Gold and Silver Enter New Lower Range

Following Friday’s big sell-off on the back of the U.S. jobs report, trading resumed yesterday with a bit of short covering and physical demand bringing us a test of $1,175.00 and $16.00 where selling reemerged. With gold and silver entering a new lower trading range, I would expect the “shorts” to keep the pressure on unless we get an unexpected headline. A test of $1,150.00 gold and sub-$15.50 silver, where physical demand should be significant, is likely to spur on a short covering rally. Adding to negative market sentiment we have platinum trading at multi-year lows as it hovers just above $1,150.00.

In the face of the strengthening USD and higher U.S. interest rates it is difficult to argue with speculators adding to their short positions. The lower price points are likely to be good for our corner of the market where physical demand continues to pick up on the dips, but I will be a bit of a contrarian here and look for gold and silver to test their 10-day moving averages which currently stand at $1,198.00 and $16.30 sooner rather than later.