Gold Tests $1400 Holds During New York Trading

By Tom Luongo in Gold and Oil News | April 18, 2013 22:41 | Tags: , , ,

Today would be characterized as the first strong showing of Gold in the U.S. markets this week.  The nightly rise in prices during Asian trading was not sold relentlessly to pursue as low an afternoon fix as possible.  Gold rallied right up to $1400 per ounce at which point it ran out of steam near the COMEX open.  But, while the selling began in earnest to cap the price, we did not see a huge sell off back below $1350.  This is indicative of buyers coming in to support the price and nervous shorts covering into any weakness.  Gold spent the rest of the day trading around the $1390 level.

This helped Brent Crude to regain its footing after yesterday’s rout.  This dip below $100 per barrel in Brent is purely the effect of riding gold’s coattails.  Euro weakness did not help matters yesterday, but we saw strength there today as well.

Silver very confidently re-took the $23 level.  While Gold bounced right off of its 288 week EMA near $1320, Silver is still trading well below it (currently the 288 week EMA for Silver is $24.40).  I would expect that to be the first real point of resistance that has to be overcome.  If we see a rally tomorrow that takes gold back above $1436 — the 200 week MA — and silver above $24.40 that would be a huge victory for the bulls and a big technical achievement.

But at this point both metals have moved into bear market territory and will likely not see any strength unless there is a serious black swan event that truly shakes investor confidence.

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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