Gold and Silver into 2013
So much for that 200 day moving average in gold… After holding above the 200 day moving average for two days, gold crashed below it today. Once the 200 moving day average broke, stops were triggered on hefty volume and gold swiftly sold off to make a low at $1,636 basis the active February Comex contract. The selling pressure seems to have been precipitated by the US Commerce Department raising its estimate of third-quarter growth for the US economy. It grew at an annual adjusted rate of 3.1% versus estimates of 2.00%. The rationale behind the precious metals response to this headline is that a stronger economy would eventually require the Fed to unwind its ultra-loose monetary policy. We’ll see…
All hope is not lost for gold just yet. Even though it was down 1.2% yesterday, it held where it needed to at a four point trend-line dating back to May of this year. Volume has been impressive this week thus far but with Christmas right around the corner, it is hard to envision participants actively trading during the last week of the year. After a rough last week for the precious metals, I expect to see some consolidation around these levels before the New Year arrives.
