Precious Metals Run In Place
Posted on: Feb 24th, 2009 | Doug Casey | Filed under Financial News
Gold stuck tight to a trading range between $980 and $995 on Monday, and when all was said and done the metal was parked near to where it started, finishing at $991.70/oz., down $1.50. Overnight, gold has edged lower.
Platinum was in positive territory until early in the New York session, when it suddenly dropped $15 in a half-hour and, though it recovered a bit from there, ended at $1075/oz., down $6. Overnight, platinum is little changed.
Silver had a wild and woolly day to zero effect, falling sharply from the New York open to mid-morning, then shooting up to add 45 cents by the noon hour, falling into the Globex, rallying one last time, but selling off again to close at $14.41/oz., unchanged. Overnight, silver has been flat. (Click here for charts)
The precious metals were all little changed yesterday, as they consolidated amid profit taking off of last week’s strong push higher.
Some of the doom and gloom generated by crashing equities undoubtedly rubbed off, and the usual suspects provided little support, with the dollar strengthening and April crude opening its run by falling below $40.
A bit of backing and filling is also to be expected as gold hovers around the psychologically-important $1,000 level.
“That $1,000 level stopped gold,” said Frank Lesh, of FuturePath Trading in Chicago. “Gold is overbought. This isn’t the end of the bull run. You’d rather see a slower, steadier build.”
Technicians checked in, noting that gold’s seven-day relative strength index topped 80 on February 20, when the metal broke past $1,000. They contend that a reading above 70 often signals a price drop in the short term.
“We continue to be wary of a bear-market rally in equities as profit-taking could see gold correct,” wrote John Reade, a UBS metals strategist in London. “We merely highlight the risks that large, long-gold positions on the Comex pose to investors here.”
Speculative long positions outnumber short positions by 165,921 contracts on the Comex, the Commodity Futures Trading Commission said last week. That’s the highest level since July 29.
Still, “Gold is about the only commodity that’s going higher,” Lesh said. “There’s a lack of confidence in paper assets. Right now, the gold ETF is getting a lot of capital that would normally go to a bank or equities. There’s a perception that gold is going to hold its value.”
Source: Precious Metals Run In Place
Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.