Gold had a wild ride this week, opening just below $1290 per oz, running up to $1310 on Wednesday, crashing all the way back down to $1290 on Thursday and then late on Friday gold was still hovering just above $1291 for a slight gain on the week. What is all this volatility about? On Thursday there was better than expected U.S economic data which pushed the U.S. dollar higher, and while it looks to have been an overreaction to the positive data on Thursday, the U.S dollar lost ground and dropped against a basket of currencies on Friday reversing Thursday’s slide and ending the week on a small uptick for the week. However, trading is close to the monthly lows and is below the significant $1300 level. Looking forward, the $1280 level is a highly significant support or “floor” for the markets. If it continues down and breaks that level, we could easily see a price down to the next support level of $1250 and possibly even $1200. However, if we can see prices close above the $1310 level on the topside, $1325 is the next significant “ceiling” or resistance level.
Silver dropped this week for much the same reasons as Gold. The week started out at $15.08 per oz and trading down to a low of $14.90, but closed slightly ahead of that right around $15.00 per oz. The key to this week’s price action is the fact that we tested a major support level of $14.90 and moved up from there. This is very positive, as each time this year that prices have fallen below $15.00 there have been enough buyers to come in and push the market higher, making the $14.90 per oz level a significant support level and a psychologically important “floor.” To the upside, Silver could trade up to the next resistance level of $15.25, if we can see some momentum and a close above $15.10 in the next week or two.
This week we may have seen the “oil boom” slow down a bit. This week saw oil prices just range around, trading fairly flat between $65 and $66 per barrel. However, we did see the week close slightly higher, although not as high as previous weeks. There is some unrest and uncertainty concerning production from Libya and Sudan which increases threats to the market production, already hit by OPEC cuts and disruptions in Venezuela. If demand keeps up and the global crude inventories continue to decrease, Crude oil likely will continue to rise even more than the 40% rise already this year. All in all, the rally, while slowing down, doesn’t look to be over any time soon.
About Bill Poulos
Bill Poulos is a published author and retired automotive executive. He is the co-founder and president of Profits Run, Inc. Bill and his son, Greg Poulos, started the company in 2001 from the family’s kitchen table. Profits Run produces publications, software, and courses on strategies for making the best trades while reducing risk. Poulos contributes often to several online news sources on current events in the stock market and the economy. Bill earned his undergraduate degree in engineering from General Motors Institute and an MBA from the University of Michigan. He is married to his high school sweetheart, Karen. They have three grown sons and two grandbabies. They live in Wixom, Michigan, where Profits Run is headquartered.