The first Wednesday of the last month of the year saw gold prices end with sharp gains. In the early trading sessions Wednesday the yellow metal hit a five-month low following the U.S. ADP jobs report that was much stronger than expected – a 215,000 rise in workers vs. estimates of about 170,000. However, investors and bargain hunters immediately took the opportunity to buy at this value price and drove the price up almost $30/oz. to about the $1250/oz. level before closing above $1400/oz.
December is a welcomed sight for precious metal holders as November saw about a 5 percent slide in precious metals, with gold experiencing its worst month in 35 years. We’re experiencing a bit of a perfect storm with Goldman Sachs forecasting precious metals will weaken, John Paulson (noted gold bull) claiming he’s not adding to his position and the increased supply of U.S. Mint Gold Eagles – there were over 48,000 printed last month alone. These forces, in addition to more taper talk from the U.S. Fed, have added downward pressure to gold and precious metals.
Despite the pop Wednesday, this pressure will continue to be applied in the near-term. I’ll be looking for prices to hit and push through the June lows of $1180/oz. and bottom out sometime between December 12th and 20th as we hit capitulation. At this area, I’ll be looking to add to my long-term gold holdings. As an investor I’ll add to my holdings through direct purchase of physical gold, and as a trader I’ll be long the $GLD.
If you have any questions or would like to discuss my thoughts, please call my friends at Capital Gold Group for more information: (800) 510-9594
- Jon “DRJ” Najarian, Capital Gold Group Senior Economic Analyst