Hawaii Six O - Gary Wagner
Yesterday’s 1,000 Plus Gain in the Dow Now Seems Like a One Day Wonder
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Market sentiment continues to underwrite moderate to strong price advances in both gold and silver. Both precious metals are benefiting from a financial environment favoring risk-off assets such as the safe-haven properties of gold and, to a lesser extent, silver.
To say that U.S. equities have been a roller coaster ride over the last couple of weeks would be an absolute understatement. Starting December 3, when the Dow had hit a high of 26,000 points, the market began to methodically selloff trading and closing lower on 11 days out of 15.
This took us to the Christmas break when the Dow traded to a low of roughly 21,700 points. Immediately following the Christmas holiday, traders woke up when the Dow closed up well over 1,000 points and closed at 22,855 points. This was the most significant single-day point gain in the history of the Dow Jones Industrial Average.
It was also a one-day wonder in that today the stock market once again was trading under substantial pressure. As of 9:50 PM Eastern standard time, the Dow has lost - 1.74%, the NASDAQ composite has lost -2.91%, and Standard & Poor’s 500 has lost 2.5%. However, stocks scored an impressive recovery and closed in the positive.
The Dow closed up 160 points at 23,056, while the S&P 500 closed up 10 points at 2480.
In terms of the precious metals, today’s move has put substantial downside pressure in the U.S. dollar index and brought buyers of both gold and silver back to active status as they bid up the precious yellow and silver metals. With the exception of platinum, the entire precious metals from is trading higher on the day.
The dollar index is currently down 56 points and fixed at 96.005.
Spot gold is currently up $10.30 today and fixed at $1276.60. According to the KGX (Kitco Gold Index), today’s $10.30 advance is mostly a byproduct of an extremely weak U.S. dollar which added $7.50 in value to an ounce of gold. The remaining gains of $2.80 can be directly attributed to buying. The net result is gold has gained +0.81% in trading today.
Spot silver is currently up $0.18 on the day, which is a net gain of 1.2% and is currently fixed at $15.18 per ounce.
There are two extremely bullish technical indicators suggesting that gold will move higher. The first is the fact that on last Thursday, December 20, gold prices gained almost $20 as it closed at $1.268, this advance moved gold prices above its 200-day moving average for the first time since May of this year.
Secondly, today’s pricing has broken above a critical support level of $1275, which represents the 0.38 % Fibonacci retracement level. Currently, gold futures basis the most active February contract is fixed at $1,278.70 and has traded to a high today of $1,281.60. A solid finish and close at this price point could indicate a new resistance level that occurs at $1,300, with major resistance at $1,312. It also suggests that the former level of resistance at $1,275 per ounce will now serve as the first level of major support.
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Wishing you as always, good trading,