Precious Metals | timiacono.com

The U.S. dollar has become about the only thing that matters for precious metals these days as, along with the rest of the natural resource sector, gold and silver are being pummeled by investors and traders with each move higher for the dollar. This is consistent with the well established inverse correlation between these asset classes and, absent a substantive change in course for the dollar, it’s hard to see how precious metals can rebound.

Gold and SilverThe Federal Reserve policy committee gathers this week and it is possible that the central bank could present a more dovish stance than expected.

This could bolster the metals market and commodity prices in general, as could renewed safe haven demand arising from U.S. military action in the Middle East or a buying surge in Asia at the beginning of a seasonally strong time of the year. But, for the time being at least, the dollar is in charge.

The gold price saw its biggest weekly decline since a drop of 3.6 percent in late-May and it now sits at its lowest level since early-January. This comes after the trade-weighted dollar strengthened for the ninth consecutive week, rising to a six-year high against the Japanese yen in the process. Given the surge in the dollar and gold’s response as shown below, it seems it could have been much worse for the yellow metal in recent weeks.

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Gold snapped a three-week losing streak and saw solid gains last week as a result of renewed safe haven demand, but silver registered losses for the fourth straight week, following the broad commodity market lower. A stronger U.S. dollar has been a key factor in limiting recent gold price gains and, with the eurozone economy now stumbling badly, the strong inverse correlation between the two could continue to hold metal prices in check.

GoldU.S. stocks and bonds both rose last week and this too limited the upside for gold while the latest ETF flows indicate U.S. investors may again be souring on the metal, due in part to its inability to break free of its recent trading range.

hysical demand in Asia remains weak during this seasonally slow time of the year, but with prices still relatively low, gold buying in India and China should pick up in the weeks ahead.

Geopolitical tensions between Russia and the West over Ukraine along with ongoing violence in Iraq and Gaza continue to be about the only supporting factors for precious metals. Absent this safe haven demand, it is reasonable to think that gold and silver prices could be much lower since global demand has been lacking, however, none of these conflicts appear headed toward long-term resolutions and should continue to lend support…

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After rising for six weeks, gold and silver prices fell for the third straight week as bearish forces strengthened, the most important being an improving U.S. economy that has led many investors to think the Federal Reserve will raise interest rates sooner rather than later.

GoldThough the disappointing labor report on Friday cast new doubt on the pace of the recovery and led to a gold market rally, data released earlier in the week on economic growth and wage increases pointed to a less accommodative central bank and a stronger dollar later this year and early in 2015.

Safe haven demand continues to be one of the very few positive near-term catalysts for precious metals and, given recent developments in Ukraine and the Middle East, this could drive prices sharply higher at any time. B

ut the lack of Asian buyers over the summer and the ongoing weakness in broad commodity markets will make it difficult for metal prices to rise in the month ahead and positive seasonal factors may not help either.

The gold price fell below the key $1,300 an ounce level on Tuesday and added to those losses after better-than-expected GDP growth was reported on Wednesday and rising wages were reported on Thursday.

The metal ended July with a loss of over two percent and, as shown below, has recently made a mockery of the regular seasonal patterns by moving opposite the norm over each of the last four months…

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Gold and silver prices dipped early last week after broad stock market indexes had reached record highs, but then the metals advanced sharply and ended higher as equity markets faltered amid new credit market fears, this time concerning the health of Portugal’s biggest bank. This marked the sixth straight week of gains for precious metals that are now at 3.5 month highs despite recent sharp declines for most other commodity prices.

Gold and SilverThough safe haven demand from a number of different sources (a list that seems to grow every week) has been the key driver behind rising gold and silver futures market buying, the big gains turned in by mining stocks so far this year are also being credited for some of the metals’ strength.

The silver rally has been particularly impressive as the “poor man’s gold” has risen 15 percent in just the last six weeks.

India and China remain non-factors for metals markets this summer and this is likely to continue over the near-term as the new Indian government chose not to reduce gold import duties and inquiries into commodity financing deals cast doubt over China’s gold demand. But quickly approaching seasonally strong periods of the year for both of the world’s top two gold buyers should prompt physical buying in Asia.

After surging in February and then faltering in the spring, precious metals are now again in strong short-term uptrends, seemingly determined to…

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