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Precious metals have followed the course this week and have spent Monday through Thursday moving lower as the USD has strengthened. While the FOMC minutes were a bit more hawkish than expected, with a June rate hike still on the table, it is important to remember those discussions took place three weeks ago and the economic data since the March meeting has been very weak. The selloff this week has been harder on silver than gold and with silver’s move lower yesterday, the gold silver ratio is pushing 74 which is a level that has recently indicated silver is about to rally and outperform gold with the ratio moving back towards the upper 60s.
This morning finds all four precious metals sharply higher, with gold back above $1,200.00 despite the USD strength and crude weakness although it remains above $50.00. Physical demand, while not great, continues to be just good enough as the short sellers were not able to push gold and silver below $1,190.00 and $16.00. This morning’s rally has the feeling of short sellers covering and locking in a profit before the weekend, but a close above $1,200.00 and $16.50 will be a victory of sorts for the market and should bring a test of $1,225.00 and $17.00 next week.
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