COMEX Gold and Silver Sell Off Likely To Be Greeted by Eager Physical Buyers

By: GoldCore

Gold and silver's weekly gains have been pared but both remain higher for the week so far. Gold and silver fell almost 1% and 2% respectively in trading on the COMEX yesterday. They traded sideways in Asian trading and have resumed their slide in early New York trading. The dollar has bounced from record monthly lows and this is leading to some selling. Profit taking is also likely after the recent run up in price.

Gold is currently trading at $1,328.80/oz, €957.28/oz, £837.48/oz.

Lower weekly closes below $1316.60/oz and $22.04/oz respectively would turn the technicals negative and could lead to further sell offs. The COT data shows speculative longs are near record levels which has often been a prelude to sell offs on the COMEX. Those short the market have incurred significant losses in recent weeks may use the opportunity to manipulate the market lower and possibly try and close substantial in the red concentrated short positions.

However, physical demand is robust as seen in physical bar premiums in India and Asia and any sell off on the COMEX will likely be greeted with eager physical buyers including central banks. Therefore gold could be supported at the $1,300/oz level as pullbacks are likely to be bought. AngloGold Ashanti's 2.7 million ounce hedge book was closed out at an average price of $1,300/oz which is an indication that the gold mining industry sees prices at the $1,300/oz price level as sustainable.

Gold (orange), Silver (yellow) and Gold/ Silver Ratio (white) - 40 Years.

Silver

Silver looks very well technically and the gold silver ratio has fallen to below 60 (59.10 - 1308/22.49) with 55 and 50 looking potential targets in the coming months. Throughout history the gold silver ratio has been close to 15 and the average in the 20th century has been around 45. The relative undervaluation of silver to gold and the fact that it remains less than half of its (nominal) record price in 1980 is leading to strong demand for poor man's gold internationally and in Asia particularly.

Silver is currently trading at $22.47/oz, €16.19/oz and £14.15/oz.

Platinum Group Metals

Platinum is trading at $1,676.00/oz, palladium is at $578/oz and rhodium is at $2,175/oz.

This update can be found on the GoldCore blog here.

Mark O'Byrne
Director

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.