Mar 28, 2011 2:09 PM Analysts See Reasons For Gold, Silver To Head Higher This Week Posted by Murray Coleman
Bob Chapman, editor of the International Forecaster newsletter, is asserting that silver and gold prices are dropping today largely because options are expiring on gold and silver futures contracts.
“That can make the prices go down. If there are a lot of long options and they go below those prices, the banks don’t have to pay-off,” he said in an interview. “You can almost plan on the attack each month as gold and options contracts come up.”
He doesn’t see any other major reasons behind the fall-off by spot gold and silver prices on Monday. The SPDR Gold ETF (GLD) is down 0.5% and the iShares Silver Trust ETF (SLV) has slumped some 0.3% so far.
But pressure is also likely coming from potential delays in the restart of auto production in Japan and by some hints of tighter monetary policy, says MF Global’s Tom Pawlicki in a note to clients today.
“We still lean positive in gold, but we’re unsure about the potential downside given the hawkish comments from Fed’s (Charles) Plosser on Friday,” he wrote.
The Philadelphia Fed president gave a bullish sermon in New York at the end of last week. “If this forecast is broadly accurate, then monetary policy will have to reverse course in the not-too-distant future and begin to remove the massive amount of accommodation it has supplied to the economy,” Plosser said.
But analyst Pawlicki believes gold and silver could move higher later in the week as a rush of new economic data is released, ramping up to Thursday’s PMI and Friday’s non-farm payrolls and ISM survey.
“The numbers will capture data for March, which may begin to reflect the adverse effects from the March 11th earthquake in Japan,” he added. “Potential support will also come from uncertainty tied to European debt and to the Middle East.”
A week after pushing bullish gold bets to a six-month high, speculative traders grew more bullish still on Comex-traded gold and silver futures.
Commodity Futures Trading Commission data Friday showed those traders raised their net long gold positions by 3%. Meanwhile, the same measure for silver jumped 11%. Figures are for the week ending Oct. 2. Platinum and palladium also saw increases.
Gold futures rose for the sixth week in seven, ending last week with a 0.4% five-day gain. The action features a fresh 2012 settle high at $1794.10. Silver was flat on the week after a 1.5% Friday decline. The SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) matched the futures markets’ 0.4% weekly rise while the iShares Silver Trust (SLV) was flat. All fund quotes are given on a market-price basis.
The closed-end funds Sprott Physical Gold Trust (PHYS) and the Sprott Physical Silver Trust (PSLV) have also been on the rise. Their premiums of 3% and 4.9%, respectively, are below the 52-week average, according to CEF Connect.