Submitted by konrad on Friday, April 26, 2013 - 21:15.
Trading lower ahead of the U.S. House's vote to raise the debt ceiling, gold never really recovered. The move lower was abetted by profit-taking and chart consolidation.
We are in the midst of yet another earnings cycle for equities, and many eyes will be on key companies in consumer, heavy equipment, communications and computer gear. Apple has already leaked its big news: the first quarterly decline in earnings in 10 years.
Sometimes, as equities go, so goes gold. So, the overall direction of the stock markets and their reflective indexes need close watching just for the next 10 days or so during this earnings season.
As predicted here a number of times in our communications, Japan is postponing the "nits and grits" of its stimulus program, that is, the direct aid to municipalities, to entities looking to build infrastructure, improving school physical plants, etc. This sent the yen up in the midst of a terribly bearish market for the big east Asian economy's currency.
About 1/5th of today's decline in gold is due to the corresponding fall of the dollar in relation to the rising yen. The dangerous crosscurrents affecting gold and silver right now are (still!) the European economic situation and the big question: how deep and how fast will budget cuts come to the United States?
Otherwise, there was scant news to fundamentally drive precious metals today.
A parting question: Can gold function as a safe haven and a risk play at the same time (not the same moment, of course)? Sign into our Facebook page and give your thoughts, please.
Long silver @30.23 stop below 29.10 basis Comex contract
On a technical basis the lower pricing we have seen in gold today can best be characterized as a mild round of profit taking as we see the charts consolidate. The U.S. dollar, which has been trading under pressure and was trading lower on Wednesday for a time, did rebound as many traders covered short positions in the currency markets. Gold's key resistance level of $1700 will be our specific topic on today's video. As you will see, this is the second real attempt to trade at and above that critical price target. Although I see $1700 per ounce as a resistance level, that's an intermediate level in the big picture. As for now it is a price point that gold has not been able to trade at or above. The question remains whether we will see the market begin to trade under pressure; in other words, will this conclude our minor count of wave one found within our intermediate third wave? Silver, on the other hand, continued to trade to higher ground even though today's trading activity only showed a modest gain of just above five cents. The fact that it did not come under pressure as the rest of the precious metals complex traded lower is significant. The question within silver is whether or not $32 per ounce will become support as I believe it very well could. We have maintained very loose stops within the marketplace on signs of weakness, and by underlying signs of weakness meaning substantially lower pricing in gold. At that point we would look to cover our long gold position. Traders, as much as we need to be sensitive to price changes we truly need to be objective as to what is consolidation and what is part and parcel of a corrective nature within the market.