Dillon Gage is proud to offer the following insights into the precious metals market from Roy Friedman. Roy has over 3o years of in-depth experience in all facets of precious metals. We will offer Roy’s comments several times each week.
Precious metals prices started off yesterday on a quiet, steady note, as the markets continued to benefit from Monday’s comments by Chairman Bernanke. With Comex April gold options expiring yesterday, gold began to rally early in U.S. trading and took a run at $1,700.00, where there was a very large open interest. The market reached its high in the upper $1,690.00’s and then spent the rest of the day moving lower, driven by options-related selling and short term speculators exiting the market.
As we have seen over the last few weeks, the markets are reacting with great volatility to any comments that Mr. Bernanke makes regarding the state of the economy and its implication on QE3 or any other form of a stimulus package. The technical side of the market analysis equation has been equally influential; especially recently as short term traders and position takers have dominated the market. The price action in gold yesterday would be called a key reversal and interpreted as short term bearish. Having made a new recent high yesterday morning, gold proceeded to sell off for the rest of the day and closed near the low of the day and below the 200-day moving average of $1,688.40 and the 100-day moving average of $1,686.00.
With the USD gaining strength this morning and short term longs still looking to lock in profits, all four metals are on the defensive. Support in gold should initially be found at $1,670.00 and again between $1,655.00 through $1,650.00. Resistance will be encountered between the 100- and 200-day moving averages and again at $1,700.00. A break of $1,650.00 or $1,700.00 could add another $25.00 to $50.00 of follow through.
Roy Friedman has a degree in economics and political science from the State University of New York at Binghamton. For more than 30 years, he has worked at all levels of he industry including as a trader for major Metals firms and international banks. For more information on Mr. Friedman, please click here.