What moves the price of Gold these days? Simply put, it’s news and technical levels.
In the old days, price movement was created by supply and demand. Today, a good part of the action is coming from algorithm programs. These programs are driven by key words coming over the wires from something as simple as a comment from a Fed President, a tweet from our President or a news story from across the pond.
Also, when we refer to the technical side, it can be as simple as we witnessed just a week ago when the price of Palladium reached an all-time high. And the price chart indicated that the Palladium market was extremely over bought. In the days following, a significant sell off occurred, dropping the price over $80 dollars.
Here is an excerpt from our January 18th Market Gage:
Yesterday, the price of Palladium reached another all-time high at $1,436.50 per ounce. But on the other hand, looking at how high we have progressed and how fast, the price of Palladium is way overdue for a correction, especially if news stories start to dry up. Keep a close eye on the Palladium EFP, it hasn’t moved much. If fresh metal comes into the market place, the current EFP of minus 50 minus 30 should come in and a sell off could occur. And that’s what I expect to happen.
Just Friday, there was news out of Davos that the CEOs attending the conference were concerned about global debt and a slowing global economy. This news translated into a higher Gold price as it was a sign the Fed would not be able to raise rates any further and would have to concentrate on their balance sheet.
Here’s an excerpt from Friday’s Market Gage:
At these levels, the price of Gold is seemingly building a foundation and I expect that in short order the price of Gold will start to move higher and test the $1,303 level of resistance once again.
Over the last couple of weeks, we have seen inflows into the Gold ETFs. All over the globe we are experiencing
an economic slowdown, prompting investors to look for alternative investments to balance their portfolios.
This is the kind of news that could prompt Fed members to think twice before raising rates at the next Fed meeting. Reducing the balance sheet also comes into question. I’m sure this will be the major topic at the next Fed meeting.
In the last seven business days, there has been a sharp increase of inflows into the Platinum ETFs. Some PGM traders on the street believe that the price of Platinum has bottomed out. Looking at the amount of new investors buying the Platinum ETFs, they too have taken up the cause.
When the story was written the price of spot Gold was trading at $1,287. Later on in the day, after all the news was absorbed into the marketplace, the price of gold rallied and broke thru the key $1,303 level of resistance.
After reading this you might think I’m try to toot my own horn. But believe me that’s not the case.
What I’m try to share with you is that price action in the marketplace has two distinct drivers: News that moves the market with algorithm programs and technical levels that create a buy or sell signal.
Obviously, these two factors also move the U.S. Dollar which is the heart beat in the body of Gold price activity.
Professional precious metal traders around the globe use all these tools which have an major impact on the price of Gold and other metals.
Going forward you can be sure it will continue. That’s why, we at Dillon Gage are always on the hunt for the next news story or technical level on a chart that will move the price one way or the other. Also, we have conversations each day with other gold analysists, global precious metals traders, economists and financial advisors to get their opinions and discover what they are hearing from their customers. Then we report to you the up-to-the-minute news that can and will have an impact on precious metal prices.
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.