Daily Bullion Market Update 8/26/11
By Barry Stuppler – MintStateGold.com
Post Jackson Hole speech, we should see Gold continue to build its new trading range. Last night the most active trading month (the December gold contract) hit the $1,800 resistance level before trading back down to $1,770 per ounce. This week we have seen a new $1,700 to $1,800 trading range for gold. After the extraordinary volatility of the past two weeks, we need to build a new base before making the next breakout to $2,000 per ounce. At 11am PDT Gold is trading at $1,791.40 per ounce, up $34.20 from yesterday with good trading volume for a Friday.
Silver did not follow Gold higher last night, but had excellent support around $40.12 per ounce. In the past 24 hours Silver has traded from a $40.12 low to a $41.33 high on excellent Friday volume. Right now, at 11am PDT Silver is trading at $40.88 per ounce, up $0.18 on above average Friday volume. Silver staying above $40 is highly bullish for the metal and should track gold in the next breakout in September.
Japanese investors have been steadily boosting their platinum investments over the last month, tempted by the precious metal’s stability relative to gold as they look to diversify their commodity holdings with global markets in turmoil. Osamu Ikeda, of Tanaka Kikinzoku Kogyo, Japan’s largest bullion house, said “The amount of gold holdings customers want to sell has grown by the day this month, but purchases of platinum have actually doubled.”
WHAT DID BERNANKE SAY?
Federal Reserve Chairman Bernanke said the central bank still has tools to stimulate the economy without providing details or signaling when or whether policy makers might deploy them. While Bernanke wanted to reassure investors and the public that U.S. growth is safe in the long run, and that the Fed still has tools to help the recovery as needed, he did not indicate that the central bank will start a third round of government bond-buying at this time.
I believe what I heard is Bernanke is asking for fiscal policy stimulus from the White house and Congress before providing any new monetary policy easing programs. This is a non-event for precious metal prices. We should see the continued consolidation of Gold and Silver markets at current levels until the major September buying comes in from India and Jewelry manufacturers. I look forward to hearing what ECB president Jean Claude Trichet will say tomorrow about the current Eurozone debt problems.
On August 23, a member of German Chancellor Angela Merkel’s government called for European Union countries to pledge gold reserves as collateral towards future bailouts of Eurozone countries.
Other Important news that affects precious metal prices:
- Today it was reported that during the second quarter, business inventories and exports were less robust than originally expected. Gross domestic product growth rose at annual rate of 1.0 percent the Commerce Department said, a downward revision of its prior estimate of 1.3 percent. It also said after-tax corporate profits rose at the fastest pace in a year. Economists had expected output growth to be revised down to 1.1 percent. In the first quarter, the economy advanced just 0.4 percent. The government’s second GDP estimate for the quarter confirmed that growth almost stalled in the first six months of this year.
- New applications for U.S. unemployment compensation rose 5,000, to 417,000, the Labor Department said Thursday. Initial claims from two weeks ago were revised up to 412,000 from an original reading of 408,000.