 percent at $758.90. The fact silver declined the least yesterday and is relatively stronger this morning, may well suggests some bargain hunting is coming into silver, so we will watch the gold / silver ratio to see if that starts to fall.

Equities – the Euro Stoxx 50 closed up 0.1 percent and the Dow finished down less that 0.1 percent yesterday, but a stronger tone is being seen in Asia this morning with the Nikkei up 0.5 percent, the Hang Seng is up 0.8 percent, the Kospi is up 0.2 percent and China’s CSI is up 0.1 percent. The markets still seem to be focused on the headwinds from China and Ukraine.

Currencies – the dollar index is edging higher, last at 80.12, a move up through the 80.20-80.30 level would look constructive. Conversely the euro is looking heavy, last at 1.3741, sterling looks like it may edge higher from the 1.6610 area, the aussie continues to climb, last at 0.9264, while the yen consolidates around 102.15 and the yuan around 6.2100.

The economic agenda is busy today, late last night a host of Japanese data came out including: household spending, CPI, unemployment and retail sales and it was a mixed bag, especially the 2.5 percent fall in household spending  – see table below. UK GfK consumer confidence came in at minus 5, which was an improvement on the previous minus 7 reading and later we get German CPI and import prices, French consumer spending, various UK data including a final reading on GDP and then in the US we get data on personal spending, income, inflation and revisions to consumer spending and inflation expectations.

Gold found some support around the $1,289 area, which happened to be where the former neckline of the inverse head and shoulder formation was. Prices are getting some lift now, so we wait to see how much bargain hunting materialises. Generally we thought prices did need to have a meaningful correction when they were stretching away from the uptrend line in early March, the correction has been deeper than we expected, but has not turned us bearish. We wait to see how the market now handles this pull-back. Silver also seems to have found some support and we wait to see if the correction in the PGMs has run its course too.

Metals Overnight Performance
GMT 06:15:50 +/- +/- % Lots
Cu 6607 41.25 0.6% 4295
Al 1740.75 5.5 0.3% 423
Ni 15825 115 0.7% 186
Zn 1982.75 9 0.5% 463
Pb 2077.5 5.25 0.3% 211
Sn 22900 96 0.4% 11
Steel 450 0 0.0% Total
Average (BM ex-Steel) 0.5% 5,589
Gold 1295.14 2.44 0.2%
Silver 19.8 0.09 0.5%
Platinum 1404.4 7.4 0.5%
Palladium 758.9 0.9 0.1%
Average PM   0.3%

 

  Economic Agenda
GMT Country Data ACTUAL Expected Previous
11:30pm Japan Household Spending y/y -2.5% 0.2% 1.1%
11:30pm Japan Tokyo Core CPI y/y 1.0% 0.9% 0.9%
11:30pm Japan National Core CPI y/y 1.3% 1.3% 1.3%
11:30pm Japan Unemployment Rate 3.6% 3.7% 3.7%
11:50pm Japan Retail Sales y/y 3.6% 3.4% 4.4%
12:05am UK GfK Consumer Confidence -5 -6 -7
12:20am USD FOMC Member Tarullo Speaks
 7:00am Germany German Import Prices m/m 0.3% -0.1%
All Day Germany German Prelim CPI m/m 0.4% 0.5%
7:45am France French Consumer Spending m/m 1.0% -2.1%
9:30am UK Current Account -13.5B -20.7B
9:30am UK Final GDP q/q 0.7% 0.7%
9:30am UK Index of Services 3m/3m 0.6% 0.8%
9:30am UK Revised Business Investment q/q 2.4% 2.4%
Tentative Italy Italian 10-y Bond Auction 3.42|1.6
12:30pm US Core PCE Price Index m/m 0.1% 0.1%
12:30pm US Personal Spending m/m 0.3% 0.4%
12:30pm US Personal Income m/m 0.4% 0.3%
1:55pm US Revised UoM Consumer Sentiment 80.6 79.9
1:55pm USD Revised UoM Inflation Expectations 3.20%