Gold Silver Worlds: After two months of strength, the gold and silver price have shown today a significant correction.
At the London AM Fix, gold was trading at 1340.25 US dollar per ounce and 1008.54 euro per ounce. The afternoon trading was much weaker as the PM Fix closed at 1328.00 dollar per ounce and 1000.07 euro per ounce. Yesterday’s close in London was at 1363.75 dollar per ounce and 1025.83 euro per ounce.
At the moment of writing (close to 16h NYT, 21h GMT), COMEX gold is trading at 1324.40 dollar, which is a 2.89% loss on the day.
Silver closed in London at 22.67 US dollar per ounce and 17.05 euro per ounce. COMEX silver is trading at 21.93 dollar, which is a 5.38% loss on the day.
From a chart point of view, both gold and silver are back at their 50 day moving average, a key technical price point. In August, the precious metals had moved to their 200 day moving average but were not strong enough to hold that level.
The odd thing about this price action is that the dollar is showing weakness as well in the last week. It is trading at 81.5, coming off its peak of 82.8 a week ago. On the other hand, oil is holding up very well near a multi-year high. Oil has been trading between 107 and 111 dollar per barrel in the last two weeks.
This divergence is hard to explain apart from technical selling in gold and silver. This is somehow confirmed Dan Norcini’s latest commentary:
“I keep coming back to the same thing I have been focusing on for the last couple of weeks now – namely – the recent gains in gold have come mainly from hedge fund short covering as their short positions had become rather large from an historical perspective.