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Is This Gold's Breakout Day ?

Commentaries & Views

(Kitco News) - Still a little foggy having just returned from the IPMI, where global banks, dealers and refiners met for our annual conference. The mood was somewhat somber from the North American perspective because of the massive dishoarding of physical investment bars and coins from the retail market. Premiums on the bid have virtually vanished over the past few weeks, as retail investors continue to sell physical material into the market. If you are looking for a time to buy physical gold bars or coins, I have never in my 45 years seen lower premiums. The upside was that the general consensus was for higher prices in the coming months, premised on a firm belief that the Fed was close to resuming a dovish policy, which would bring rates down and weaken the dollar. From a technical perspective, the hurdle remains the $1,365 area. On the PGMs, the refineries were aggressively looking to source palladium and to some extent rhodium, with both metals in supply deficit situations. Rhodium has jumped some $500 in the past two weeks, and palladium from a $1,320 level early last week is now again dancing with the $1,500 print.

Today’s Fed announcement will create heavy volatility at 2 p.m. I expect them to remain pat today but a drop in rates today is not in the market, and if I am wrong about them holding pat, expect metals to ratchet higher. If I am right, I suspect an initial softness and would buy the dip on expectations that the statement will contain dovish wording going forward. We have been continually selling the $1,350 resistance but today would not risk a short trade at this level.

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