Gold, Silver Drop for Fourth Week as U.S. Gold Bullion Continues Rally Posted by James Randolph on December 24, 2012
The U.S. fiscal cliff, which has been the focus of the media for nearly two
months, continues to cause a major drag in markets but with a new tone as the first of the
In pre-holiday trade on Monday, equities regained strength, lending support to
gold, though prices remained near the weakest seen in four months as investors continue
to wait on the sidelines until there is more resolution to the fiscal cliff issue.
Gold gained $0.72 to $1,656.81 per troy ounce after falling to $1,635.09 per troy
ounce last week. U.S. gold futures for February delivery shed $2.30 to $1,657.80 per troy
Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said we
are expecting thin trading volumes due to the festivities and because of this gold is prone
to volatility. He added that he did not expect any surprises and gold should hold above
$1,625 per troy ounce.
A major dynamic of the gold market for the past three weeks has been a profit
taking in the face of the fiscal cliff, which has driven prices lower and removed demand
from markets. Frank Lesh, a broker and futures analyst with FuturePath Trading in
Chicago, said a lot of traders have been booking profit and, of course, as the market had
moved lower, other people who didn’t liquidate have come in to preserve what profit they
A Kitco News Gold Survey, which surveys the market sentiment among traders,
analysts, and dealers, however, indicated the expectation of higher prices this week. Out
of 33 participants, 19 responded for the week with 12 indicated they see prices moving
up, 3 seeing prices moving down, and 4 neutral.
The comment on the Gold Survey indicated respondents saw minor support
established at Thursday’s low with many looking ahead into next year when markets will
revert back to trading on underlying fundamentals instead of political instability. Those
seeing short-term bearish conditions partially confirm this view as they point to technical
charts for their projections.
During this time, U.S. Mint bullion sales continue to be strong, indicating a
fundamental difference in drivers of trading markets and physical bullion markets. Gold
bullion coins rallied last week with 33,000 ounces being sold at split of 31,500 ounces in
American Eagle Gold Coins and 1,500 ounces in American Buffalo Gold Coins.
The U.S. Mint has said it will not offer any 2013-dated American Eagle Silver
Coins until January 7, 2013 as sales of backdated American Eagle Silver Coins reached
232,000 ounces last week. Sales levels for 2012 gained to 33,742,500 ounces, the third
highest level in the Eagle’s 27-year history.