Today is Saturday 9th March 2019 and we are providing our gold and silver weekly update for the week ending 8th March.
Gold rose $7 last week from $1292 to $1299 having hit a high of $1,300 and a low of $1,282. In sterling terms gold finished the week at £998 that’s up £20 and in Euros it closed at 1,156 Euros that’s up 19 euros.
Silver rose 13 cents from $15.21 to $15.34 having hit a high of $15.37 and a low of $15. In sterling terms, it closed at £11.78 that’s up 26 pence and in Euros it closed at 13.65 euros that’s up 0.27 euros.
The Gold to Silver Ratio fell slightly from 84.9:1 to 84.7:1
The Dow Jones closed on Friday at 25,450 down 22 points on the day and down 576 points on the week, and the NASDAQ closed at 7,408 down 13 points on the day and down 187 points on the week, and the S&P 500 closed at 2743 down 6 points on the day and down 60 points on the week.
Brent Crude rose 69 cents from $65.05 to $65.74 and US Light Crude rose 27 cents from $55.80 to $56.07
The dollar index stands at 97.03 that’s up 0.78 on the week.
In Last week’s report we pointed out that the important day to watch out for was Friday because of the Non-Farm payrolls and boy did that prove to be the case and we mentioned “we can see some movement in anticipation of those figures on Friday”. Well in actual fact the movement really occurred immediately after the figures were announced.
All week gold prices were subdued, gradually heading lower and then for a couple of days consolidated, but come Friday’s jobs report it changed and we saw an immediate rise of around $15 shortly after the announcement. Now in the overall scheme of things that wasn’t a huge rise in price, but the reversal was noticeable.
Non-farm payrolls rose by 20,000 jobs in February while expectations were for a rise of 185,000. Now we suspect these figures may be amended next month as we feel they are too low, but they do follow an unexpected rise in January of 311,000 which was further extended by another 7,000 jobs. So the two month figures are not that poor at all. In addition, the unemployment rate fell by 0.2% to 3.8% and average hourly wages grew at an annual rate of 3.4%.
For those critical of Government figures and statistics we draw your attention to some thing called the U-6 which many regard as the real unemployment rate because it includes those holding part-time jobs and discouraged workers – and that rate fell from 8.1% in January to 7.3% in February – an 18 year low.
So, we saw on Friday a weakening of the US dollar though it has been high all week and still closed at a higher level than the start of the week despite Friday’s fall. From a technical point of view resistance is seen at $1302 (both the 10-day and 50- day moving average) and some reasonable support at $1275.
Analysts are predicting that gold could in fact rise back up to the $1325 level this week and we too can see that if the dollar maintains its weakening, though to be fair, we don’t see much on the horizon to support other countries currencies making much advancement against the dollar either. It could very well be the case that the initial reaction could indeed be just that and we would not be surprised if, after an initial rise on Monday morning prices fell back again.
Silver followed a similar pattern to gold and the charts are almost identical. Silver did find considerable support at the $15 level though and technical suggest a hammer has been formed which is positive.
We envisage a small follow through on Monday with silver prices rising a little further but frankly we need to be convinced that this will hold. We are already witnessing rumours in the marketplace that the FED may be lowering interest rates soon, but frankly we have to disagree. Stock markets are robust at present, and the dollar’s level is not adversely affecting industry and in fact is making imports relatively cheap still. So unless we get another month of very poor jobs data we think rates are going to remain where they are at least for the next couple of months.
What we can foresee however is a further weakening of the Euro against the US dollar and if this occurs it generally has an adverse impact on precious metal prices.
Also a number of major banks tend to agree with us especially since ECB President Mario Draghi said on Thursday:
“there was a sizeable moderation in the pace of growth last year and that this has carried over into 2019. As a result, the bloc’s economy will be slower in producing the expansion necessary for inflation to return sustainably to its target of close to but below 2%.
And then acknowledged that rates will remain where they are until at least “through the end of 2019”, even though the previous guidance suggested a hike could come in Autumn 2019.
So against this backdrop we cannot foresee the Euro strengthening against the US dollar much further than it has already.
Also, further reports of a global growth slow-down will undoubtedly impact the demand for silver at the Industrial level, and therefore there would have to be a much stronger desire for it at the monetary level to compensate. But if this too is affected by the strengthening of the US dollar, for the next few months we cannot see where silver will get its impetus from and frankly may even see a GSR rise to 90:1 as an outlying possibility.
So what do we have on the economic calendar for next week:
- Monday Retail Sales for January
- Tuesday Consumer Price Index and core CPI for February
- Wednesday Producer Price Index for February
- Thursday Import Prices for February
- Friday Industrial Production for February and Consumer Sentiment for March.
In conclusion, whilst we envisage a slight rise in gold and silver prices early next week, we cannot see what may happen to continue the trend, and if anything can see more, certainly as of today, to witness a further pullback. Not a significant one as we still believe that both gold and silver will operate within the trading ranges we have mentioned in previous weeks, but we are a little more pessimistic silver than gold even though the GSR is at a level where the opposite should be the case – so we are going out on a slight limb with this prediction.
Meanwhile, we hope you have a most prosperous week ahead and for Silver members just a reminder that we have our Membership webinar later today.