From the Trading Desk
US equity weakness at the beginning of yesterday’s trading session caused gold to shoot up over $30. It looked as if it was going to challenge the recent one year high at $1,263 but when equities, oil, and bond yields mounted a surprising rally, gold methodically trended lower as the day’s session came to a close. Today proved to be a relatively dull day for the yellow metal… it held above $1,220, now a double support level, however, it showed weakness later in the trading day and sold off from its intraday highs.
While ETF demand has been incredibly strong recently, physical demand of gold from India and China has been noticeably weak. Gold at major Indian trading centers is trading at a steep discount to global gold prices, indicating lackluster demand. A potential cut in the 10% import tariff on bullion at next week’s budget would help bolster gold demand in the region though. Most of China’s gold imports pass through Hong Kong. The release overnight of official custom’s data illustrated that gold imports from Hong Kong to the mainland in January fell to their lowest levels since 2011. Since demand in December was impressive, January figures may be an outlier. It is expected that Chinese demand will recover in the coming months.
Gold might have worn out its welcome today for awhile. We have had a nice ride higher but today and yesterday’s overall price action was weak. It was only in Asia where we see the bounces higher. Interesting development. Buying in Asia and selling in U.S.
I expect to see a big drop soon in gold. Simple as the fact we don’t see to go higher but end each trading day lower not breaking to higher highs. With the more industrial metal silver even struggling to stay above 15 today, a breakdown seems imminent. Other metals and especially platinum were down today.
Dollar was down a hair.
Unemployment data was weak today. Does the Fed see this? The markets shook that off and moved higher today with good durable goods data and a higher oil price. Oil and the markets have been trading in sync.
With the move higher in the markets I do see weaker gold prices ahead as long as the markets cimb higher. The VIX was down today with UVXY even going to a lower low.
Right now in Asia we have gold up 2.20 to 1236.10.
We’ll see what tomorrow brings.
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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.