Heading lower or an opportunity to buy precious metals?
The markets are a sea of red today as assets ranging from commodities to equities sell off on the back of concerns regarding the global economy. Gold has steadily trended down for three weeks now after failing multiple times between key resistance at $1,790 and $1,800. For the time being it has managed to find bids to keep it above $1,700. Without further QE headlines to galvanize the market though, it seems like the risk remains to the downside for the yellow metal. A break below $1,700 would project down to the convergence of the 100 and 200 day moving averages at $1,660.
While the precious metals have garnered some overnight attention, equities have largely stolen the show today thus far. Asian bourses were a mixed bag but the pressure lower gained steam in Europe and has resulted in an even bigger sell off in the US. The Dow Jones is currently down almost 250 points (approximately 1.75%) and heading closer to psychological support at 13,000. Weaker quarterly earnings from companies such as DuPont and 3M have highlighted broader concerns for the global economy. Moody’s also downgraded the credit-rating on Catalonia and four other Spanish regions which rattled European bourses and the euro currency.
Be sure to look out for the commentary from ECB President Draghi’s speech tomorrow at 7:45 EST.
