Gold and Silver futures took a respite from their post unemployment rally as equities again held their ground while the U.S. Dollar finished slightly higher. A big drop in crude oil and gasoline prices potentially spilled into the precious metals sector as there was a reluctance by buyers to push front month gold futures above 1300.0 and ounce and deferred contracts in silver above the $18.00 threshold. Most importantly in my view today’s trade featured some light profit taking ahead of key potential market moving events Thursday. These include general elections in the United Kingdom, a European Central Bank meeting, and former FBI Director Comey testifying in front of Congress.
There has been ongoing general uneasiness about the Trump administration and possible ties to Russia’s alleged hacking into the last presidential election. Surprises to any of these events tomorrow can have obvious effects on equities and the Dollar that obviously will have ramifications for gold and silver. Since last Friday’s disappointing non-farm payroll number, we have seen three days of fund buying or the re-emergence of fund buying as Gold was previously testing the 1260 level and for silver the 17.00 level, just prior to the non- farm payroll numbers release. The paltry jobs number of just 138K jobs added and revisions to the prior months number told investors that it could be a one and done for awhile on quarter point rate hikes by the FOMC in subsequent meetings. Aside from this geo-political events over the weekend in the Arab world along with terrorist attacks in London and France have traders buying dips in metals heading into Thursday’s data. Simply put since Friday morning the market has witnessed three days of fund buying followed by light profit taking.
In my view the key going forward will be the reaction in equities to all of these data points. Should equities hold along with the Dollar, I would suspect some further back and fill eventually for the metals. If equities plunge look for gold to at least take out 1300.0 and for silver to eventually challenge 18.00.
Technical’s for both July Silver and August Gold comes in as follows. For July Silver support is down at 1736.3 and then down at 1714.6. Resistance is up at 1774.1 and then 1795.8. For August gold support is down first at 1274.5 and then 1263.5. Resistance is up at 1295.6 and then up at 1322.0