Precious metals took it on the chin yesterday as a breach of nearby support levels saw long positions being liquidated while short sellers were likely initiating positions. Gold’s failure to hold above $1,300.00 while geopolitical tensions continue to escalate was a bit of a surprise, but it was welcomed by our corner of the market as physical demand saw a sharp increase in all four precious metals yesterday with gold holding above $1,290.00.
This morning finds silver has tested the support band from $20.40 through $20.25 as it has traded down to $20.35, but very good physical demand has it back testing $20.50 in early U.S. trading. The next key support level in gold will be $1,286.00 which is the 200-day moving average. A break below could have us looking at $1,250.00 – $1,240.00 in short order. Silver should find technical support at $20.18 and $20.04, which are the 50 and 100-day moving averages. A break below $20.00 likely takes us to $19.50 in a hurry. Monday is Option Expiration Day on the COMEX and there are large positions in the $1,300.00 put and call. While this may keep gold trading near $1,300.00 through Monday’s close, it also sets the stage for greater volatility next week.
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