Which Way Will It Go?
After a meteoric rise in the last few weeks, the precious metals were propelled even higher at the end of last week as employment figures, or rather, unemployment figures, jolted the markets. Lower wages, less hours, and lower payrolls gave further credence to the market’s expectation of QE3. Upon the release of the jobs’ data, the euro and gold both catapulted higher.
Last Friday gold went from $1,690 to $1,735. This week it has been as high as $1,745 and currently trading at $1,732. Last Friday silver opened at $32.00 and closed at $33.68, over a 5% increase. This week silver has gone as high as $34.05 and is currently trading at $33.09.
Precious metals movements this week have been relatively muted. Traders are taking a breather here and are eagerly awaiting the FOMC rate decision/statement tomorrow before adding or trimming positions. Gold remains well above the psychological support at $1,700 while overhead there is really no technical resistance until $1,790. Silver will meet resistance as it approaches $35.
All Things Considered – John’s Commentary:
The probability of QE3 is largely already priced into the current metals prices. The market could easily move either way on a rate decision and easing. It would be very bold for the Fed to make a move prior to the election, as it would be viewed as political incumbent support as much as an economic stimulus.
Quote of the day: “We’re the definition of an idiot by Einstein – repeating the same experiment. That’s what central banks have reduced themselves to. We’ll never know what will happen if they stop because they continue to print, print and print.” – CNBC – September 11, 2012
