Market Updates

Good morning everyone,
 
A jobbers / range traders market in Gold/AUD at present as AUD 1690 & 1710/15 continue to remain the demarcation lines.
 
While the situation in North Korea remains firmly on the radar (a subject we will return to in the moment), of more pressing concern will be the outcome of the first round of the French Presidential elections on Sunday and (all things being equal) the markets are likely to remain in a holding pattern ahead of the outcome.

Good morning everyone,
 
Gold continued its consolidative price-action in AUD terms yesterday, hitting resistance in the ‘sticky’ AUD 1710-1715 noted in yesterday’s commentary but holding above AUD 1690. Speculative re-balancing on profit taking and the tipping out of some of weaker ‘late to the party’ longs creating intraday price weakness, while shortcovering and bargain hunting provided the support.

Good morning everyone and I trust you had a good long weekend.
 
Investors (and I would venture, most people in general) remained on edge as major geopolitical events continued to unfold while the markets were closed for the Easter break.

Good morning everyone,
 
Whether he’s raining down Tomahawk Cruise missiles on airfields in Syria or slapping the US Dollar down with comments to the WSJ that he prefers a weak US Dollar and low interest rates, President Trump’s pirouettes on previously stated beliefs and promises would do a prima ballerina proud and have proved a boon for gold investors.

Given the community concern about housing affordability, and the vested interests at play, the reaction to the latest rumours that the government may allow Australians to use superannuation monies as a first home deposit should come as no surprise.

There have been numerous critics, including a handful of thoroughly researched and no doubt well-meaning economic commentators who have noted the risks in the Australian housing market, including our sky-high private debt levels.

Good morning everyone,
 
Reasonable each-way interest was evident throughout Far Eastern trading yesterday as gold drifted lower from the TOCOM open before finding support when Chinese investors arrived and the metal then consolidated for the remainder of the Far Eastern session and into European trading.

Good morning everyone.
 
Notwithstanding that geopolitical developments remained front and centre in investor minds vis-a-vis the Trump Administration’s surprisingly muscular foreign policy statements and actions recently, early firmness during an otherwise somnolent Far Eastern session gave way to profit taking & speculative rebalancing driving GOLD/AUD values lower during European trading before US investors arrived to “swoop and scoop” the dip. GOLD/AUD bottoming out at 1665 on the day.

Good morning all,
 
By now everyone would be aware of the US missile strike against Syria on Friday, a geopolitical development that we flagged in Friday morning’s comment but the rapidity of escalation which still managed to cause a good deal of surprise.

Whilst not as headline grabbing nor as strong a start to the year as we witnessed in 2016, Q1 of 2017 has been kind to precious metal investors, with gold and silver prices rising by 7.88% and 13.20% in USD terms respectively.
Given the over 6% rise in the value of the Australian dollar vs. the US dollar over the quarter, price growth was more contained for precious metal in AUD, with gold rising 1.50%, whilst silver was up by 6.50%.

A subdued session in the Far East yesterday and during European trading saw gold drift lower as Chinese investors returned to their desks and were on the offer for much of the day.
 
A strong ADP jobs report from the US drove the U.S. dollar index and stock markets higher, weighing further upon metal values. The U.S. ADP national employment report (March) showed a higher than expected rise of 263K jobs vs 180K expected.

Good morning all,
 
Chinese participants remained absent yesterday during Far Eastern trade as they observed Tomb Sweeping Day but AUD/Gold took a leg higher when the AUD was pushed lower after the 2.30pm RBA announcement which left interest rates on hold at 1.50%.

Good morning all,
 
AUD/Gold caught a bid in Asian trading yesterday in spite of reduced liquidity due to the absence of Chinese participants who are out for ‘Tomb Sweeping Day’, Monday and Tuesday of this week.

If you are to taking your cue from the market as to what will happen next with Australian interest rates, then you’d come to the conclusion that the RBA has reached the end of its rate cutting cycle, with the official cash rate set to rise toward 1.80% by the end of 2018.

The precious metal market has had a mixed week, with gold pushing up toward USD $1,263 per troy ounce, approaching the 200 day moving average, before pulling back toward its current level around USD $1,235.00 per troy ounce.
 
Silver has been under even more pressure, with the metal falling over 3.50% overnight, currently trading at USD $17.72 per ounce. The move happened rapidly too, with some USD $2 billion of notion silver exposure dumped unceremoniously onto the market.
 
Prices in Australian dollars have been supported by the fall in the local currency overnight, which fell a full cent. This helped limit the fall in precious metal prices for local investors, with the AUD gold and silver price sitting at $1,632 and $23.62 per troy ounce respectively.

The precious metal complex has continued its solid start to calendar year 2017, with gold currently trading at USD $1,238 per troy ounce, whilst silver is sitting at USD $18.15, with the two metals up 7% and 14% respectively this year.

In this week’s market report, we look at the latest developments in the precious metal market, the outlook for the Australian dollar, and a handful of other economic and market factors relevant to investors, including:

• A look at the Australian housing market

• Alan Greenspan’s thoughts on gold

• Insights from the latest Credit Suisse Global Investment Yearbook

Last week, ABC Bullion participated in the SMSF Association’s National Conference in Melbourne. To coincide with the Conference, we are proud to release our latest research report, titled Exter’s Pyramid and the “End of Easy Money”.

Investors in both gold and silver have enjoyed a solid first month of calendar year 2017, with the price of both precious metals in USD rising by 5.30% and 8.40% respectively.

Despite the price weakness and rapidly declining sentiment toward precious metals in the aftermath of the US presidential election, it is worth reflecting on the fact that as it stands today, 2016 has been a very profitable one for long-term gold and silver investors.
 
Starting the year below USD $1,100oz and USD $14oz for gold and silver respectively, the metals jumped out of the gate during January and February, with continued strong gains (for silver at least), through March and April. There were multiple drivers for this rally, with a combination of volatile stock markets, the introduction of ever more extreme monetary policy (most notably the introduction of NIRP in Japan), and a heightened sense of political uncertainty all contributing.

Up until a few weeks ago, 2016 was shaping up as the year that the precious metal market well and truly moved back into bull mode, with strong price gains that easily exceeded the returns generated in risk assets.

Gold: Right but so Wrong!
 
In the week leading into the election (before the FBI released there “nothing to see here” comments regarding Secretary Clinton’s email issue), we commented that at least half of any potential “Trump premium” was already priced into gold, which had crept back above USD $1300oz at the time.

In our market update last week, we noted that longer term investors should look at a gold price close to AUD $1650oz as a gift, and one that they may wish to take advantage of sooner rather than later, with signs that the “correction in the USD gold price may be petering out”.
 
Dated 27th October, this turned out to be a good short-term entry point, with the yellow metal rallying since, now trading at closer to AUD $1700oz, whilst in USD terms, it has headed back above the important USD $1300oz mark.
 
Silver has also rallied, now back above AUD $24oz and USD $18.30oz respectively, up close to 5% in the last week alone.

In a bull market, you should either be long, or sitting on the sidelines waiting to get long. It’s a simple message, but one that a senior trader at ABC Bullion is fond of repeating right now, as it illustrates exactly how precious metal investors should be looking at the market today.
 
For despite the corrective action we’ve seen in precious metals over the last few weeks, 2016 is still shaping up as the year that the secular bull market in gold, which dates back to the turn of the century, re-asserted its primary trend.
 
With that in mind, longer term investors will be nothing but thankful that they now have the ability to buy gold with a spot price near AUD $1,650 per troy ounce, and silver at under AUD $23.50 per troy ounce, despite the decrease in the valuation of any metal they already own.

Precious metal prices rallied last week, with the price of gold climbing back toward USD $1,340 per troy ounce (oz), whilst silver prices rallied toward the USD $20oz level at one point, before giving up some of the gains.

As it stands, September is set to be a positive month for the precious metal complex, arresting the decline witnessed in August, which at one point threatened to push gold below the USD $1,300oz level, and did take out USD $19oz in the silver market.

Physical gold has been one of the best performing assets this year, up some 20%, with the price currently sitting just below AUD $1,750 per troy ounce. This continues a strong run that dates back to the turn of the century, with gold prices returning close to 9% per annum over this time period.
Despite the solid returns, gold is still barely on the radar of most investors, with global pension funds holding less than 0.50% of total assets in gold.

With the central banking symposium at Jackson Hole coming to an end, Livewire, one of Australia's leading financial news platforms, was kind enough to ask us, as well as analysts from BT Financial Group, JCB, Morphic and Nikko Asset Management for our views on the event, and the implications for monetary policy going forward.

You can read the report here.

Below are our answers to the questions in full!