From the Trading Desk
After holding as support for five consecutive trading days last week, the 50 day moving average in gold finally gave up today. Gold topped out at $1,260 on Tuesday but sold off yesterday and has collapsed today more than $20. Even yesterday’s geopolitical tension in the form of two Russian fighter jets exhibiting aggressive flight maneuvers near a US military vessel in the Baltic Sea was not enough to stem the selling pressure on gold.
The yellow metal was instead influenced by commentary on monetary policy by the Federal Reserve Bank of Atlanta President Dennis Lockhart. He remarked that June remains an option for a potential Federal Reserve rate hike but that modest improvements in economic data would be needed to justify it. The market took the statement as hawkish and gold was offered throughout the day as a result. The 50 day moving average at $1,232.50 is now acting as resistance. Support is coming in at $1,210.
The dollar managed to climb over 95 today fell below and then finished above putting more pressure on gold as it did yesterday. Silver is still above the $16 resistance showing a little more strength. For real weakness we have to see gold under $1,200 and we just haven’t seen that for awhile now. I do notice some weakness in the mining stocks today and if the overall stock market were to decline, they just may lead gold lower as long as the dollar confirms this.
Personally, by the way, no rate hike is coming no matter what the market thinks of the Fed’s comments.
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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