A Rare Occurrence

Every once in a while it seems as though the stars align and the outcome is an unusual occurrence. After witnessing today’s trading activity a case could be made for today’s “rare occurrence”. Typically one sees a negative correlation between certain markets. Rarely do you see them all move in tandem.

That is certainly not the case today.

Today we witnessed the equities markets, the US dollar, crude oil and the precious metals all moving in the same direction to higher pricing. Today we saw the Dow Jones industrial average close at 1858.69 approximately a 99 point gain on the day. The Standard & Poor’s 500 closed at 2101 up 10.35 on the day. Crude oil closed at 51.72 a barrel up $.93 on the day. The US dollar index closed at 9936 up 41 points.

Oddly a stronger dollar and the US equities markets running back to all-time highs could not curtail the upside move that unfolded in the precious metals markets today. When we look at gold pricing which closed up roughly $14 on the day we can see that the more than the majority of that price change was due to normal trading in gold today. Normal trading in gold moved prices up $18.50 on the day, with a strong US dollar subtracting roughly $4.40 from that value (Kitco Gold Index).

Acknowledging this occurrence is one thing, explaining this event is quite another thing. For now let’s simply look at this incident is a rare occurrence, possibly the lagging of fact of this most recent FOMC meeting and the release of the minutes this week. The combination of the FOMC meeting and subsequent release of the minutes has revealed more uncertainty then clarity on the topic.

We have now seen gold which began its rally at the end of March at 1141 run roughly $80 higher before running into resistance. The initial fall from this price point moved gold prices to an intraday low below 1180 which was the 50% retracement level of this rally. This occurred just prior to gold prices making a second attempt to take out recent highs, unsuccessfully.

That is up until today when we saw gold prices move back above 1200 to close at 1208 up roughly $14 on the day after finding support at 1292, the 38 % retracement of the most recent rally.

Has gold and silver found support at these levels. Will we see precious metals prices move higher next week or was this a “one day wonder”? Traders certainly have a lot to ponder and think about over the weekend.

Wishing you as always, good trading,