Precious metals came off the ropes with a big flurry on Friday just when it looked like a knockout was imminent. As the reversal gathered momentum several factors contributed to gold breaking above $1,180.00 while silver went flying through $15.75 and then $16.00. The reversal of USD strength and crude oil weakness provided early support and started the short covering rally, but the market really took off when large buy orders were reported in the OTC gold options market along with several orders that were executed on the futures exchange. The rumor mill continued with speculation about Russian and Chinese buying in gold providing one last move higher before the day ended.
Trading has been active since our market resumed yesterday led by a very weak third quarter GDP report out of Japan which saw growth come in at minus 0.4 percent. Gold and silver became very volatile after this economic release and made highs of $1,193.60 and $16.45 before USD strength on the back of this release saw all four precious metals begin to move lower. Precious metals are on the defensive in early U.S. trading as gold and silver will look to hold support levels at $1,180.00 and $16.00. Below these levels, support should be expected in the low $1,170.00s and $15.75. Tensions seem to be rising between the G20 nations and Russian president Putin who unexpectedly left the Brisbane conference early. This along with escalating unrest in Ukraine should be supportive and potentially fuel a rally in our market.
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