Yesterday’s early morning short covering rally which may have been caused in part by discord within the French government was short lived, especially in silver where those gains were all given back during the U.S. trading day. Overall volume from all segments of the market continues to be light, but despite the strength of the USD and continued record bullish run in U.S. equities, gold and silver have held support at $1,275.00 and $19.25.
Both metals continue to be locked in a technical trading range and are once again looking for direction. This will likely come from the USD which has once again become the leading influence on precious metals. A weaker USD on the back of lower bond yields could propel gold back above resistance at the 100-day moving average which currently stands at $1,295.75 and would signal a further test of the 50-day average at $1,307.00. A continuation of USD strength likely sends gold below support at $1,275.00 where the target would be $1,250.00. With the gold silver ratio currently at 66, a move towards $1,250.00 should take silver below $19.00 where further selling is likely to materialize.
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