Precious Metals Market Comments

by Mike Daly, PFGBEST

1-877-294-4669

mdaly@PFGBEST.com
Friday, February 10, 2012 at 2:08 PM

Gold Settles $15.90 Lower … ($1725.30)

This week the April Gold Futures contract covered a very choppy and volatile $49.10 range.
The week was filled with economic concerns from the European Union, geo-political concerns in the middle-east, as well as better than expected Jobless Claims number. The vast array of news this week forced traders to shift gears and strategies on a daily basis. Early on in the week much of the investor attention seemed to be locked on the Geo-political tensions coming from Iran. There has been a lot of sabre rattling coming out of the region as the sanctions imposed on Iran for continuing to enrich uranium to achieve nuclear capability appear to be working.
The trade this week has been very technical and range bound. The Gold and Silver have lost their momentum in the last trading session of the week due once again to the fragility and sketchy news coming from the Euro region. According to Reuters Standard & Poor’s today downgraded 34 0f the 37 Italian Banks that it rates. I expect the choppy and volatile market conditions to continue as long as the news from the EU remains as clear as mud.
The Euro region uncertainty (Greece) is a drag on the precious metals…..

News From The Week:

THURSDAY:

THE WEEKLY INITIAL JOBLESS CLAIMS WAS 358,000. THIS WAS BETTER THAN THE 370,000 THAT WAS PROJECTED.

The news from the Euro region remains sketchy at best. Early on in the trading session we had heard that the Greek government had agreed to tougher austerity measures and their budget. This along with Higher Crude oil prices helped fuel the early precious metals rally. April Gold traded as high as $1755.50 per ounce early in the trading session. Mid to late in the trading
Session reports from The Associated Press (Brussels) released a statement from Germany’s Finance Minister Wolfgang Schaeuble raising concerns that the austerity measures were not sufficient, (Below)

      Brussels -- (AP) Germany's finance minister says a deal
between Greek party leaders on new spending cuts appears to not
yet fulfilled all the conditions for a euro130 billion ($173 billion bailout.
     Wolfgang Schaeuble says that "The agreement, as far as I
understand, is not at a stage where it can be signed off."
     Schaeuble says the conditions for the bailout include
bringing Greece's debt level down to 120 percent of GDP by
2020, limiting official rescue loans to euro130 billion and
getting approval from the Greek parliament.
     He said "'Those general requirements are not fulfilled yet”.
WEDNESDAY:

The precious metals gave back much of their gains from yesterday as fragility and indecision from the European Central Bank in regards to their participation in the Greek debt reconstruction. Euro zone sources have said that the ECB has not made a decision on whether or not to contribute funds. Even though March Crude oil futures traded as high as $100.90 per barrel today the appeal to take profits in the precious metals due to Euro region concerns was the strategy of the day. San Francisco Fed Boss John Williams said there is a QE 3 plan on the table. He stated that the FOMC may need to purchase mortgage bonds and views that as the best stimulus choice…

TUESDAY:

Today’s substantial rally was a direct result of a weaker U.S Dollar and a stronger Euro.
The news out of the European Union appeared to be a bit brighter in regards to Greece.
The Greek government was said to be drafting an agreement on their latest bailout deal
subject for approval later this week. Iran continues to be defiant in regards to its enrichment of uranium in its attempt to acquire nuclear capability and has warned retaliation to any nation that attacks its nuclear facilities program. This has heightened the sabre rattling in the region and has speculators nervous and buying Crude oil futures. March Crude Oil futures traded as high as $99.13 per barrel. Higher Crude oil is normally “bullish” precious metals…
FOMC chairman Ben Bernanke spoke to the Senate Budget Committee and stated ‘the labor market has improved modestly from last year however; there is still a long way to go before the job market is running normally”. He also said “that interest rates will remain low through late 2014… The Friday and Monday price dip may have been a bargain buying opportunity for the jewelers of India. The Indian wedding season will continue through March…

MONDAY:

The gold market continued to decline today as the stronger U.S Dollar and lower crude oil prices help to lessen the demand for precious metals. The market had traded as low as low as $1714.00 early in the session before railing off news that President Obama ordered new sanctions against the government of Iran including its Central Bank. President Obama stated
“the sanctions are warranted because of the deceptive practices of the Iranian Central Bank and the unacceptable risk posed on the international financial system by Iran’s activities”.
The world is certainly watching as Iran continues to enrich uranium in order to achieve nuclear capability. It is widely believed that if Iran continues to enrich uranium it will bring a unilateral strike on Iran’s nuclear program. A warring environment especially in the middle-east (oil supply) would be considered “bullish” for precious metals. St. Louis Fed Boss James Bullard is opposed to the FOMC retaining these low interest rates and stated that the zero interest rate policy punishes savers….

MY SWING NUMBERS 2/13
APRIL GOLD
RESISTANCE # 2…………$1754.00
RESISTANCE # 1…………$1740.00
PIVOT……………………...$1723.00
SUPPORT # 1……………$1709.00
SUPPORT # 2……………$1692.00
VOLUME …………………163,000

MARCH SILVER
RESISTANCE # 2………..$34.50
RESISTANCE # 1………..$34.05
PIVOT……………………..$33.61
SUPPORT # 1…………   . $33.16
SUPPORT # 2…………   . $32.70
VOLUME………………….47,000

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