Precious metals are continuing to feel the weight of yesterday’s hawkish FOMC minutes which showed that several committee members discussed the possibility of raising interest rates sooner than expected, citing stronger than expected job creation and the lower unemployment rate. The reaction of the USD was an immediate rally as the USD Index moved to an 11-month high pressuring gold and most commodities.
While physical demand has been steady the past 2-weeks, the gradually lower spot prices have not brought an increase in demand which has been disappointing. After a quiet Asian trading day which saw gold fail to hold $1,290.00, it moved lower in early European trading and when it failed to hold the 200-day moving average at $1,285.00, a large sell order was executed on the electronic trading platform which drove gold down $10.00 to $1,275.00. This morning finds our corner of the market coming to life as physical buying in gold and silver is very good. The question to be answered is, do we hold here and grind higher or do gold and silver move lower and test $1,250.00 and sub $19.00. Keep an eye on the USD as it appears to be the driving force at the moment.
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