14th January 2015

Until Tuesday, gold was moving reliably higher on the back of equity and/or energy-related weakness. In fact, the precious metal did perk up early on Tuesday after crude shed an additional $2/ounce early in the day and gold also seemed to withstand the sharp rally that set in over the US equity markets shortly after the open. However, US equities turned south in late afternoon trading to ultimately finish slightly lower for a third straight day, while oil prices remained under pressure as well, but gold inexplicably sold off, giving up more than $10/ounce of gains. We can only attribute the surprising selloff in gold to the fact that the dollar rallied rather sharply by the close, getting back to the mid-$1.17 level against the Euro. In addition, several key moving averages relevant to gold were not taken out and there was also chart evidence that double-top resistance at the $1240 level held.

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