Slip Slidin' Away

April 11, 2019 - 5:57pm

 by Gary Wagner

“Slip slidin' away. You know the nearer your destination, the more you're slip slidin' away”
-Paul Simon.

Today the precious metals were dominated by strong selling pressure taking the entire complex dramatically lower. With all the explanations that analysts have cited to explain today’s price decline. It is songwriter Paul Simon who might have put today’s selloff in words best because the one certainty about today’s move in the precious metals is that they are slip slidin' away.

Although all of the precious metals were dramatically lower today, silver had the greatest percentage decline giving up approximately 2.16%. After factoring in today’s $0.33 decline silver futures are currently fixed at $14.91 per ounce.

Gold’s selloff resulted in the smallest percentage decline of the complex losing 1.40%, currently June futures are fixed at $1295.50. Although some analysts are citing dollar strength, it was selling pressure that had the greatest effect on pricing. The U.S. dollar index gained .26% in trading, truly a fractional portion of the 1.4% decline in gold prices.

Spot gold gave up a total of $15.90 today, with the vast majority ($12.50) directly attributable to selling pressure. A strong U.S. dollar only resulted in a price decline of $3.40, this according to the KGX (Kitco Gold Index).

There is also the belief by some analysts that the minutes released from last month’s FOMC meeting are less dovish than initially interpreted. However, after looking in detail at the minutes from the March FOMC meeting they convey the fact that the Fed will leave interest rates where they are throughout this calendar year. They also convey that there will be only one interest rate hike in 2020. This was in-line with the statement released last moth.

That being said there were some fundamental events that had a cooling effect on recent price advances for the safe haven asset class today. Including Brexit and economic data from the U.S. that were cited as having a strong impact on the precious metals.

A six-month delay was announced today in the exit plan for Britain leaving the European Union. According to Reuters, “International Monetary Fund Managing Director Christine Lagarde said on Thursday a six-month delay of Britain’s exit from the European Union avoids the “terrible outcome” of a “no-deal” Brexit that would further pressure a slowing global economy.”

So as unexpected and exaggerated as today’s price action was it seems the best way to sum it up is that pricing was simply slip slidin' away.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer