From the Trading Desk
After failing to close above psychological resistance at $1,300 for two days in a row, gold has now backed off the key level and has made lower lows for three consecutive days. Besides the technical failure, weak physical demand and the USD gaining ground against a basket of currencies has spurred steady selling in gold this week.
The China Gold Association stated that Chinese gold consumption in the first quarter of 2016 fell 3.91% versus the same quarter last year. GFMS reported that global physical gold demand in the first quarter declined 23.8% year on year, dropping from approximately 33 million ounces to 25 million ounces. Most notable within this was India which had Q1 physical purchases decline by 65%. Physical demand was clearly not the only factor for gold though to kick off the year though. Gold rallied 22% in the first quarter so the lack of physical demand, predominantly in Asia, was not a major factor in gold’s strength. ETFs added over 10.5 million ounces in Q1 and gold started to attract safe haven bids again as the markets became tumultuous. Support in gold for now is coming in at the low of today of $1,270 while resistance is firmly entrenched at $1,300.
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
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.