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Gold Seeker Closing Report: Gold and Silver End Slightly Lower
By: Chris Mullen, Gold-Seeker.com

 -- Published: Wednesday, 4 June 2014 | Print  | Disqus 

 

Close

Gain/Loss

Gold

$1243.70

-$2.60

Silver

$18.81

-$0.03

XAU

85.04

+0.08%

HUI

205.53

-0.15%

GDM

618.31

-0.13%

JSE Gold

1386.15

-0.06

USD

80.66

+0.10

Euro

135.99

-0.29

Yen

97.35

-0.21

Oil

$102.64

-$0.02

10-Year

2.606%

+0.013

Bond

136.03125

-0.1875

Dow

16737.53

+0.09%

Nasdaq

4251.64

+0.41%

S&P

1927.88

+0.19%

 
 

 

The Metals:

 

Gold dipped to $1244.39 by a little after 6AM EST before it rebounded to $1248.97 in the next couple of hours of trade, but it then drifted back lower into the close and ended with a loss of 0.21%.  Silver slipped to as low as $18.755 and ended with a loss of 0.16%.

 

Euro gold remained at about €915, platinum gained $5 to $1432, and copper fell 4 cents to about $3.09.

 

Gold and silver equities waffled near unchanged and ended mixed.

 

The Economy:

 

Report

For

Reading

Expected

Previous

ADP Employment

May

179K

200K

215K

Trade Balance

Apr

-$47.2B

-$41.3B

-$44.2B

Productivity

Q1

-3.2%

-2.5%

-1.7%

Unit Labor Costs

Q1

5.7%

4.8%

4.2%

ISM Services

May

56.3

55.5

55.2

 

The fed’s Beige Book “said the economy expanded at a modest to moderate pace last month as auto sales led household spending and the labor market improved”.

 

Tomorrow brings Initial Jobless Claims for 5/31 expected at 310,000.

 

The Markets:

 

Charts Courtesy of http://finance.yahoo.com/

 

Oil erased early gains after the Energy Information Administration reported that crude inventories fell 3.4 million barrels, gasoline inventories rose 200,000 barrels, and distillates rose 2.0 million barrels.

 

The U.S. dollar index ended slightly higher on mixed economic data that sent treasuries lower.

 

The Dow, Nasdaq, and S&P rose to see modest gains by midday on positioning ahead of tomorrow’s ECB meeting and Friday’s jobs data.

 

Among the big names making news in the market today were Citigroup, Dai-ichi Life, and Markit.

 

The Commentary:

 

There were two pieces of economic data released this morning, both of them conflicting (figures!). The first was the ADP private sector jobs data. It came in at 179,000 for May, well below the market expectation near 220K. That sent bond yields falling. Many market players regard the ADP data as a type of proxy for the government's nonfarm payrolls number and tend to extrapolate that report from this one.

Then the ISM (remember our pals from earlier this week with the double screw up on the manufacturing number?) came out with the Service sector reading for May. They reported the number rose to 56.3 from last month's 55.2. That sent bond yields moving higher along with the US Dollar.

Once again the pattern of mixed economic data continues as it results in traders, particularly trend following hedge funds, getting whipsawed back and forth as the market responds to one set of data only to reverse on another.

There was a story today on the wire feeds detailing how Chinese officials now appear to be getting ready to crack down in earnest on copper-backed loans. That news sent copper prices lower. Authorities there closed down the third largest port in China, Qungdao, in order to dig deeper into possible warehouse fraud involving copper and aluminum.

Traders fear that those same authorities will force the deals involving the metal, which is used as the loan collateral, to be closed out meaning that the copper in storage will be available for sale into the market. That would send an additional supply out driving prices lower. Those traders selling are obviously convinced that this is going to happen.

Here is the most recent Commitment of Traders report for Copper. Do you recall that I posted this chart up a couple of weeks ago noting the huge disparity between the positioning of the largest speculators in the market? Guess what? That disparity has grown even larger. I noted previously that it is rather uncommon to see the LARGE speculative forces so greatly divided and at odds over their bets as to which way the market is going to move. One side or the other in this copper market is going to be proven to be quite wrong. Over the last week of trading, the hedge funds have been wrong while the "Other Large Reportables" category has been dead on target.

 

Depending on what we get out of the ECB tomorrow and what we get on the payrolls front this Friday, copper could move higher but this development in China is a big deal.

One of the concerns I have when it comes to gold is that the same thing has occurred with the yellow metal. It is often used as collateral for bank loans in China. The last thing that gold needs at this time is an additional supply hitting the market. If the market were to get wind of anything like what is happening to copper is heading towards gold, prices will fall. I have seen some pretty scary estimates as to how much gold is possibly being used as loan collateral in China. So far it is a non-factor but with any potential market moving event, we need to stay attuned to things that might develop on this front.

As far as market price action today goes, traders are not going to get aggressive ahead of that ECB meeting tomorrow. The result has been a narrow range for gold today with little to speak of. From a technical standpoint however, the market continues to hold above support near $1240 but thus far has been unable to gain much, if any, upside traction.

Old crop soybeans continue their roller coaster ride. Wheat finally managed a bounce today as US wheat prices appear to be getting somewhat more competitive. Also, some excessively heavy rains in certain parts of wheat country during the harvest has raised a few concerns that it might be harmful to wheat quality. The result has been a technical bounce higher.

Some of those same rains are working their way across the corn belt and that is improving prospects for a large corn and bean crop. The tightness in the old crop bean carryover however continues to impact the entire soybean market, both old crop and new crop and will probably continue to do so until we get rid of the July contract. I still wonder if we are going to see the commercials squeeze the bears during the July delivery period. They have pulled this stunt regularly this year up to this point. We have had some time however, as the summer nears, for S. American beans to make their way into the country so any squeeze might not be quite as effective as it has been previously. Needless to say, this game is not for small speculators to play. First of all, you run the likely risk of getting assigned. Secondly, if you are wrong, good luck getting out!

The crude oil number got the EIA numbers this AM and they showed a surprising large drop of 3.4 million barrels. That was a big number! The market was looking for a decline nearer 1.4 million. Crude moved higher on the number but, for now, has surrendered those gains. The market is growing increasingly nervous about the SEVEN YEAR HIGH in speculative length in the market and while today's reported drop was friendly, stocks remain near record highs. One thing will be certain about crude - it is going to be quite the roller coaster moving forward. Personally, I hate trading markets that have this much speculative length in them because they tend to become extremely volatile and snap your neck at the rate they move up and down.

I might throw a chart of gold up later on today but methinks it is best to wait until we get the ECB news tomorrow as the mining shares are relatively quiet today as well.

Silver cannot get back above $19. The Euro is hovering near 1.36 with the Dollar just below key chart resistance near 80.70 - 80.80 basis the USDX.

By the way, the yield on the Ten Year continues to rise today and is now above 2.6%. The last reading as these comments get finished up is 2.611.

The VIX remains very low at 12.03, near the low reading for the year. Complacency reigns.- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

 

GATA Posts:

 

 

What if people ever started asking about rehypothecated gold?

GATA's Ed Steer discusses gold price suppression at Vancouver conference

Banks routinely rigged gold fix to defend their positions, Financial Times reports

Koos Jansen: The World Gold Council's new clothes

 

The Statistics:

Activity from: 6/03/2014

Gold Warehouse Stocks:

8,265,765.075

-

Silver Warehouse Stocks:

175,745,635.613

-97,156.83

 

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 

Product name

Total Tonnes

Total Ounces

Total Value

New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchange (TSE) AND Hong Kong Stock Exchange (HKEx) AND Mexico Stock Exchange (BMV)

SPDR® Gold Shares

787.076

25,305,269

US$31,496m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra)

Gold Bullion Securities

138.13

4,441,056

US$5,526m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra) AND NYSE Euronext Amsterdam

ETFS Physical Gold

152.66

4,908,200

US$8,004m

Australian Stock Exchange (ASX)

Gold Bullion Securities

11.16

358,789

US$447m

Johannesburg Securities Exchange (JSE)

New Gold Debentures

41.68

1,339,954

US$1,709m

Note: Change in Total Tonnes from yesterday’s data: SPDR added 1.797 tonnes.

 

COMEX Gold Trust (IAU) Total Tonnes in Trust: 163.41: No change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 10,359.09: No change from yesterday’s data.

 

The Miners:

 

Pretivm’s (PVG) project update was the only big story in the gold and silver mining industry making headlines today.

 

WINNERS

1.  NovaGold

NG +5.54% $3.24

2.  Turquoise

TRQ +3.19% $3.88

3.  MAG Silver

MVG +3.08% $7.50

 

LOSERS

1.  Gold Resource

GORO-3.02% $4.17

2.  McEwen

MUX -2.33% $2.10

3.  AngloGold

AU -2.16% $15.42

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

       

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

 

- Chris Mullen, Gold Seeker Report

 

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Additional Resources for today’s Gold Seeker Report can be found:

© Gold Seeker 2014

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

 

 

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

 


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 -- Published: Wednesday, 4 June 2014 | E-Mail  | Print  | Source: GoldSeek.com

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