Friday’s US jobs data managed to yield a lift in precious metals values this morning but the advance was itself significantly below expectations and it most certainly did not come at the expense of a notable cratering in the US dollar.
This morning, the meltdown continued in gold, but this time, unlike during yesterday’s after-hours electronic trading, silver and the noble metals joined gold and fell hard as well. Once again, the only green color to be seen was the net change in…the greenback.
Spot dealings opened with a bid-side quoted at $1,667 in gold and at $32.50 in silver. While there is still scope for attempts at taking out overhead resistance near $1,680 and $1,704 in gold (with a possible $1,730 end-target) the going has been anything but smooth.
Commodity prices are sinking in European trade amid broad-based risk aversion following comments from Standard & Poor’s analyst Moritz Kraemer warned that Greece may have to undergo another debt restructuring.
The midweek trading session in New York opened with lower prices across the precious metals boards as crude oil slipped by a notable amount and as options expiry and month-end related trading book activities became visible.
If my expectations are somewhat accurate, the short term weakness in the Dollar will assist stocks and risk assets in a move above recent highs. In the case of the S&P 500, a move to key resistance at 1420–1450 could occur.
Last week’s wide price swings continued to befuddle and frustrate speculators in the commodities’ space and for a fourth consecutive week the results revealed that hedge fund players placed their bets incorrectly in these markets.
Gold’s technicals remain poor and prices are heading for their fourth straight week of losses. This is particularly the case in US dollar terms due to the recent period of dollar strength. However gold’s technicals in euro and other fiat currency terms are not as poor.
Gold prices fell towards the $1,645 level at the opening of the midweek session in New York as the US dollar climbed slightly on the trade-weighted index. The initial action was rather subdued but speculators were perhaps justifiably skittish.