Thus far this week the volatility has continued in the precious metals markets. We have traded a $24.70 range in Gold as investors continue to watch and speculate as Greece’s fiscal crisis continues to fuel the precious metals markets. European Central Bank President Jean-Claude Trichet has advised Greece to take more aggressive fiscal measures saving $4.8 Billion Euros prior to pledging support to Greece from the European Union. This scenario has sent mixed signals to traders. Many traders are speculating that a bail-out will strengthen the Euro ratio versus the U.S Dollar and therefore raising the appeal for Gold. While others believe that Greece is only the beginning to future European bail-outs. Portugal, Spain, and Ireland are struggling with their own fiscal responsibilities. This scenario would pressure the Euro and make the U.S Dollar more appealing.
**UNEMPLOYMENT** 3/5 Friday 7:30 am (CST)
Good news on the Jobless Claims front as the U.S Department of Labor reported that initial Jobless applications fell by 29,000.
This week has been a very technical trade as the both Gold and Silver have ranged in between key support and resistance levels. The appeal for gold appears to be growing as speculators are buying physical Gold as
a “safe haven “investment and a hedge to the uncertainty of the globes economy. Many investors are taking their cues from the Asian sector as they have been buying physical Gold during price dips.
I believe many traders were on the side-lines this week as gold approached over-bought levels as the U.S Dollar fell against the Euro. It is my belief that traders are concerned about the top heavy Gold going into the Friday UNEMPLOYMENT number.
The volatility in the precious metals will continue as the European Union charts its course.
I am of the opinion this will drag on….
Mike Daly / Gold Specialist