Gold Price Today : Gold, Silver and Oil Trading GLD, SLV, USO

Gold Price Today : Gold, Silver and Oil Trading GLD, SLV, USO

SPDR Gold Trust (ETF), NYSE:GLD, iShares Silver Trust (ETF), NYSE:SLV, United States Oil Fund LP (ETF) NYSE:USO

Gold, Silver and Oil

The Overall Fundamentals

The commodity sector reversed gains last week due to a number of reasons ranging from concerns over the downside risks to the global economic recovery to ongoing worries on the sovereign debt crisis in the EuroZone to dampened hopes about the the US Fed’s QE-3 intentions.

Precious Metals

The precious metal complex fell led by Gold and Silver. The precious Yellow metal fell more than $100 on the US Fed Chairman Ben Bernanke’s testimony last Wednesday.

Investors viewed that the Chairman’s expectation that growth in the coming quarters would be ‘at a pace close to or somewhat above the pace that was registered during the second half of last year’ is an indication of no further quantitative easing (QE).

The disappointment was exacerbated by St. Louis Fed President James Bullard’s comment that no further easing is needed as US economic data improves. He also expected US’ unemployment rate to drop to 7.8% by the end of this year as a ‘moderate expansion’ helps improve the labor market.

Although speculations of further quantitative easing (QE) by the US Fed have been tamed, this has not dampened LTN’s Bullish POV on Gold’s. Shayne and I both believe that monetary policy by central banks will be positive for the precious Yellow metal.

Note: Gold, despite persistent sovereign debt crisis in the EuroZone, has not been rising in tandem with the USD like it did in last few years. So, we believe that the Fed will continue to weigh growth higher than inflation while the ECB prioritizes price stability. This would give the USD better opportunity to depreciate further, thus boosting Gold price. Another issue is that further rises in Crude Oil prices may deteriorate the US recovery prospect, making the Fed more “Dovish” in its monetary stance.

Energy

In the Crude Oil complex, the front-month contract for WTI Crude Oil fell for the 1st time in 4 wks, by -2.80%, to settle at 106.7 on Friday. The contract rose to a 9-month high of 110.55 earlier in the week. The equivalent Brent Crude contract slipped -1.45% last week, after rising for 5 straight weeks.

As tensions over Iran escalated over the past months, Crude Oil prices rose on worries that Crude Oil suspension in Iran would bid up prices, affecting especially European buyers.

Crude Oil prices continued rallying earlier in the week with WTI and Brent Crude tapped important levels above 110 and above 125 respectively, after a report stating that a pipeline in Saudi Arabia was attacked. The rumor was denied by Saudi’s spokesman, but the dramatic reaction in the Crude Oil market indicated investors’ sensitivity on possible Crude Oil supply shortage.

There has been talk in recent weeks, as Crude Oil prices rose, that the fragile Global economic recovery would be hampered by rising Crude Oil prices. Such concerns became apparent as Brent Crude Thursday breached the Y 2011-high and approached the Y 2008 crisis mark.

In the surveillance note to the G-20, the IMF warned of major downside risks, including risks from high Crude Oil prices, facing the Global economy.

The World lender stated that ‘the overarching risk remains an intensified Global ‘paradox of thrift’ as households, firms, and governments around the world reduce demand…This risk is further exacerbated by fragile financial systems, high public deficits and debt and already-low interest rates’. It went on to say that ‘advanced economies are experiencing weak and bumpy growth, reflecting both the legacies from the crisis and spillovers from Europe’.

Despite approval of the 2nd bailout to Greece, market confidence towards the 17-nation EuroZone has remained weak.

Following S&P’s downgrade of Greece’s rating, Moody’s announced that the debt-ridden Country’s rating to C from Ca, warning that investors participating in the country’s PSI program would likely receive less than 70% of the face value of their holdings as the deal contains ‘a distressed exchange, and hence a default’.

Spain breached its commitment with the EU and raised its deficit target of 5.8% of GDP this year from previous goal of 4.4%. These added worries to the region’s economy as well as the Euro.

Nat Gas prices weakened again last week. The DOE-EIA reported that gas inventory dropped -82 bcf to 2 595 bcf in the week ended 24 February. Stocks were +756 bcf above the same period last year and +780 bcf, or +45.0%, above the 5-yr average of 1 733 bcf.

Baker Hughes reported that the number of gas rigs fell -19 units to 691 in the week ended March 2. Oil rigs soared +28 units to 1 293 and miscellaneous rigs dipped -1 unit to 5, sending the total number of rigs to 1 989 units. Directionally oriented combined oil, gas, and miscellaneous rigs climbed +5 units to 215 while horizontal rigs increased +5 units to 1 170 and vertical rigs fell -2 units to 604 during the week. Read More