Gold dips below $1500 in Asia, recovers in early U.S. trading

(USAGOLD – 9/10/2019) – Gold dipped below the $1500 mark early in the Asian trading session. It fell to a low of $1490 at one juncture as traders booked profits and the safe-haven trade took a breather. That weakness dissipated at the COMEX open, though, where the precious metal is now trading level on the day at $1496.50. Silver is trading at $17.99 – up 3¢ on the day.

A number of technical analysts have warned that a short-term correction in the gold price is overdue. “Gold bulls,” says Market Pulse in an report, “may finally be conceding defeat after repeated tests of the $1,520-1,560 range failed to produce a breakout. This has historically been a major area of support and resistance for the yellow metal so when momentum started to slip on approach to it again, it was clear it was in for a tough test.” Repeatedly during this rally, which began last May at $1275-1285 per ounce, the gold market has encountered overhead resistance that required more than one attempt to crack.

As Market Pulse points out, $1550 is a big test but so were $1400 and $1500. In the current environment, the right combination of news and central bank maneuvers can exert a more pronounced influence on day-to-day pricing than arbitrary technical targets. In the recent past those markers have been pushed aside with little more than a presidential tweet or some casual remark from the Fed chairman.

Quote of the Day
The problem is… the global bond market is now in excess of $115 trillion (a very very big number) and its grown dramatically since the 2008 crisis. It’s just about tripled according to one set of numbers I looked at. When the bond market crunch comes, let’s assume there will be some very very large losses – and all the systemic bad consequences that will go with that.  Worry less about how index funds, or ETFs will trigger the next crisis, but what happens when bond markets collapse on a few points of interest rate rises, triggering massive defaults, while chronic illiquidity creates the biggest value trap of all time.Bill Blain, Blain’s Morning Porridge

Chart of the Day

Bar chart showing gold's annual returns since 2001, 18.5% return this year as of August

Chart note:  For those exploring the virtues of gold ownership, today’s Chart of the Day is illustrative. Gold has provided a positive return in 15 of the last 19 years. It is up 18.5% thus far in 2019 (through August 30).

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