Gold
Gold
has traded at new nominal record highs (over $1,070/oz) and is
currently trading at $1.066/oz. In EUR and GBP terms, gold is trading
at €715/oz and £665.90/oz respectively. Resistance currently lies at
$1,070/oz with initial support at $1,050/oz and then at $1,040/oz. With
oil back above $75 per barrel and at a 1 year high, and the dollar
again under pressure today, gold continues to eke out gains. Gold’s
record comes as the dollar (as measured on the US Dollar Index) has
fallen to lows last seen in August 2008 and has breached 1.49 against
the euro. The US Dollar Index has fallen to 75.51 and looks in poor
shape technically with strong support not seen until down at the multi
year lows at 71.0 (see chart). As long as the dollar keeps falling,
gold will continue to rally in dollar terms. Should the dollar mount a
rally then we shall see gold move up in euro and sterling and likely
make new record highs in these currencies – as has happened throughout
this gold bull market in all currencies.
Gold’s move is not "all" about the fall in the dollar. With the
dollar having fallen again in recent days, obviously gold has rallied
in dollar terms but gold is actually moving up in all currencies.
This can clearly be seen in the chart of gold as measured against a
basket of major currencies (US dollar, euro, sterling, yen and Canadian
dollar). Gold is just below record highs in nearly all major currencies
and when the dollar mounts a counter trend rally (which is due in
coming days and weeks) then we shall see gold reach new record highs in
other currencies.
The continuing taboo is that of an international monetary crisis. While this remains unlikely, it is a real possibility and this is one of the primary reasons for gold’s strength. Central banks continue to diversify into gold and overnight came news that the central bank of Taiwan is considering diversifying more of its substantial currency reserves into gold.
Silver
Silver is currently trading at $17.91/oz, €12.03/oz and £11.20/oz.
Silver resistance lies just above the $18/oz mark and support at
$17.55/oz. Silver remains very undervalued relative to gold, on a
supply/demand basis and on a historical basis. The very large short
positions held by two large Wall Street banks is under pressure and
could lead to a significant short squeeze.
Platinum is trading at $1,365/oz and rhodium is trading at $1,775/oz. Palladium is currently trading at $333/oz.
