Weak Econ Data Continues to Support Precious Metals

Precious metals continued to be supported yesterday by weak economic data as the U.S. Producer Price Index fell by .4 percent in April. This provided the fuel for gold to break above the 200-day moving average at $1,218.00 as it recorded an intraday high of $1,228.00. Silver had an equally impressive day as it broke above $17.50 for the first time in three months. With much of Europe on holiday yesterday, their return today to higher prices brought sellers to the market. In pre-U.S. trading, a large sell order on the electronic trading platform took gold below support at $1,215.00 as $1,210.60 in the active June futures contract is the current low.

As we head for the finish line this week our market is in rally mode again on the back of additional weak economic data as Consumer Sentiment came in sharply lower than expected as did Industrial Production. The World Gold Council released a very detailed report yesterday that I suggest you take a few minutes to find on the internet and read. While not a surprise, they confirmed that the demand for coins and bars fell by 10 percent in the first quarter, which is a trend that appears to be changing over the past few weeks. In addition, they said the supply demand curve had swung to a deficit in the first quarter of 2015 which brings very significant upside potential for the market if the trend continues.

Have a good weekend,