Gold and Silver Outlook 10-16-14

 

Gold and silver couldn’t really make up their mind today just as I couldn’t yesterday in trying to figure out their next direction when I said my crystal ball was foggy. The scores remained the same with silver falling back to -100.

10 Year Treasury Yields and the Fed

I’ve been mentioning from time to time the fact I thought higher interest rates were not on the table and sure enough we have seen the 10 year fall below 2% this week before bouncing a bit higher today. Fed board member Bullard came out and said QE3 could last a bit longer than Fed’s Bullard says QE3 could last a bit longer than October. Below you’ll see the last 5 day price action for the 10 year treasury.

 

From the Trading Desk 

 

A massive risk-off sentiment has enveloped the markets this week.  Yesterday, the Dow traded down nearly 500 points, crude oil fell to five year lows, and US 10-year Treasury Yields touched 1.8622 at their lowest point.  The Vix index, a measure of market volatility, touched the 30 level for the first time since December 2011 and traded in a 24% range on the day.  US 10-year Treasury Yields posted a massive 36.5 basis point trading range yesterday, exhibiting one of the largest intra-day moves ever and the biggest weekly range since the middle of the financial crisis in February of 2008.  German 10 year debt hit record lows at .719% with all-time lows also reached in Belgian, Austrian, French, Finnish, Dutch, and Swiss treasury yields.

This combination of factors caused investors to flock to the safe haven appeal of gold.  Stops from shorts were triggered at $1,240 which pushed the yellow metal up to resistance at $1,250.  The convergence of $1,250 and the 50 day moving average at $1,252 remain the short term target.  It is slightly disappointing that gold only had a 1% up day in the midst of equity and debt markets going berserk.  But continued liquidation of equity positions should still paint a short term bullish picture for gold.

Palladium is down 20% from its 13 year high that it reached a little over a month ago. The fundamental picture is still strong and multi-year support levels are near at $730 and then $700.

 

 

TNA did have a wild day as well. I have been saying the stock market is overdue for a bounce and barring any negative world news will be poised for a nice run sooner than later (within the next two weeks).

The dollar is still below 85 but a little stronger today.

I still see pressure on gold and silver as they are not taking off but taking a breather instead, waiting for some push to get it past the 50 day moving average of $1,252. If the stock market does decide to move higher, it may hurt the price of gold but the miners may respond positively at first.

 

 

 

 

Disclosure:

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