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Gold Lacks Energy

Commentaries & Views

On Monday, the equity markets were under heavy pressure early, as was the dollar. And where were the metals? They were only slightly higher. Metals continue to be asleep with no energy. With Monday’s fear in equities and a weak dollar, gold could only muster a small rally. With equities down almost 500 points and the euro currency up big and gold on support, the rally was disappointing.

With equities lower this morning again, gold has lost all gains from Monday, which tells you how weak the metals are now. All markets go through these types of patterns -- lackluster, no energy and no buyers. This will change; the only question is when. What will it take for the metals to break out of this range and which way will they go?

Based on the current action, expectations are that gold will break to the downside. If $1,300 fails to hold in gold, $1,240 comes into play. The big event that may finally move gold could be Wednesday’s Fed announcement. We are long-term bullish, but the current action is not. The best trade here is to observe and watch the footprints.

Keep those stops tight

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.