Following a weak close on Friday, trading resumed yesterday with light physical demand through the Asia Pacific region, which may have sent some of the recent longs looking for the exit sign as prices moved lower. This morning finds all four precious metals on the defensive as a stronger USD, calmer tone in the Middle East, lower crude oil market and a big rally in U.S. equities weigh on our market. In another sign of a U.S. economy which may not be ready to support a rate hike, consumer spending in February missed the mark as household savings soared to a two-year high. While this data was certainly impacted by winter weather, I believe it further supports a rate hike no sooner than September.
As our market is now probing the lower end of the recent range with gold and silver failing to hold $1,200.00 and $17.00, we can look for support in gold at the 10-day average at $1,183.50. Silver may hold the key here as the 10-, 50- and 100-day averages are fall within 22 cents. Initial support should be seen at $16.76 which is the 50-day average, followed by $16.61 which is the 10-day average, and finally $16.54 which is the 100-day average. Physical demand should pick up sharply as we approach $16.50, but a break below that level will likely empower the short sellers.