Gold and Silver Market Update (6/27/14) – Golden Eagle
The precious metal market has shown mixed performance this week, with modest overall gains following some more pronounced ups and downs. Both gold and silver opened well but then dropped sharply on Wednesday and Thursday. After that they picked up again, with silver managing to top its previous high but gold recovering more slowly.
While precious metal spot prices haven’t risen much this week performance has actually been better than expected given the overall market. Last week gold and silver received a boost from fears that the Federal Reserve would push through a rate rise earlier than expected, but this week that prospect looks less likely. This has preserved the attractiveness of equities and reduced demand for traditional safe investments like metals, so really we should have seen a modest fall in prices. Other factors have helped support them though.
On the surface the economy looks quite good just now, with another set of unemployment figures showing a fall in those out of work and confidence in stocks remaining high. On the other hand the US Dollar index has fallen off slightly this week and there are signs that the credit situation may be starting to tighten. Both these factors will nudge smart investors in the direction of precious metals. Comex’s managed money category predicted big falls in gold and silver prices three weeks ago and they’ve lost that bet spectacularly.
The international situation is also having an influence on metal prices. South Africa’s miners have been taking industrial action for several months but that’s now coming to an end after the mine owners agreed a new pay deal. This has the potential to drive prices down in the medium term as supplies become more reliable but this week both platinum and palladium climbed 2-3 per cent. Short term restructuring in the mining industry will support this, as will strong demand for the metals from the auto industry as vehicle production continues to pick up. Some analysts are revising their price predictions upwards, estimating that palladium could end the year at around $900 an ounce with platinum possibly hitting $1,550.
Two news stories are also pushing demand for gold and silver. There’s no sign of a conclusion to the dispute between Russia and Ukraine, and with the EU voting through a fresh round of sanctions this week access to Russia’s reserves of gold, palladium and oil are likely to be affected. The partial collapse of Iraqi government control and the ISIS offensive are also sending shock waves through the Middle East, traditionally a very strong market for gold and still the dominant oil producer. With doubts about control of Iraq’s Kirkuk oil fields, added to concerns about US support and the role of Iran, there are a range of possible knock-on effects on equities and a subsequent surge for metals.
The last few months have been interesting times for metal traders and this week was no exception. There’s a lot of reason for optimism and silver, especially, looks likely to rally from its long slump. It’s definitely worth looking at adding silver to your portfolio in anticipation of a rise in the near future.
About the Author: Clint Stelfox
Clint is the director of marketing at Golden Eagle Coins. Son of Richard Stelfox, co-founder of the company, Clint has been living and breathing coins his entire life. After trading for a Philadelphia Stock Exchange firm for several years Clint returned to give Golden Eagle the online presence it has today. 
