Gold rebounded nearly 1% today after forming a base at $1700 as traders returned and US markets reopened for the first time since last Friday. Silver pushed higher by 1.6% to $32.26.
“Gold has been forming a good base over the last couple of days,” Saxo Bank vice president Ole Hansen said. “Japan quantitative easing yesterday returned the focus to monetary stimulus, forward-looking inflation has been creeping higher as well.”
“It looks like speculators are dipping their toes in again, but probably only to do a bit of window dressing ahead of month end,” he added. “Do not expect any major fireworks unless we close above 1730 or until after non-farm payrolls on Friday.”
UBS noted that consolidation above $1700 is healthy in preparation for the next leg higher. Quoting their report:
“There are those who are still looking for another dip, perhaps one that offers an opportunity to jump in sub-$1700, between now and year-end. The clear downtrend from earlier in the month has now been replaced by this consolidation phase. But the possibility of another attempt on the downside certainly cannot be ruled out, especially with U.S. nonfarm payrolls coming up and the U.S. elections looming.”
Technically, the yellow metal has support at $1700 and resistance at $1750-$1760.
Silver has formed a base of support below $32.00. It has resistance near $33.50.
Meanwhile, it was a strong day for the shares as GDX opened marginally higher and was able to close 3.2% higher on the day and at the highs of the day. Was $50 the bottom of this correction? Only time will tell…