You know you’re in the midst of the summer doldrums when after being gone for a week on vacation, you come back, and all four precious metals are trading at the same exact price… On increasingly thin volume, gold continues its consolidation with August’s range now inside of July’s which was inside June’s which was inside May’s. The $1,628 – $1,630 area remains significant resistance which was failed at yet again in the last two trading days. Since the beginning of June, $1,630 has been approached, but never closed above, a whopping 15 times. With September just around the corner and considering that it is normally a bullish month for precious metals as investors return from summer keen on allocating funds, this $1,630 area in gold will almost assuredly be tested yet again in the early fall. To the downside, support is coming in at a trendline at $1,572 and then below there at the low from 2012 of $1,527. Despite the immediate risk and momentum seeming to be for lower gold prices in the next two weeks, traders should be wary about being short any of the precious metals as September arrives.
While news was fairly subdued overnight, participants who focus on the platinum group metals are closely monitoring developing headlines in South Africa. In the past few days, nine people have been killed in violence related to Lonmin’s Western South African mining operation. The situation seems to be a result of two rival unions, the established NUM and the newer AMCU, competing to attract members in order to more effectively negotiate with Lonmin. Further escalation of this story will certainly compromise Lonmin’s mining operation and therefore could potentially cause a squeeze in platinum in the short term.