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Plenty of headlines today all of which impact precious metals prices and highlight the volatility being seen in all markets. In no particular order here are a few:
1. Copper prices are following crude oil and collapsing on the back of the World Bank cutting its forecast for global growth in 2015 from 3.40 percent down to 3.00 percent. In addition, a tremendous amount of selling has been seen from the Asian market which may be related to the liquidation of long positions that were being financed or purchased on margin. Copper prices are often looked at as an indicator on the health of the economy. In this case it is certainly telling us an economic slowdown is on the horizon.
2. Investors continue to look at gold, and to a lesser degree silver, as a “safe haven” investment as crude oil continues to move lower and is now trading just above $45.00 on the benchmark W.T.I. contract, with many commentators talking about prices falling into the $30.00s.
3. U.S. equities are leading a global sell-off. Despite yesterday’s sharp early gains, the market turned negative and closed down on the day. This morning brings further weakness with the Dow Jones Average currently down over 200 points in early trading.
4. Weak U.S. and global economic data continued this morning as U.S. retail sales missed the target by posting the largest decline in 11 months.
5. This morning finds U.S. bonds continuing to march higher as the 10-year bond yield trades down to 1.83 percent with bond traders likely thinking a rate hike in 2015 may not happen at all this year.
This morning, gold is trading up, but the rest of the complex is lower on the back of copper and economic concerns. A break above $1,250.00 sets the stage for a run into the $1,280.00’s while a dip below $1,225.00 will likely bring us a test of support at $1,200.00.
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