Gold & Silver Break Down Below Key Support Levels

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Last week the Federal Reserve left the Fed Funds rate unchanged at 5%, but gave an indication that it is likely that there could be two or more increases by year-end. Plus, last month the U.S. consumer price index (CPI) rose at the lowest annual rate in over two years. The lower CPI signals that the Fed’s efforts to curb the rising cost of goods and services is starting to pay off.

Concerns about a possible increase, not decrease, in the Fed Funds rate put pressure on precious metal prices. Gold reached a low of $1,928 during early trading on Thursday, before rallying back above the key $1,950 support/resistance level. Gold closed on Friday at $1,958 per ounce, down $2 for the week.

Over the past month it has become very frustrating to watch the precious metal markets trade.
Gold is building an uncreditable base around the $1,950 level, with substantial amounts of Gold being accumulated in this price area. The world’s largest Gold buyers (central banks) have been aggressive buyers when the U.S. Dollar rallies and Gold sells off. I am seeing bargain buyers from our clients on many of the well-known bullion coins and the very popular pre-1933 Gold coins.

Today: It was reported this morning that the Chinese economy is slowing and the recovery is losing momentum. This news is affecting precious metal demand and we saw a sell-off this morning. Gold dropped to $1,930 during Asian trading this morning before finding bargain buying.

Last week, Silver traded above and below the key $24 per ounce support/resistance level.
Silver reached a high of $24.48 and a low of $23.22, while it was trying to build a firm base above $24. Silver closed the week at $24.07, down $0.28 for the week. The CPI was a positive indicator for Silver on Tuesday, but by Friday it was lower. The Gold-to-Silver ratio continues to increase to 81-to-1.

Today: Silver followed Gold lower this morning during Asian trading. The Silver price broke down this morning during Asian trading, reaching a low of $23.04 before finding buyers.

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