November 18th Weekly Gold Market Update
Following on from the previous period’s modest recovery, gold made another small gain over a very uneven week. Weekend trading had eroded all of the previous gains and more, but a small rally on Monday took it back up above the $1,160 mark. The spot price then declined slowly until the New York markets opened Friday morning, when it suddenly took off to add close to $40 in a very busy few hours. By the time the markets shut down for the day gold was trading at $1,180.50, a round $10 up on the Friday before. That’s far from a spectacular recovery and it was built on top of a very hesitant performance over the preceding few days, but for the second week in a row we’ve seen an upward move. Another week or two of this and it will be safe to say a trend is building.
One thing we find encouraging is that for the second week in a row gold managed to gain ground even with the stock markets holding reasonably firm. The Dow Jones had some peaks and dips last week but overall finished slightly ahead, which on past form should have depressed gold. That didn’t happen if we ignore the daily closes and look at the bigger picture. Just like the week before, it seems most likely that while equities are still managing to climb they aren’t doing it strongly enough to reassure investors. Abroad the FTSE 100 outperformed the Dow last week but still didn’t look all that robust. With doubts lingering about the strength of the economic recovery many potential investors are going to want a safer option for their money and gold looks to be rebuilding that position. With Black Friday on the horizon we should get an indicator on how the holiday retail season is likely to turn out, which may bring clarity to equities, but for now the idea of a safe haven looks to be regaining its appeal.
There might be hints of recovery in the gold market but so far it hasn’t extended to the other key commodity – oil. Crude prices – both regular and Brent – continued to creep down last week, with standard crude now below $76 a barrel. The ISIS terrorists in Iraq get most of their backing from the Gulf oil producers, but if that’s a gambit aimed at destabilizing Iraq’s oilfields and forcing prices up it hasn’t paid off so far and isn’t likely to now. Instead the dominant influence in the energy markets continues to be the expansion of shame and fracking, reducing the influence of OPEC. Lower energy prices will push shares up in the medium term but for now they’re a boost for gold and other precious metals.
With gold still at a four-year low it’s definitely a bad time to sell, but if this slow regain carries on for another week or so that will start sending a buy signal. The opportunity to cash in as the metal climbs away from the current bargain prices is far too good to miss.
