Greetings!, The precious metals markets traded under extreme pressure primarily in response to a stronger U.S. dollar. Upon release of the US non-farm payroll report gold attempted a very short-lived rally as it was announced that only 80,000 new jobs were created in June. This was well under expectations as the prediction was 100,000 jobs added, and ADP had reported 175,000 jobs added in June. Although the facts and figures are clear-cut, the interpretation by investors and traders are split. Today's dramatic rise in the U.S. dollar suggests that traders believe a third round of quantitative easing will not occur during the August 1 meeting of the FOMC. With no solid predictive assumption that quantitative easing will take place, traders and investors shepherded their safe haven investments into U.S. dollars and U.S. treasuries. Once again we saw equities and commodities trade drastically lower.
The net result was gold broke below key support at 1600 and is currently flirting with 1580 per ounce, with major support still at 1530. The question remains whether we will see any concerted efforts on the part of the central banks to initiate new rounds of quantitative easing. My current belief is that until such actions are conveyed by the central banks, the dollar and U.S. treasuries will be the main safe haven investment for the world.
As always, wishing you good trading Executive Producer |
