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June 1: Gold Gains Over 3% on the Week

Chris Mullen
|
Friday, June 1st
 

Close

Gain/Loss

On Week

Gold

$1622.20

+$60.10

+3.14%

Silver

$28.46

+$0.71

-0.04%

XAU

162.71

+5.79%

+3.09%

HUI

444.50

+6.74%

+3.88%

GDM

1287.59

+6.42%

+3.63%

JSE Gold

2631.28

+51.42

+5.21%

USD

82.82

-0.24

+0.50%

Euro

124.28

+0.67

-0.69%

Yen

128.05

+0.43

+1.97%

Oil

$83.23

-$3.30

-8.40%

10-Year

1.467%

-0.114

-15.93%

Bond

152.625

+2.34375

+3.32%

Dow

12118.57

-2.22%

-2.70%

Nasdaq

2747.48

-2.82%

-3.17%

S&P

1278.04

-2.46%

-3.02%

 
 

 

The Metals:

 

Gold fell over 1% to as low as $1544.95 by a little after 8AM EST, but it then soared higher following this morning economic data and ended near its early afternoon high of $1629.64 with a gain of 3.85%. Silver surged to as high as $28.701 and ended with a gain of 2.56%.

 

Euro gold rose to almost €1306, platinum gained $30 to $1440, and copper dropped 5 cents to about $3.31.

 

Gold and silver equities climbed steadily higher throughout most of trade and ended with about 6% gains.

 

The Economy:

 

Report

For

Reading

Expected

Previous

Nonfarm Payrolls

May

69K

150K

77K

Unemployment Rate

May

8.2%

8.1%

8.1%

Hourly Earnings

May

0.1%

0.2%

0.1%

Average Workweek

May

34.4

34.5

34.5

Personal Income

April

0.2%

0.3%

0.4%

Personal Spending

April

0.3%

0.3%

0.2%

PCE Prices - Core

April

0.1%

0.2%

0.2%

ISM Index

May

53.5

54.0

54.8

Construction Spending

April

0.3%

0.5%

0.3%

 

The BLS net birth/death adjustment added 204,000 payrolls to May’s data. Private Payrolls rose 82,000. April’s payrolls were revised down 38,000 from 115,000.

 

All of this week’s other economic reports:

 

Chicago PMI - May

52.7 v. 56.2

 

GDP - Q1

1.9% v. 2.2%

 

GDP Deflator - Q1

1.7% v. 1.5%

 

Initial Claims - 5/26

383K v. 373K

 

ADP Employment - May

133K v. 113K

 

Pending Home Sales - April

-5.5% v. 3.8%

 

Consumer Confidence - May

64.9 v. 68.7

 

Case-Shiller 20-city Index - March

-2.6% v. -3.5%

 

Next week’s economic highlights include Factory Orders on Monday, ISM Services on Tuesday, Productivity, Unit Labor Costs, and the fed’s Beige Book on Wednesday, Initial Jobless Claims and Consumer Credit on Thursday, and Wholesale Inventories and the Trade Balance on Friday.

 

The Markets:

 

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

 

Oil fell on worries about economic growth.

 

The U.S. dollar index fell as the euro rose on the idea that the US is just as bad off as Europe.

 

Treasuries jumped higher as the Dow, Nasdaq, and S&P dropped over 2% on poor economic data.

 

Among the big names making news in the market Friday were Chrysler, and Verizon and Hughes Telematics.

 

The Commentary:

 

Gold's reaction to the payrolls number this morning was instantaneous - it shot up as if it was fired out of a cannon! As stated in the post on the mining shares this AM, gold is now fully expecting the Fed to move forward with a round of QE3 Sooner rather than later. It is this anticipation of a Fed move that has it blowing the recent hedge fund short positions out. Not only that, the ability to capture this elusive "16" handle and HOLD IT, has fresh money that has been sitting on the sidelines or in Treasuries (obtaining next to nothing for yield) willing to come in on the long side of this market.

Note on the chart that it has run to exactly the 50 day moving average which also happens to correspond to the resistance zone near the $1625 level. A clear push past this level, and it will go immediately to $1650.

Downside chart support is now first at the $1600 level followed by the top of the recent tighter range near $1580.

 

 

The last time we had a THREE CONSECUTIVE WEEKS during which the mining shares outperformed the broader US equity markets was in late October/early November of 2011. While the month of May this year has been atrocious for the S&P 500, it has been an excellent month for the miners. June is starting out on a good note to say the least as we witness today's strong upmove in the mining shares.

 

My interpretation of this event is that today's payrolls number, which was so horrible that it cannot have any sort of positive spin placed upon it, has jolted traders into moving more and more to the view that the Fed is going to act SOONER RATHER THAN LATER on the next round of QE.

New York Fed Governor William Dudley said earlier this week the following according to reports by Dow Jones:

"If the economy were to slow so that we were no longer making material progress
toward full employment, the downside risks to growth were to increase sharply,
or if deflation risks were to climb materially, then the benefits of further
accommodation would increase in my estimation and this could tilt the balance
toward additional easing."


Today's payrolls number, a sinking Continuous Commodity Index, a swooning stock market which is threatening to turn into a downside rout and interest rates plummeting to more than 60 year, if not all-time lows, has met every benchmark laid out in the above quotation.

This is what has gold soaring this AM and the gold shares moving sharply higher. Silver is being dragged higher by gold but has managed to at least climb back above the $28 level. I do not trust silver until it at the bare minimum gets back above the $29 level and STAYS ABOVE IT.

I still think the Fed would like to see gasoline prices move closer to $2.50/gallon at the benchmark Nymex contract (it is currently near $2.66 as I write this) but if the global equity market rout does not let up, they are going to have a full-fledged rout on their hands and thus may not have the luxury of waiting much longer.

The JUNE Fed meeting is obviously going to be a significant event for the markets.

Incidentally, the yield on the TEN YEAR NOTE has now fallen BELOW the 1.5% level. INCREDIBLE!- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

 

The Statistics:

Activity from: 5/31/2012

Gold Warehouse Stocks:

10,978,402.940

-28,680.885

Silver Warehouse Stocks:

143,150,158.702

+701,261.561

 

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)

SPDR® Gold Shares

awaited

awaited

US$awaited

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

Gold Bullion Securities

awaited

awaited

US$awaited

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

ETFS Physical Gold

awaited

awaited

US$awaited

Australian Stock Exchange (ASX)

Gold Bullion Securities

awaited

awaited

US$awaited

Johannesburg Securities Exchange (JSE)

New Gold Debentures

awaited

awaited

US$awaited

Note: No change in Total Tonnes from yesterday’s data.

 

COMEX Gold Trust (IAU) Total Tonnes in Trust: 176.19: No change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 9,643.17: No change from yesterday’s data.

 

The Miners:

 

Gold Fields’ (GFI) hopes for an exploration deal in Kyrgyzstan and Tanzanian Royalty’s (TRX) drill results were among the big stories in the gold and silver mining industry making headlines Friday.

 

WINNERS

1. ITH

THM+12.35% $3.64

2. Exeter

XRA+12.09% $2.04

3. Alexco

AXU+11.09% $5.11

 

 

LOSERS

1. Gold Resource

GORO -2.75% $25.77

2. Ivanhoe

IVN -1.28% $9.27

3. Northern Dynasty

NAK -1.14% $2.60

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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© Gold Seeker 2012

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