So far this week we have experienced some extremely choppy and volatile trading sessions in the Gold and Silver markets. There are many factors that are fueling these tumultuous conditions such as The Euro trading at the $1.50 level (1st time in 14 months) versus the U.S Dollar, the end of the festival season in India (Dhanteras & Diwali), the allure of stronger Equity markets world-wide, and reports of a Russian Gold producer increasing it's output to name a few. The Jobless report was another sign that the U.S Economy is still a work in progress. The number of U.S workers filing new claims for unemployment was once again HIGHER than expected. The initial claims were reported to be 11,000 last week and taking the total to 531,000.Certainly the Labor sector remains weak despite some economic bright spots. There is little doubt this Gold and Silver rally has been greatly fueled by speculative buying versus the soft U.S Dollar. Many Gold Bugs feel the Gold and the Silver markets are technically at over bought levels. This is causing the seasoned traders to take profits after the momentum leaves the rallies and to look to re-enter the market by buying dips. Comex has shown speculative LONG positions to be at All-time levels (almost 254,000 lots)... Recent worries concerning the U.S Dollar are forcing some countries to devalue their own currencies in markets. The international community is seeking more than promises concerning a strong U.S Dollar from the U.S Administration. This should all be addressed next month at the G20 meeting to be held in Scotland. Although the Diwali and Dhanteras festivals in India are over. However, their wedding season is on the horizon. Tradition dictates Gold ornaments, jewelry, and garments to be very much a part of the festivities. There is a reason the country of India is the consumer of Gold.12% of the worlds Gold is in India's households. There has been reports stating an increase of Gold production out of Russia. With the insatiable quest for Gold by the citizens and the Government of China it will certainly be welcome. Silver has been trading in tandem with the Gold. Both Gold and Silver feel over bought however, with the decay of the U.S Dollar the flight to a hard currency is the play.
Mike Daly / Gold Specialist