How did Obama affect the prices of gold and silver?
Even though it is pressured today, gold seems like it is finally starting to regain some of its safe haven status. Despite equities falling more than 5.5% since President Obama reclaimed the White House, gold (and silver) has managed to stand its ground. It is beginning to trade on its own conviction and in the short to medium term, it should be helped out by a combination of headlines:
- The conflict between Syria and Israel continues to escalate with 15 dead in the last 20 hours.
- The anxiety in the US over the “fiscal cliff” is clearly reaching a critical mass as evidenced by the recent sell off in equities. The Fed yesterday even stated that there is a possibility of bumping up the amount of quantitative easing from $40 billion to $85 billion per month.
- Portugal, Greece, Italy, Spain, and France all had demonstrations and general strikes against austerity policies. This was the largest coordinated European labor initiative in three years. With Greece’s GDP shrinking by 7.2% extending it into its 6th year of depression and the other aforementioned countries struggling mightily as well, Europe will remain a primary focus for the markets.
Gold has formed a steady base over the last three days around $1,720 but if stops are triggered, it could feel some short term pain down to $1,700. Looking a little further into the next few weeks, I expect an eventual move upwards where resistance will be found at the 50 day moving average (currently at $1,742 and where gold failed two days in a recently).
