Trading Thins as Participants Take Leave
Trading and volume have thinned as investors and traders are squaring and closing positions for this year, getting ready to celebrate a new year. As this current calendar year winds down, trading volume and liquidity continue to contract. Each trading session takes us closer to the conclusion of 2016.
US Dollar Surges in Value
The US dollar continues to gain value, today gaining another 2/10 of a percent to close roughly at 103.25, a .23-point gain. This is the highest the US dollar has been since December 2002. We currently do not see any major technical resistance till approximately 105.
Gold and Silver Post Modest Gains
Within this quiet and subdued trading, including a stronger US dollar, both gold and silver managed to post moderate gains. As of 4 o’clock EST, gold futures are trading up $3.80 (+.33) at 114260 (1141.70 spot). Silver gained over half of percent (.086) to settle at 16.075, up almost 9 cents on the day. While both markets are still dominated by bearish sentiment, recent action has alluded to the real potential for a bottom forming and price support holding at the recent lows.
We can expect that the next year could very well bring on increased volatility due to a number of factors. First and foremost is the Trump presidency, beginning on January 21.
Uncertainty is the Only Thing we are Certain Of
The fact that our President-elect is absolutely untested alludes to a multitude of possibilities and outcomes based upon his actions. What happens if his campaign promises and pledges actually become policy? What if that policy leads to tax reduction, massive infrastructure projects and a more favorable business climate, based upon a reduction of regulations? We could see continued downside pressure on the precious metals complex as a whole.
However, if President-elect Donald Trump is unable to deliver on his campaign pledges and promises, or if his brash style of leadership creates global tensions, we could see both gold and silver begin a rally that could be comparable to what traders witnessed in 2008.
The fact of the matter is, we simply don’t know. As such, we will enter 2017 with great uncertainty.
Wishing you as always, good trading,