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.
Following a quiet Friday in the U.S., trading resumed yesterday in Asia with light volume and prices trading on either side of Friday’s closing prices. Euro zone news on both the political and economic fronts caught the markets by surprise in early Monday trading, as precious metals, most commodities and equities are under pressure, as the USD and bonds are the safe haven of choice. The news that jolted the markets and gave us the reactions just mentioned began with French President Nicolas Sarkozy losing the first round of French presidential elections to the socialist candidate Francois Hollande; a run off on May 6 will now be contested. This was followed by talk of the Dutch government being on the brink of collapse as it deals with severe budget cuts and lastly Spanish bond yields are again over 6 percent, which is raising concern over their need to request a bailout from the EU.
On the economic front, better than expected economic data on manufacturing in China was discounted as the Hang Seng Index fell almost 2 percent. In Europe the same economic data came in below expectations and further added to our markets woes.
I would expect physical demand to pick up today, as the lower prices will bring renewed activity, but speculators and long positions being liquidated will be the driving force in today’s trading. Gold has already seen a large sell order in London this morning, as 4,000 futures contracts were sold on the electronic platform, as the market fell from $1,640.00 to $1,628.00. Support in gold now lies at $1,625.00 and $1,610.00. A breach of these levels will bring on more selling as sell stops and short sellers will pressure the market. Silver has already fallen below $31.00 in early U.S. trading, and as sell stops continue to be elected, a test of $30.00 could come quickly.
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.