The yellow metal had its largest daily drop in over two months on Friday. Today’s AM fix was USD 1,747.25, EUR 1,347.56, and GBP 1,086.87 per ounce. Friday’s AM fix was USD 1,767.00, EUR 1,362.80 and GBP 1,101.35 per ounce.
Silver is trading at $33.28/oz, €25.78/oz and £20.81/oz. Platinum is trading at $1,648.50/oz, palladium at $637.30/oz and rhodium at $1,175/oz.
Gold fell $13.10 or 1.49% in New York on Friday and closed at $1,754.40. Silver dropped to a low of $33.46 and ended trading with a loss of 1.47%. Friday’s falls resulted in gold falling 1.2% for the week, while silver fell 3% over the same period.
Gold saw quick price falls at the open in Asia overnight and hit a two and a half week low, continuing the drop from the prior trading session. Stop loss selling was triggered that counteracted the news of China’s inflation data which hinted at a need for further QE.
The yellow metal had its largest daily drop in over two months on Friday. More speculative players may have taken profits and closed long positions after US consumer sentiment climbed to a five year high.
October is one of gold’s weaker months and a correction after recent gains was possible and has materialised. Further weakness is possible and indeed likely although physical demand from Asia has picked up and that should support gold at the $1,700/oz level.
UBS said this morning that it is important to point out that “volumes exiting are not overwhelming, the liquidation action is patchy rather than consistent, while outright shorts are in limited numbers.”
US gold futures and options net length climbed to 198,194 contracts for the week ended October 9th, the highest in nearly fourteen months.
This correction should be used to further accumulate physical bullion in anticipation for a rally in gold after the election in November.
The US Retail sales number is published at 1230 GMT.
Other economic data scheduled for release this week are:
Monday Empire Manufacturing & Business Inventories.
Tuesday – CPI, Net Long Term TIC Flows, Industrial Production, Capacity Utilization, & the NAHB Housing Market Index.
Wednesday – Housing Starts & Building Permits.
Thursday – Initial Jobless Claims, the Philadelphia Fed, & Leading Economic Indicators.
Friday – Existing Home Sales. China’s GDP numbers out this week.
In our Market Update from last Friday we incorrectly said that Roosevelt was “re-elected” when in fact Roosevelt was of course elected for the first time in 1933. The substantive point remains that after Roosevelt’s election there was an admission that economic conditions were much worse than had been acknowledged during the election.