End of summer, gold should break though $1,700
After the long holiday weekend in the US, the precious metals have returned from the official end of summer to strong bids pushing the market higher. Volume is surging once again indicating that investors have returned in force and are ready to reallocate funds after a typically lackluster summer of trading. In the US this morning, the ISM’s (Institute for Supply Management) factory gauge declined to 49.6 in August from 49.8 the month before. Economists had expected an August reading of 50, generally considered the fine line between expansion and contraction. US equities sold off on this news and in a positive sign for the precious metals, they are distancing themselves from the broader market liquidation and are attracting investors in the wake of Bernanke’s hints at QE3 last week.
Gold is currently up $8 on the day but has found resistance so far at the psychological level of $1,700. In the past three trading days, it has begun to form a base at the previous Fibonacci resistance of $1,689.75 which is a positive sign. It seems that it is only a matter of time, and a short one at that, until $1,700 is decisively broken. Silver has continued its ascent as well and in the last two days has formed a double top at $32.30.
