Gold and silver prices continue their slump from last week as weaker than expected Chinese lending and a drop in the Chinese money supply weigh on commodity prices. On Friday spot gold prices dropped by $12 after a report showed increased selling of the yellow metal by the International Monetary Fund. In turn silver prices were also dragged lower by almost $1.50.
The latest CFTC Commitments of Traders Reports indicated that investors increased their long gold positions and may be encroaching on an overextended market positioning, thereby contributing to the sharp declines on Friday.
Equity markets continue to sell-off with the S&P 500 down for the sixth consecutive weak. The SPX has made a firm break of the 1290 and technicals indicate further downside potential. The decline in equity prices has not been supportive of gold prices despite the metal’s use as a safe-haven. One explanation for this may be the strengthening dollar versus the euro.
A strong greenback may have also contributed to the declines as this makes gold more expensive for investors who do not hold US dollars. The greenback could continue to come off its recent lows versus the euro should the EU/IMF/ECB fail to come to an agreement for a medium term financing program for Greece.
One potential catalyst for spot metal prices would be any additional steps taken by the Federal Reserve to support the struggling US economy. The enactment of QEIII would likely offer support to spot gold prices as this would require a readjustment of US inflation expectations. Thus spot gold prices may have scope to test the $1,552 resistance level with spot silver respectively at $37.80. In the near term support is found at $1,518 and $35.00.
ليست هناك تعليقات:
إرسال تعليق