HardAssetsInvestor

Written by Sumit Roy  |

May 30, 2012

Precious Metals Monitor: Gold Holds Support For Third Time, But Dollar’s Spike May Crush Prices

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We offer our latest analysis on the precious metals market.

Though shortened by the long Memorial holiday weekend, this week is proving to be a volatile one for financial markets. In fact, the record books will need to be updated after the latest movements in bond markets, as we’ll explain later.

While most assets have been experiencing significant volatility, price action in gold has actually been relatively muted. For bulls, that’s a good thing. For a third time this month, prices briefly touched the key $1533 support level before rebounding.

GOLD

This rebound comes despite continued gains in the U.S. dollar, which is at its highest levels since September 2010. Likewise, silver is holding above its $26 support level.

SILVER

Gold and silver are experiencing a push-and-pull of various forces, and which side wins out will determine whether prices can ultimately hold here or will decline further.

On the one hand, eurozone sovereign debt fears are growing. Greece’s upcoming parliamentary elections on June 17 loom large. The possibility that anti-bailout politicians take control, igniting a chain of events that lead to the country’s eventual exit from the monetary union, has understandably spooked markets.