Following the big sell-off on Thursday and respectable recovery on Friday, precious metals were weighed down in overnight trading as China released their weakest PMI data in over two years. This morning finds our market mixed with gold and platinum lower while silver and palladium trade higher versus their closes on Friday. After the big moves on Thursday and Friday, with silver falling over 6 percent on Thursday, the gold silver ratio has moved back up and approaches 74.00. Last week’s FOMC statement was a bit more hawkish than expected. The phrase that I think unnerved the markets was their belief that the economy was expanding “at a solid pace” as an interest rate hike at mid-year again seems like a possibility.
While the possibility of higher rates is again debated, perhaps we need to look no further than our treasury market where the yield on the 10-year bond has fallen below 1.70 percent. Crude oil which has been front and center recently staged a rally at the end of last week and is now closer to breaking above $50.00 per barrel than it was to breaking below $40.00 as many commentators had called for. The news here, like gold mines when prices fall, is that many oil drillers have taken rigs offline as the glut of oil on the market likely makes it unproductive to drill until the price recovers further. Keep a close eye on gold during the first half of this week as gold struggles to trade back above the 10-day moving average which currently stands at $1,285.75. A failure to move back above this level could signal a test of the 50-day average is on the horizon which currently sits down at $1,222.50.
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