From the Trading Desk
Gold’s run up on Tuesday following the Belgian terrorist attacks was short-lived. Safe haven bids vanished as Tuesday’s trading session moved later into the US time zones with gold retreating into the mid-$1,240s to close the day. The markets have acclimatized to these types of terrorist incidents and with each passing one, it appears that the longevity of gold’s immediate upwards reaction becomes increasingly brief.
The USD has five days of consecutive gains against the euro which has contributed to the selling pressure on gold. Once gold broke through double bottom support at $1,240 in Wednesday’s overnight session, stops were quickly triggered that ultimately resulted in a low on the day of $1,215. The momentum in gold has shifted south and near term support is coming in at the 50 day moving average of $1,197. After failing at $16 three times in the past week, silver plunged lower by 4% yesterday. Like with gold, the next area of support is at the 50 day moving average of $15.03.
The 2 big numbers most who invest in gold are looking at right now are $1,197 and $1,280 and in particular $1,300, a psychological level of sorts. All of these are still in play with this current run up and pullback in gold. From a micro perspective though, you have to look to the dollar for what gold is doing of late. It had been moving up off the 95 level and today hit 96.35 before falling to 96.05 and closing at 96.17. Today was a consolidation day before the next move, which can still go either way.
If we do get more bombings in Europe or elsewhere, money will flow even more to the dollar and this can put pressure on gold. You’ll notice I am not in the camp that terror around the world is bullish for gold and the Belgian terrorist attack saw gold move up $15 quickly but then fell over $30 shortly thereafter. Gold has not entered the continuation of the bear just yet. I am however going to have you look at the dollar closer for short term analysis of what gold might do.
Doug 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
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