We start the week on a quiet note as noteworthy news stories are hard to find.
It seems that at the moment, there is no urgency for investors to cash in some of their Equity holdings
and head for the safe haven investments like Gold and Bonds.
The price of Gold still range bound, but rapidly approaching the lower end of the scale at the $1,310 level of support in spot.
Sunday night, we opened the markets with some bids around the $1,318 area in spot, but it didn’t take long for the traders in the Far East and then in the EU Zone to put some selling pressure on the yellow metal as the dollar index was firming up.
Overnight there were over 200,000 ounces redeemed in the Gold ETF also contributing to the selloff.
The CBOE VIX Index, otherwise known as the “fear market index” is trading at the 16 level indicating there is no real concern from Equity investors that anything consequential in the short term will happen to the Equity markets.
Will the lack of any visible catalyst to move the price of Gold higher, I expect the Wall Street gold traders to continue the selloff from overnight, testing the $1,310 area in spot. In the event they are successful and find any stops in that area, the selloff might accelerate and force the price of gold to test the next level of support at the $1,303 level. In the event there are no stops just below the level of support, the price of Gold should rebound and head higher once again. So in plain English, at this juncture, it’s anyone’s guess which direction the price of Gold is headed in.
At the beginning of the year, there were Commodity Hedge Funds kind of bottom picking and investing in Platinum, thinking the price was due for a correction after it was terribly beat up in 2018.
Also joining the club has been the ETF investor; a steady inflow has been seen since the middle of January now standing at 2.4 million ounces in the fold.
As long as the price stays above the $800 dollar level I expect investors to stand pat.
The price of Palladium, even though in positive territory has been lacking direction. The Palladium EFP which dictates the action in the spot market remains in a backwardation at minus 50 minus 30. Here, too, is a market desperate for some significant news.
A very difficult market to call, especially with so much stock on the shelves. It seems this market is not sure what type of commodity it is. Sometimes when the Equity market is in a decline, it calls itself an industrial metal, then when the price of Gold experiences a strong rally, it follows as a safe haven investment.
Nonetheless, at this point it just seems precious metal prices are in a holding pattern looking for the next bit of news that will move the needle.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.