Physical demand for gold was slowing down throughout the Asia Pacific region this week and precious metals prices became vulnerable to another downside move which took place overnight. As a quiet trading day in Asia was coming to a close, gold came under pressure, and when it failed to hold $1,420.00, sell stops were triggered in both the OTC and electronic markets.
Gold vacuumed lower on heavy volume before finally holding just above $1,405.00. Silver followed suit with volume increasing on a move lower that also saw sell stops being elected when it failed to hold $23.00. Platinum and palladium continue to outperform gold and silver on the back of supply concerns, with platinum now trading at an $85.00 premium to gold. While lower prices will likely bring us an increase in physical demand, the short term outlook for price direction continues to point lower. As investors continue to buy equities and liquidate gold ETF holdings, we also have a strong USD and rising interest rates weighing on precious metals. Support levels for gold and silver may be tested this week, thus continuing the window of opportunity for value investors.
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