Precious metals, with gold in the driver’s seat, had a brief rally Sunday night into early Monday morning as “safe haven” buying was not sustained. As trading on Monday progressed, gold and company gave back the gains as market participants gravitated to the USD, bond market and equities. By the close, gold and silver were back at $1083.00 and $14.25 as they continue to be drawn towards those levels.
This morning finds all four precious metals on the defensive in early trading and still feeling vulnerable to lower levels. With gold continuing to show strong resistance on any rally attempt, witness the post Paris tragedy high at $1,092.00, it is beginning to feel like a test of $1,055.00 – $1,050.00 is where we are heading. Silver which continues to trade above $14.00 on the back of increasing physical demand could see another wave of “short sellers” hit the market if $14.00 is breached. I would expect physical buyers to step up to the plate and look for $13.75 – $13.50 to hold which could lead to a short covering rally for both gold and silver.
Keep a close eye on crude oil this week as it may be the catalyst for the next move in our market. If crude holds $40.00 and moves back towards $45.00, it could bring a short covering rally to our market. A break below $40.00 in crude will likely empower the shorts to continue pressuring our market.
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