The European Central Bank took a very aggressive stance yesterday as it looks to turn the tide on a weakening economic slump throughout the Eurozone. Yesterday’s stimulus announcement of an asset backed bond purchasing program along with a lowering of their key deposit and refinance interest rates was more than most economists had expected. The result as discussed in an earlier commentary has been a sharp rally in the USD which is now at multi year highs as gauged by the USD Index and it is certainly adding pressure to precious metals and most commodities.
The Euro currency has fallen over 2 cents this week and currently trades below 1.30 at 1.294. Along with this, bond yields are plummeting throughout the Eurozone which further enhances the appeal of the USD. As would be expected, precious metals are on the defensive but quite surprisingly after making a new recent low overnight at $1,258.00 gold has rebounded and is actually trading in positive territory at 1,268.00 supported by good early physical demand. Silver continues to hold $19.00 and like gold is seeing good physical demand this morning as it has just turned positive on the day at $19.16. With gold, silver and platinum all trading below key moving averages it appears the USD strength will keep us probing lower unless another geo-political event changes our course. The good news for our corner of the market is likely and hopefully an increase in physical demand with lower price points. Palladium on the other hand continues to be the lone wolf as it has recovered much of the losses seen earlier in the week and currently trades above key moving averages.
Good luck and have a good weekend,
Roy
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