Yesterday just before ECB president Mario Draghi was about to release his plan to stabilize the EU community, gold electronic trading programs kicked in bringing gold to the $1,237 level. Some key words triggered this sell off and almost immediately strong buying came in and reversed the selloff. Some Wall Street speculators saw it as a buying opportunity and stepped in around the $1,240 level in the April contract.
As I indicated in yesterday’s Flash Gage, a key level of support for gold is the $1,246 level in the April gold contract. In my opinion and the opinion of my technical buddies, this level must hold for the market to continue its upward movement.
Helping support the rally in gold is the nonstop infusion into the gold ETFs. Even silver has joined the party with a big increase yesterday.
Now that ECB President Mario Draghi has laid the ground work for lower rates, it would make it even more difficult for our Federal Reserve to raise rates at their meeting next week.
Lower interest rates are the key component to higher gold prices.
Have a wonderful Friday.
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