Gold On The Defensive
(Kitco News)- On holiday last week, I am missing the nuance of the pastfew trading days. We suggested that the technical picture was looking positivewith the caveat that $1,355 on a close basis was necessary to create furtherupside momentum. Looking at last week's charts, traders were unable to pushgold through this level. The weakness overnight was generated from two factors.The first was North Korea's statement that it was prepared to suspend itsnuclear program. This may prove to be a ploy to get the U.S. to the negotiatingtable. It squarely puts the onus on the U.S. to followthrough on the meeting. Backing away now will create the perception thatthe U.S., not North Korea, is the impediment to peace on the peninsula. The second is the U.S. 10-year bond, which is approaching a 3% yield. Theincrease in yield has pushed allocations into the $U.S. and hit the commodityspace. Silver, which has been reactingpositively in response to stronger oil prices, has also backed off its recenthighs, as oil prices weaken against the quieter geopolitical landscape.Technically, gold needs to hold support at $1322 and requires a break above the$1,337 area to spark new interest.
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