Gold And Silver Test Support And Quickly Rally Back

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Gold sold off early last week, reaching a low of $1,721 in early Asian and European trading Thursday. As trading rolled out of Europe and into the U.S., the buyers and volume came back. Gold ended Thursday trading over the key $1,750 level on the largest trading volume of the week. Demand remained firm on Friday, with Gold closing at $1,757, up $6 for the week.

The primary reason for Thursday's morning drop was the U.S. Dollar Index, which reached a one-year high of 94.50 on concerns about weakening global economic growth. As I have said numerous times, the $1,750 support/resistance level is key to the short-term direction of the Gold price. As we move into the fall of 2021, seeing the Gold price consolidate between the $1,750 to $1,800 level is a good indicator for a strong finish of 2021.

Don’t lose your faith in Gold. I have carefully watched Gold trade since the mid-1970s, and every major rally has started with a long base-building period. During that time period, the major players in the Gold market, commodity houses, international banks, professional traders, central banks and long-term investors added substantial amounts of Gold to build a strong position. Every time we have seen a Gold sell-off, major central banks, (i.e., India, China, Russia or Poland) have stepped up and added to their country’s reserves. The world’s major central banks are the largest holders of Gold and have valued their holdings over the past 200 years.

Today: In overnight Asian and European trading last night, Gold tested support ($1,748) and hit resistance ($1,771) as I saw fresh demand. The markets await the September Jobs data, which will be released later this week.

Last week was very frustrating for Silver investors with Silver dropping $1.00 per ounce, then bouncing back $1.15 per ounce in just three trading days. Silver fell to a new 2021 low of $21.41 per ounce in early Thursday trading, then rallied back on late Thursday and Friday to close the week at $22.51 per ounce. The Gold-to-Silver ratio last Friday remains at 78-to-1, a very attractive level to increase a Silver position.

Today: Silver also had an excellent range today, between $22.30 and $22.80 per ounce. Both the U.S. Dollar Index and interest rates moved lower today, which is helping the price of Silver.