Gold took today’s employment data showed a deceleration in March and February construction numbers showed a steeper decline than estimated. This gave gold and silver a nice boost and was something I gave a 60/40 chance of occurring. Now that we are above $1,200 again in gold, it may take us higher which is what may get us a summer rally that some are expecting and what patterns of past years show is highly likely. Then we’ll see the bottom fall out.
I don’t recommend investors chase gold higher here. When we dip you add to positions, not when we move higher. Yes gold can go up another $100 and many will think they should have bought, but my indicators tell me we still have more room to the downside. In fact, my suppliers are even calling me trying to drum up business. This doesn’t occur during a bull market. I simply tell them I have been telling investors to wait for my all in call and that is a ways off.
The dollar stayed strong today and didn’t give us a weak signal for gold bugs to like. This means there is still some resistance in the metals. A move below $1,200 in gold would have me cautious. In fact, gold is down 6.70 in Asian trading to $1,201.40 and the dollar is still over 98 on the Index. You would think that with all the negative data the dollar would be lower, but it really goes to show how bad things are everywhere else and that “perception” about the U.S. is we are the best place to park money.
Another Fed board member Lockhart came out today and reiterated what other Fed members are saying; that we are ready for higher interest rates between June and September. I”ll believe it when I see it. How can they even say this with a straight face? But CNBC is all over what the Fed talks about and believes (worships?) what they say. Their latest article was “Here’s why it could get way worse gold.” They technically base their entire reasoning that the Fed will raise rates. Well, CNBC has been calling for the Fed to raise rates for well over 6 months and it hasn’t happened?
If you think about it, a stronger dollar with higher rates will do what to the trade balance? Find out tomorrow when the data comes in! Tomorrow’s data could set the tone for more bad news for the markets with the Trade Balance coming in at 8:30am EST and at the same time Initial Jobless Claims. Then we get Factory Orders at 10:00am. Expect some fireworks and some good trading opportunities at 8:30am EST.
Silver is finding $17 as resistance and I wouldn’t be full on bullish on silver until we break $17 and stay there. It is presently sitting at $16.88.
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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