Yesterday’s events and the reactions of all markets have been well documented and highlight why investors flock to gold and precious metals during heightened geopolitical events. The question is where do precious metals go from here? This morning finds precious metals are lower across the board as are European equities, while U.S. equities are higher and recovering from yesterday’s sharp sell-off. Geopolitical tensions are high globally and this will provide underlying support to precious metals for the foreseeable future but as we are witnessing this morning the spike higher is not followed by further gains and we eventually get a day like this past Monday when prices drop over 2 percent. This is followed by physical buyers stepping to the plate and taking advantage of the lower price.
I continue to look for a breakout of the current range in gold and expect a 5 percent plus move in gold from $1,300.00 before the end of August. Keep an eye on the 10-day moving average in gold at $1,317.25 and the 100-day average at $1,303.50 today as a close above or below should give us a hint on where gold heads next week. While I expect the market to break on the upside, that is likely the minority opinion. Overnight economic data released in China showed an economy that remains soft and continues to slow which should weigh on base metals.
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