I could do this all week, it seems. After a stunning rally on Tuesday that saw gold prices shoot up nearly $30/oz the price action on Wednesday was subdued. The futures near month contract prices was sauntering vaguely downward back towards support near $1750 when the clock struck 12:45pm. EST. In less than 20 minutes gold prices had shot up $18 to $1771 to close the COMEX session at $1771.45. It moved higher for the next hour until the rest of the commodity pits closed on the Globex briefly touching $1781 before settling into a tight trading band in the high $1770′s for the rest of the afternoon. Silver followed along putting on more than $0.80 in that same time frame before being beaten back during the Globex to settle at $34.26.
This is the technical breakout in gold that I discussed yesterday which should be strong enough to see prices re-test the $1804 peak from November. Clearing that level will give gold the green light to attempt a run at the all-time high of $1926. Given the liquidity pump that is happening right now I’m not betting on gold breaking back to $1600. Not when, as Kyle Bass put it recently,
“…as every day goes by, I see deflation in the things you own and inflation in the things you need.”
Speaking of inflation in everything you need, West Texas Intermediate Crude prices held onto recent gains to close at $105.96 per barrel. Brent Crude tacked on another $1.19 to close at $122.69 per barrel. Gasoline futures continue to rise and there are reports in the U.S. of $6 per gallon gasoline in parts of Florida. Have fun driving to work folks.
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