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.
The precious metals complex lead by gold and silver recorded impressive gains yesterday but volume was only average and it raises concern with regard to the rally being driven by short covering or fresh buying. The rally so far this week on the back of renewed optimism that the Fed will need to stimulate the economy with QE3 later this year to keep the shaky recovery afloat was fueled by surprisingly weak employment and jobs data released last Friday and this week.
This morning finds commodities and equities on the defensive. Overnight the Chinese GDP figures were lower than expected, causing crude oil, metals and equities to sell off. This morning finds a continuation of the overnight trend, as a stronger USD has added pressure to the metals complex. Gold has backed away from the upper end of the recent trading range and resistance levels above. Equities markets are under pressure lead by the high flying banking sector, as JP Morgan and Wells Fargo are under pressure.
On the technical side, gold should find support at $1,655.00 to $1,650.00, while the 100-day moving average at $1,676.50, 50-day moving average at $1,695.00 and 200-day moving average at $1,696.75 will provide stiff resistance. Overnight, the CME lowered margin requirements on the COMEX silver and palladium contracts as of the close of trading on Monday, which should be supportive.
Have a good weekend,
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.