Roy’s Commentary 5/10/16

Despite a weaker than expected reading on U.S. employment data to close out last week gold, was unable to challenge $1,300.00 as we closed the month of April with gold feeling a bit vulnerable. On the back of continued talk of a slowing Chinese economy, most commodities opened lower and continued to sell –off after trading opened on our Sunday night. As all four precious metals moved lower throughout the day yesterday and again this morning, gold is looking to hold support in the low $1,260.00’s while silver pivots around $17.00.  From a technical perspective, our market may trade in a narrow range for a few days as we await the next “jolt” which gives us a clearer direction.  Until that happens,  gold should continue finding support in the low $1,260.00’s and again around $1,250.00, the 50 day moving average is currently $1,248.25.  On the upside, resistance can be expected at $1,275.00, $1,285.00 and at $1,300.00.  Silver support should be found at  $16.85 while resistance can be expected from $17.40 through $17.50.

The World Gold Council just released data for Central Bank activity for Q1.  While central bank buying slowed a bit in Q1 of 2016 as compared to the second half of 2015, it did increase when compared to Q1 of 2015.  Featured buyers in Q1 were Russia, China and Kazakhstan as they purchased 46, 35 and 7tonnes, respectively.  Many will debate what if any impact central bank activity has on the outright gold price.  I have always felt that when a central bank commits to buying gold, it is speaking quite loudly.  As central banks diversify their holdings, it is likely they are selling USD in order to buy gold and, in my opinion, that sends a signal that everyone should be noticing.

Roy’s Commentary 5/4/16

Despite the continued weakness of the USD, falling bond yields and a weak stock market, the rally in precious metals has stalled as short term speculators have opted for locking in profits on recent purchases.  In addition, there has been talk of producer selling this week as hedging may have been increased with gold at a 15 month high.  While gold was not able to hold above $1,300.00, it has fared better than silver in recent days as witnessed by the gold silver ratio which has moved back up towards 74.00. Physical demand from our corner of the market has slowed a bit with the higher price points. Demand from China has been weak but the demand for gold ETF’s has picked up sharply and certainly adds to the bullish sentiment gold currently enjoys as our market is receiving much more press coverage than it has in many months. Technically speaking, gold has already breached my first support level today in the mid $1,280.00’s but better support should be found in the mid to low $1,260.00’s.  On the upside, momentum traders are likely to jump on the bandwagon if gold breaks above $1,310.00 with my target being $1,340.00 before another round of profit taking sets in.