Gold Rally Rolls On; Silver Trying To Catch Up
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
On Tuesday, equity markets had one of the slowest 500-point rallies in history as they crept up 500 points. For traders, it was a grueling day with no real price movement except straight up with no pullbacks. That rally continues this morning, and right along with the equities, gold continues to rally, chasing down $1,350.
With the equities strong, gold tried to sell off, but there is a lot of strength in gold, which is what we wrote about on Friday. Gold looks like it will trade up to $1,350 before and sellers show up to take profits. For those who think gold is only a safety play, why is it so strong into a rallying equity market? The answer is simple -- gold is a stand-alone hard asset and trades like any other market.
While gold traders and investors are once again having a wonderful time, silver continues to struggle. Although silver is rallying, it can’t seem to break above resistance and the gold/silver ratio is over 90. This means that gold will have to sell off or silver will break out. Although we aren’t buyers of silver yet, the positioning suggests that it will break out to the upside soon.
As I look into my crystal ball, I would expect to see gold have a pullback to $1,310-$1,320 and silver back to $14.60 before attempting to break out to the upside. The sell-off should come today or tomorrow into Friday’s jobs report, which could be the catalyst for the breakout.