Gold prices bounce off 15-month lows to reclaim $1,200/oz. as the dollar rally pauses, helping strengthen shares of precious metals miners: AU +4.4%, GFI +3%, IAG +1.9%, BTG +3%, GG +2.2%, NGD +1.5%, KGC +1.6%, AGI +1.6%, RGLD +1%, SLW +2.1%.
Sterne Agee analysts Michael Dudas and Satyadeep Jain foresee gold and silver prices trending higher, with gold averaging $1,400/oz. in 2015 and $1,450 in 2016 and silver averaging $19 next year and $21 in 2016, as “global demand remains firm, liquidity remains ample and the dollar appears overbought.”
With investor sentiment still skeptical, Sterne thinks any supportive macro news flow could provide fuel for a rally; the firm rate Newmont Mining (NEM +1.5%), Agnico-Eagle Mines (AEM +2.4%), Coeur Mining (CDE +1.3%) and Gold Resource (GORO +0.2%) as Buys, with Barrick Gold (ABX +0.5%), Hecla Mining (HL +4.3%) and Pan American Silver (PAAS +1.5%) rated Neutral.
Metals continue to lead the way down in commodities following the FOMC results and Yellen press conference. Unless something happens to change the Fed's mind, QE will end this fall and rate hikes are starting about one year from today.
Gold -1.4% to $1,322 per ounce - as recently as Monday, the metal was challenging $1,400. Silver -2.6% to $20.28. Copper -2.2% to $2.92 per pound. Platinum -1% to $1,437 per ounce. Palladium -2.1% to $752. WTI crude oil slips another 0.4% to $98.76.
Gold's retreat over the last couple of sessions has wiped out all of March's gain.
Gold is up 1.8% to $1,262 per ounce and silver 1.9% to $19.49 following the big miss in the ISM report as traders contemplate maybe a slowdown in the taper, and some bulls dream about a QE4. Up 1.5% at the moment the Gold Miners ETF is ahead 12.9% YTD.
The 10-year Treasury yield is off 3 basis points to 2.62% and the December 2016 Eurodollar contract is up 9 basis points to 97.99 - suggesting a slower pace of rate hikes, but still pricing in a Fed Funds rate 175 basis points higher than it is today.
Threatening to sink below $1,200 ounce after the strong ADP jobs report this morning, gold has staged a big reversal to $1,247. Below $19 earlier, silver has also come along for the ride, now at $19.72.
The "struggle for gold not only rests with the predominant selling interest among investors currently, but with limited positive catalysts looking forward, gold is unlikely to regain its former appeal," writes UBS, slashing its precious metals forecasts for 2014 - gold to $1,200 from $1,325 and silver to $21 from $24.
With the downward momentum building, gold could test $1,050 an ounce - a level that might approach a "decent buying level," writes the team, but the path would be "very turbulent."
Gold is flat in morning action at $1,223 after yesterday's plunge, while silver has given up a bit more ground, -0.5% to $19.93.
The benchmark rate for the $20T gold market has become the latest focus of regulator scrutiny, with the U.K.'s Financial Conduct Authority looking at how the "London fix" is set, Bloomberg reports.
In a process that goes back to 1919, the rate is published twice a day following a telephone call between Barclays (BCS), Deutsche Bank (DB), Bank of Nova Scotia (BNS), HSBC (HSBC) and Societe Generale (SCGLY).
The process can last up to over an hour, with participants being able to use the information from the call to trade gold and its derivatives while the discussion is taking place.
"It's controlled by a handful of firms with a direct financial interest in where it's set, and there is virtually no oversight - and it's based on information exchanged among them during undisclosed calls," says Rosa Abrantes-Metz of New York University.
The iPath® Pure Beta Precious Metals ETN is linked to the Barclays Capital Commodity Index Precious Metals Pure Beta TR (the "Index"). The Index is a sub-index of the Barclays Capital Commodity Index Pure Beta TR and reflects the returns that are potentially available through an unleveraged investment in two futures contracts on precious metal commodities traded on U.S. exchanges.
See more details on sponsor's website