Daily Market Report 5/10/13

GOLD

Today’s very strong U.S. Dollar, combined with an announcement from the G7 monetary meeting that “Gold could retest the $1,322 low”, and a statement by Bank of America Merrill Lynch “That Gold could hit $1,200 per ounce in the short-term”, caused the Gold price to breakdown below the current $1,450 per ounce support level. After the support level was broken, many short term traders came in to short the market, driving prices down to $1,419 before sizeable buying came in to drive the market higher.

As many governments around the world stimulate their economies by increasing the money supplies, we hear nations and large financial firms talking down the Gold price. Gold, in addition to being a commodity, is proving to be an excellent currency alternative. Unfortunately, Gold doesn’t have a nation to defend it against disparaging talk;  just concerned individuals looking to Gold for safety against debased currency.  

At 11am PDT today, Gold is trading at $1,439 per ounce, down $34 per ounce on a very heavy volume of trading.

SILVER

As Gold fell, Silver followed, reaching a low of $23.17 per ounce earlier this morning. I have commented many times that Silver needed to break above $24 to look short term bullish. Right now, I am saying Silver needs to stay above $23 per ounce to prevent a massive drop. If Silver drops below $23, the next support level is $20.

On the positive side, today’s Silver decline, in percentage terms, was less than Gold’s, plus we continue to see strong global physical demand for all of the popular Silver investment products, i.e. bars, trade units, and coins.

At 11am PDT today Silver is trading at $23.70 per ounce, down $0.13 per ounce on heavy volume.