January Gold and Silver Wrap Up
After running out of steam between the 55 day moving average ($1695) and $1700, gold has effectively resumed its sideways trading pattern from mid-Dec. Though anecdotal, there is some sentiment that many long investors may abandon positions if they don’t feel that a meteoric rise is still looming. Early rumblings of that sort include HSBC reducing its global allocation to gold and instead utilizing TIPS as its inflation protection. Indian gold traders have also cited a lack of demand on the import duty hike, sustained higher prices and a slightly weaker Rupee. Some stronger economic data out of China (manufacturing) and the US (jobs, housing, sentiment) have also taken the yellow metal down a peg.
COMEX silver stocks continue to climb, so pure silver availability is not an issue. In bright news for the broader equity markets, this New York Times about investors returning to the stock market. I believe that qualifies for the front page sell indicator! As far as risk assets go, the EUR is still doing quite well having rallied to an 11 month high on strong German business confidence and is at 1.35 right now. WTI crude oil continues its ascent back toward the $100 mark. Yikes.
Since we’re trading sideways (and anxiously at that) before the Federal Reserve two-day meeting, the past few day’s sell-offs meant we needed a slight bounce, right? Right. The current 200 DMA at $1663 will probably change by the time the Fed announcement comes out. Next support level would be around $1625 on the Jan 4 lows according to ScotiaMocatta. We have a data heavy week still to come out of the US and any hawkish rhetoric out of the Fed could make investors nervous regarding further QE programs.
All Things Considered – John’s Commentary:
What does it all mean? Investors are getting bored with the metals. Some are feeling that the ride is over. Front page news is bullish on the stock market…always a sign for an impending rise in the metals markets.
Don’t lose hope. Hold on. We have been here before and you will be glad you did!
