By: AMark – June 28th, 2011
Overnight headlines were fairly muted with most of the focus still on the developments in Greece. The euro got a slight bump up as the Chinese premier stated he would like to double German-Chinese trade within five years and also claimed that Europe is more than capable of overcoming their current Greek woes. Despite these positive statements though, the fact remains that Greece still has a very long way to go. The markets are looking towards the Greek vote tomorrow which will determine whether the country avoids a default on its debts. There are already riots taking place as their citizens wait to see if the 28 billion euro austerity bill makes its way through Parliament.
Since last Thursday, gold and silver have lost considerable ground in the wake of several news pieces highlighting a bleaker outlook for the world economy. For three weeks gold attempted, yet failed, to decidedly break the psychological level of $1,550. After its last try on Thursday of last week, it sold off dramatically before finally finding support yesterday ahead of $1,489 (the 23.6% Fibonacci retracement level of the all time high made on May 2nd and the subsequent low on May 5th. There should be more bids waiting at the $1,489 area while overhead resistance is coming in at the 5 day moving average of $1,521.25. Silver seems to be losing its luster on its own regard so its movements will be heavily influenced by gold as the summer drags on. Near term resistance is coming in at $34.50.
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All Things Considered – John’s Commentary
Market updates are helpful, but the question we all ask, is how does it affect me and what action, if any, should I take?
If Greece defaults, that will be very bullish for the metals. Ironically, the metals may sell off initially in light of that news as the dollar will most likely strengthen, the broad market fall, and gold with it.
I am a buyer of gold anywhere around $1,500, especially if it dips below that price point. I would continue to buy silver in the $33 range. It may slip lower, but resist the temptation to get greedy and pick bottoms. Just continue to accumulate, dollar cost average, buying regularly in modest amounts.
