From the Trading Desk
With the UK and several other major markets out on holiday yesterday, gold cracked above the $1,300 psychological threshold for the first time in over a year. The move took place in thin trading conditions and despite being predominantly technically driven, the yellow metal was also aided by an overall weak USD. Gold tested above $1,300 yet again today but was unable to sustain gains. On the heels of positive US economic data, Federal Reserve President of Atlanta Dennis Lockhart commented that a Fed rate hike is a “real option” in June. He also remarked that he sees the economy recovering after the first quarter slump. Lockhart’s commentary was enough to cause gold’s retreat as traders took profits. After two days of ultimately failing to close above $1,300, gold looks like it wants to head south. It is interesting to note that silver, which has paved the way for gold lately, has traded lower for two days now and has backed more off its recent highs than its yellow counterpart. After such a big move up in April for silver, I would expect further selling pressure to emerge.
Yesterday I said we may get a bit of a reversal and sure enough we saw silver lead gold lower with the dollar moving back up over 93. Presently we have the dollar at 93.15 and gold at $1,280.40 with silver down to $17.30. All other metals were lower as well as oil and the stock market. I will say once again, the dollar seems to be controlling everything, and while there is still a shot of the dollar moving one more tick lower to the 90 level, we are seeing signs of what’s to come if I am right about the coming deflationary credit contraction.
I know it’s not easy for some of you to stick with what I think can occur but I have to stick with what I have researched and call it like I see it. When I wrote my last article; Enjoy The Gold Bull While You Can, I showed charts when silver was $16 of it going to the $17-$18 range and it did hit $18. I had put the words “bullish” on the chart so there was no confusion. Gold at the time was mid $1,250 range and I said it can go to $1,300 to $1,400 on the chart and it hit $1,300. It very well could still move higher, but only if the dollar gets down to the 90 level. The jury is out and we’ll just have to wait and see. But if the dollar moves north of 94 I don’t think it is possible. We still need to watch Europe and Japan for the answers.
Don’t listen to Lockhart from the Fed. They are NOT going to raise rates any time soon. The DO need to keep you thinking they know what the heck they are doing. What have they done that gives you confidence in them?
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About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.