U.S. gold prices finished higher Wednesday, capping their seventh straight quarterly increase and marking their best quarterly performance at 12 percent since the third quarter of 2007.
Silver followed gold, rising 6.7 percent in the second quarter to string together a streak of six consecutive quarterly wins. Other metals fell during the prior three months, however, with platinum and palladium declining 6.7 percent and 7.4 percent, respectively.
In black gold, crude oil fell further behind as it registered a 9.7 percent quarterly loss for its first decline since the fourth quarter of 2008. U.S. stocks posted double-digit percent losses during the second quarter.
New York precious metals figures follow:
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Gold for August delivery climbed $3.50, 0.3 percent to $1,245.90 an ounce. It ranged from $1,235.10 to $1,248.80. Gold gained 2.5 percent in June.
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Silver for September delivery rose 7.3 cents, or 0.4 percent, to end at $18.708 an ounce. It ranged from $18.475 to $18.820. Silver gained 1.6 percent in June
- October platinum fell $17.80, or 1.1 percent, to $1,537.30 an ounce. It ranged from $1,526.80 to $1,549.00. Platinum declined 0.8 percent in June.
- September palladium lost $10.00, or 2.2 percent, to $444.40 an ounce. It ranged from $438.50 to $462.00. Palladium plunged 4.1 percent in June.
In notable bullion quotes of the day:
"Uncertainty is going to play in the hands of gold," Richard Ross, a technical analyst at Auerbach Grayson in New York, said on MarketWatch. "Gold should continue to be an over performer in the second half of the year … benefiting from uncertainty and risk appetite. As investors look for alternative to currencies, the bullish argument for gold is intact."
"A mountain of sovereign debt in the Western world and growth concerns" are giving "rock-solid support" to gold, Filip Petersson, an analyst at Swedish bank SEB AB’s commodity unit, said on Bloomberg.
"Indian market participants and analysts are zeroing in on the same disconcerting signs that show a gold market totally dependent on ETFs and derivative speculation vehicles’ (futures/options) offtake. As such, they see potential declines in value that might not be of the minor variety," noted Jon Nadler, senior analyst at Kitco Metals, Inc. [Read Nadler’s full morning commentary.]
In PM London bullion, the benchmark gold price was fixed earlier in the North American day to $1,244.00 an ounce, gaining $9.50 from the price on Tuesday. Silver rose 17 cents to $18.740 an ounce. Platinum settled at $1,532.00 an ounce, declining $13.00. Palladium lost $17.00 to end at $446.00 an ounce.
Oil and gasoline prices
Crude oil prices fell "after a U.S. Department of Energy report was seen as bearish. It was a lackluster end for a quarter that saw oil’s worst losses since the last quarter of 2008," wrote Claudia Assis and Nick Godt of MarketWatch.
The Energy Information Administration weekly report noted that gasoline supplies rose 537,000 barrels to 218.1 million barrels last week. Distillate fuel inventories were up 2.46 million barrels to 159.4 million barrels.
"This report is net bearish," Tim Evans, an energy analyst at Citi Futures Perspective in New York, was quoted on Bloomberg. "When we see product inventories growing, the consumer can feel more secure because the risk of a refinery disruption is reduced. Who cares if we are short crude if there is plenty of fuel on hand?"
New York crude oil for August delivery lost 31 cents, or 0.4 percent, to close at $75.63 a barrel.
The national average for regular unleaded gasoline remained unchanged at $2.755 a gallon, according to AAA fuel data. The current average is 1.4 cents more than last week, 2.3 cents higher than a month back, and 12.2 cents more than the average from a year ago.
U.S. Stocks
U.S. stocks "staggered to the end of a dismal second quarter on Wednesday in another low volume session as investors found little reason to take on risk after conflicting economic data," wrote Chuck Mikolajczak of Reuters.
"Investors still don’t have major conviction on the market right now," John Carey, a Boston-based money manager at Pioneer Investment Management, which oversees more than $200 billion, was quoted on Bloomberg. "Spain has been under scrutiny for quite some time. That has put some pressure on stocks. We still don’t know the extent of this European sovereign debt situation."
The Dow Jones industrial average fell 96.28 points, or 0.98 percent, to 9,774.02. The S&P 500 Index lost 10.53 points, or 1.01 percent, to 1,030.71. The Nasdaq Composite Index declined 25.94 points, or 1.21 percent, to 2,109.24. During the second quarter, the quarter, the Dow lost 10 percent, the S&P declined 12 percent, and the Nasdaq fell 12 percent.
Gold, Silver, and Metals: Prices and Commentary – June 30, 2010
by Jon Nadler, Kitco Metals Inc.
Good Morning,
Quarterly performance tallies started to trickle in as the last trading day of the month got underway this morning. Commodities tabulated their worst quarter since late 2008/early 2009 as a 10% decline in the complex was affected by Chinese growth contraction fears and investor sentiment about the fate of the rest of the world’s economies. Gold posted a third-best showing with a 12% gain, right behind natural gas and coffee (which rose 20%).
Meanwhile, silver turned up in fourth place with a 6.5% appreciation percentage. What did not do well? Industrial metals, for the most part. Consider zinc’s 25% plunge, or nickel’s 23% fall. Bellwether copper fell 16% on the quarter and black gold dropped more than 9% since the end of March. Bad as the quarter was for commodities, the index of world equities showed a 13% decline in values for the trimester.
Then again, one could have bought the Shanghai stock market –whose SCI barometer fell 27% in the current year. Such dismal performance has prompted more than one contrarian call for a giant rally. Morgan Stanley analysts envision something on the order of a 65% rally in the Shanghai index, give or take one year. Yesterday however, that market fell 4.3% after the Conference Board revised its leading economic index for the country.
The Dow, in turn, lost 268 points (2.7%) and dipped beneath the 10K level as the same Conference Board’s consumer confidence gauge crumbled on economic fears. Translation: what will happen if the US consumer is in no mood to consume at a time when the slack in the economy is nearly as wide as any worn by the zoot suit rioters in 1943 in Los Angeles? The economic pattern letter that comes to mind is just two alphabet positions ahead the letter "Z" according to some…
The euro regained some of the ground it lost on Tuesday this morning (it rose to above 1.2275 against the greenback), as the ECB announced that loan demand by the region’s banks was some 30 billion euros lower than anticipated. Such lessened need for funding may signal a better state of health among European banks than some market participants are seen as perceiving. However, the carry trade may continue its drunken orgy in various assets and still be able to tap into essentially free money until the last quarter of 2010 according to analysts.
Gold prices opened with modest losses this morning after an overnight range that remained on the narrow side (between $1238 and $1245). Spot gold bullion fell by $3.30 to the $1237.50 level on the bid side. The rest of the complex showed declines across the board, with the exception of silver which added $0.07 to rise to $18.58 mark the ounce. The summer lull could be upon the markets following the Independence Day holiday. Trading desks we tang up overnight already show neatly arranged workstations and clean (!) coffee mugs on the cafeteria racks.
No change was reported in rhodium at $2440.00 per ounce. Carmaker Ford is reported to be ready to pay some $4 billion in debt with the aim of bolstering its balance sheet. Its shares surged nearly 4% on the news.
This morning’s ADP report indicated that 13,000 jobs were added to the US economy’s private sector in June –less than the expected figure of circa 60,000 and one of the catalysts to a drop in US stock index futures just half an hour prior to their opening.
Indian buyers remained sidelined as gold at near 19,000 rupees per ten grams continued to weigh on their minds instead of the bazaar owners’ scales when ringing up a sale.
In fact, Indian market participants and analysts are zeroing in on the same disconcerting signs that show a gold market totally dependent on ETFs and derivative speculation vehicles’ (futures/options) offtake. As such, they see potential declines in value that might not be of the minor variety.
No less than the President of the Bombay Bullion Association was quoted to say that: "There is no demand in India or for that matter in the world for gold jewellery or coins. Reports have suggested that physical demand has been on a slide. We see demand only from ETFs. He added that, at this juncture, and with such near-record prices at hand: "Those holding ETFs can make profit booking and exit at any time in near future, leading to a severe downfall in the prices. Therefore, I believe this is not the right time to invest in gold. In short term gold prices may hover in the range of $1150 – $1300 an ounce before resorting to a fall."
Part of this may be nostalgia for the good old days of physical gold buying as Mr. Hundia underscored that: "Earlier when exchanges did not exist, people bought more gold in physical form. But as exchange traded funds came into existence, the demand for physical gold started reducing and people preferred investing in ETFs rather than buying physical gold and keeping it with them."
The other side of the coin, so to speak, it the fact that the very people involved in the local gold market (still the world’s premier source of physical demand –at a price) "are of the opinion that the current gold-rush is nothing but a bubble that can burst anytime in absence of physical gold demand, which has been shrinking in recent months owing to exorbitantly high prices." So reports Commodity Online’s Rutam Vora from Ahmedabad this morning.
Then again, Aussie market strategists said as much over the weekend. Other still, disagree. All of this, coming at a time when a plethora of articles are still clogging the blogosphere and are erroneously theorizing about the presence/(or mostly, the presumed absence) of gold in ETFs, in the world’s mines, etc. For example, the (false) bit of ‘information’ that would have you believe that gold is actually traded on the LME. Well, Wikipedia certainly disagrees: "Contrary to popular belief, the precious metals, gold and silver are not traded on the London Metal Exchange, but on the OTC market usually referred to as the LBMA." What exactly does it take to get one’s facts straight? A visit to Wikipedia, maybe? Nah, that would be asking for way too much.
Want evidence of a gold price manipulation/suppression scheme? An open and shut case, it would seem. Except for the series of squiggly lines which are then offered as ‘proof’ and deductions made based upon such patterns, which contain all of the conjectural ‘insight’ that can be applied to coffee-grounds readings by elderly ladies in any Istanbul bazaar. If the (chart) shoe fits (the UFO theory) wear it (foist it upon your readers, they’ll buy it). Welcome to "The Internets:" A series of Setvensian tubes in which sometime sewage disguised as ‘information’ flows rather freely. Bring your own mask.
This is not to say that there is a total absence of worthwhile reading out there. Take, for example, the erudite expose on Gold and the Theory of Storage that can currently be seen on the Kitco Commentary section. In it, authors Mack Frankfurter and Nell Sloane make a cogent presentation about gold, hedging, storage costs, and implications thereof on supplies and prices. Now there’s some real meat to bite into. No smell.
Happy Trading. Happy New Quarter.
Jon Nadler
Senior Analyst
Kitco Metals Inc.
North America
Blog: http://www.kitco.com/ind/index.html#nadler
In addition to bullion American Silver Eagles that are already available, the United States Mint this year will also issue 5 oz. bullion America the Beautiful Silver Coins that are duplicates of the America the Beautiful Quarters. The first of five coins will be released this summer, with the remaining four to follow in short intervals. Check the above link to visit a sister site to CoinNews for more information on the new series.
