Gold And Silver Fall On Open In Asia As October Correction Continues

Today’s AM fix was USD 1,747.25, EUR 1,347.56, and GBP 1,086.87 per ounce.
Friday’s AM fix was USD 1,767.00, EUR 1,362.80, and GBP 1,101.35 per ounce.

Silver is trading at $33.28/oz, €25.78/oz and £20.81/oz. Platinum is trading at $1,648.50/oz, palladium at $637.30/oz and rhodium at $1,175/oz.

Gold fell $13.10 or 1.49% in New York on Friday and closed at $1,754.40. Silver dropped to a low of $33.46 and ended trading with a loss of 1.47%. Friday’s falls resulted in gold falling 1.2% for the week, while silver fell 3% over the same period.


Gold USD 3 Days, October 11-15 – (Bloomberg)

Gold saw quick price falls at the open in Asia overnight and hit a two and a half week low, continuing the drop from the prior trading session.  Stop loss selling was triggered that counteracted the news of China’s inflation data which hinted at a need for further QE.

The yellow metal had its largest daily drop in over two months on Friday. More speculative players may have taken profits and closed long positions after US consumer sentiment climbed to a five year high.

October is one of gold’s weaker months and a correction after recent gains was possible and has materialised. Further weakness is possible and indeed likely although physical demand from Asia has picked up and that should support gold at the $1,700/oz level.

UBS said this morning that it is important to point out that “volumes exiting are not overwhelming, the liquidation action is patchy rather than consistent, while outright shorts are in limited numbers.”  

US gold futures and options net length climbed to 198,194 contracts for the week ended October 9th, the highest in nearly fourteen months.

This correction should be used to further accumulate physical bullion in anticipation for a rally in gold after the election in November.

The US Retail sales number is published at 1230 GMT.

Other economic data scheduled for release this week are: 

Monday Empire Manufacturing & Business Inventories.
Tuesday – CPI, Net Long Term TIC Flows, Industrial Production, Capacity Utilization, & the NAHB Housing Market Index. 
Wednesday – Housing Starts & Building Permits.
Thursday – Initial Jobless Claims, the Philadelphia Fed, & Leading Economic Indicators.
Friday – Existing Home Sales.  China’s GDP numbers out this week.


Gold USD Daily 2010-2012 – (Bloomberg)

NEWSWIRE
(Bloomberg) — Silver to Extend Drop Before Rally Resumes: Technical Analysis
Silver may extend declines by as much as 3.3 percent from today’s low before resuming a rally toward the highest price this year, according to Barclays Plc.

Prices may fall to $31.95 to $32.50 an ounce in the next three to five trading sessions, said Dhiren Sarin, chief technical strategist for Asia Pacific. Barclays said on Oct. 12 that a so-called cloud base on the Ichimoku chart would underpin $33.05 an ounce. Prices today fell to that level, the lowest since Sept. 13.

“We would now allow for a deeper pullback,” Sarin said by phone from Singapore today. “At some point later in October we’d look for a base higher. We’re not seeing a strong breakdown across assets of any sort, it’s just a correction in an ongoing bullish trend.”

Prices climbed 19 percent this year as central banks from the U.S. to Europe boosted stimulus to revive economic growth, expanding consumption and increasing the allure of precious metals as a store of value. Silver will target $37.50 to $38 an ounce in the next two to three months, according to Sarin.

Silver for immediate delivery traded 1.1 percent lower at $33.1444 an ounce at 2:41 p.m. in Singapore. The metal reached $37.475 an ounce, the highest this year, on Feb. 29.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

(Bloomberg) — Sudan to Export First Shipment of Refined Gold, SMC Reports
Sudan hopes to sell gold valued at $3b this yr, double last year’s gold revenue, state-run SMC News Center reported yday * Country will export 100kg of gold next week: SMC

(Bloomberg) — Gold Traders Increase Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended Oct. 9, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 211,949 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 3,623 contracts, or 2 percent, from a week earlier. 

Gold futures fell this week, dropping 1.2 percent to $1,759.70 a troy ounce at today’s close. 

Miners, producers, jewelers and other commercial users were net-short 266,988 contracts, down 2,282 contracts, or 1 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) — Silver Traders Increase Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators increased their net-long position in New York silver futures in the week ended Oct. 9, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 39,825 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 1,707 contracts, or 4 percent, from a week earlier. 

Silver futures fell this week, dropping 2.6 percent to $33.67 a troy ounce at today’s close. 

Miners, producers, jewelers and other commercial users were net-short 57,004 contracts, down 836 contracts, or 1 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

For breaking news and commentary on financial markets and gold, follow us on Twitter.


Cross Currency Table – (Bloomberg)

NEWS
Video: Gold Price Seen Moving `Easily’ Above $2,000 – Bloomberg

Gold Drops to Two-Week Low on Signs China’s Economy Stabilizing – Bloomberg

Gold falls to 2-1/2-week low on stop-loss selling – Reuters

Gold falls to 2-1/2-week low; Spain uncertainty, US data weigh – Reuters

COMMENTARY
From Barbaric to Precious Relic – The Economist

Silver’s October Correction – SilverSeek

Is Gold A Giffen Good? – GATA

ECB’s Weidmann On Gold: "Money Is A Social Convention" – Zero Hedge

Correction: 
In our Market Update from last Friday we incorrectly said that Roosevelt was "re-elected" when in fact Roosevelt was of course elected for the first time in 1933. The substantive point remains that after Roosevelt’s election there was an admission that economic conditions were much worse than had been acknowledged during the election. 

 

Mark OByrne

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