Gold Unsure, Silver Follows The Leader
In the first post-U.S.-holiday session, gold seemed not to be able to find direction and closed down modestly. Dollar strength affected both precious metals as positive developments for the American economy - and negative developments elsewhere - push the greenback higher and higher.
U.S. consumer confidence hit a 5-year high in figures released today. You have to go back to before the idea of a Great Recession had sunk into the American psyche to find such positive public sentiment.
Moreover, Bloomberg reported, "Separate data showed that house prices rose in the 12 months through March by the most in seven years as the recovery in residential real estate gained momentum. The S&P/Case-Shiller index of property values increased 10.9 percent from March 2012, the biggest 12-month gain since April 2006, after advancing 9.4 percent in February."
Bank of America/Merrill Lynch lowered its forecast for gold for the remainder of the year, (to 1478), which did not have an immediate effect on the price of gold, but within the report are some interesting observations.
These thoughts were put thusly:
Even though gold prices are weaker, analysts say the gold bull market is merely pausing. "We believe the structural rally is not broken, and we see several scenarios that could push prices higher again. To pick just one, more affluent emerging markets could increase metal purchases to an extent that gold could trade at $2,000/oz, even if investors bought only a third of the gold they purchased in 2012," the report speculated.
James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, which oversees $325 billion, said by telephone: "People are feeling better. They're noticing this recovery broadening out and firing on more cylinders on a regular basis. They know they're under-allocated to risk assets."
On an interesting note, the U.S. Mint has resumed sales of its small gold coins, having replenished its bullion stock so they can produce more pieces. Look for those coins to start moving if there is any indication that gold could test 1320 again.
Wishing you as always good trading,
Gary S. Wagner - Executive Producer
On a technical basis today’s high in gold of 1403 lends absolute technical evidence that we have very strong resistance at $1400 per ounce. As you will see in today’s video this week and last week gold prices have attempted to trade at and above $1400, and on each occasion been unsuccessful. In fact each moved to $1400 per ounce was followed by subsequent selloff in which the market would trade lower typically to around 1380 per ounce.
It is still our belief that both gold and silver remain under pressure, and that the bearish sentiment will remain as long as the US equities markets continue to drive upward to new higher prices. That being said look to initiate short positions at 1400, and look to trail stops below 1385 should the market begin to drift below that price point.
We will also look at the potential for much lower prices in gold and silver and in today’s video you will see our market Outlook for where silver and gold might find support should they continue under major pressure.
Market Sentiment: Possible bottom at 1320 current resistance at 1412
your 1400 short should be covered (1370 to 1390)
From the week of 05.24. 2013