From the Trading Desk
Yesterday, US home sales for the month of May came in better than expected and rose by 5.1% to 5.35 million units, the best figure since 2010. Gold had already failed two days in a row at its 200 day moving average and the positive US homes data was reason enough for it to retreat 1.50% yesterday. Greece is in the headlines yet again with a 48 hour extension being granted for the country from its creditors. Greece needs a new financing deal in place in order to make a payment to the International Monetary Fund at the end of June. There is optimism that an agreement is in sight which has European equities up and the euro plunging. Gold is down for the third day in a row as the USD takes back some lost ground. First support for gold is at $1,170 and then below there at the third point in a long term trendline from 2008 at $1,163. Silver had been faring well recently, especially in light of gold’s lackluster performance. But today that has changed and silver has wiped away two weeks of gains. It is currently down over 2.50% and next support is coming in at $15.50.
Today’s weakness in gold fits in with what I have been saying for some time, that lower lows are ahead of us. We hit a low of $1,175.70 and are presently sitting just above that at $1,176.40. As said above, the main culprit for this fall is the weaker Euro, and by default the stronger dollar. Anytime you see a quick move like this in the dollar, it is usually countered by a quick fall in gold. We never did break below last Thursday’s low in gold when so many gold bulls thought we (again) had bottomed as gold had a nice couple days. But here we are again with gold testing the lows from November 5th 2014 possibly in a few days. Will we get a bounce off this area one more time or will we finally take out those lows?
We also had the 10 years back up above 2.40% today. Everything is just fine in the U.S. and the world, right?
Do the following headlines from today support a stronger dollar and higher rates?
US factory activity growth at slowest since October 2013
Durable Goods Order Bounce Dead; Biggest Drop Since 2009
Naturally CNBC’s take on the durable goods orders was spun with a positive;
US core capital goods orders rise; transportation orders fall
As usual; ignore the data. Trade the trend.
Mining stocks tried to buck the gold trend lower today and hit some higher highs before the rug was pulled from under them once again. That’s what gold does of late. It gives you a glimmer of hope (last week) and then throws the towel in again. In the end though, holders of physical gold will win the fight.
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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.