Gold and silver prices continue their strong move – 23 August 2012

What a spectactular week in the gold and silver markets. Eearlier this week, we wrote that gold and silver prices are breaking out. The dollar gold price moved up strongly on Thursday August 23, gaining 1.9% and closing around $ 1,668. The dollar silver price went  up with 3.2% closing around $ 30,50. On a weekly basis, gold in dollar terms is up 3% and silver already 8.1%.

There is a strong difference between the moves of gold and silver in dollar compared with the metals prices euro, as the euro gold price moved up only 0.05% and euro silver price 0.14%. That could seem strange, but the long term charts tell that euro gold reached its all-time highs. In a similar fashion, we see gold in Indian rupee reached as well its all-time high.

From a technical point of view, dollar gold broke its 200 day moving average. That’s a key technical indicator which is monitored closely by big institutional investors. So if gold could hold its 200 day moving average, we can expect big money stepping in the market, which could literally ignite a fire under the gold and silver market. It is very likely that higher bullion prices could pull the gold shares  (much) higher as well.

Furthermore, regarding the gold and silver price acction, Forbes writes: “The market place continues to digest Wednesday afternoon’s somewhat surprising contents of the minutes of the last FOMC meeting. FOMC members said they are ready to implement further monetary stimulus measures should the U.S. economy show more weakness. The minutes were bullish for most commodity markets, including the precious metals, while putting downside pressure on the U.S. dollar index.”

We also like to quote Rick Santelli who told CNBC that “In my opinion what makes gold move in a proactive trending way is any time the barometer of anxiety goes up.”

What do we need to look for in the short run? First, the gold and silver prices need to make weekly closes above their 200 day moving averages. Second, increasing volumes as big money (like hedge funds) steps in, would be very bullish for both the metals.

 

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