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ABC Bullion

Gold gets a Putin bounce in volatile 48 hours

28 April 2014

It was a wild 48 hours for precious metal investors leading into the weekend, with gold at one point breaking below USD $1270oz, before rallying hard to close out the week above USD $1300oz.

Silver was volatile too, at one point breaking below USD $19oz before rallying about a $1 (a 5% at these levels), and is currently sitting at USD $19.75oz.

Both metals originally plunged during European hours on Thursday, with stops triggered, with the push lower also impacted by the US durable goods report, which came in at 2.6% for March, vs. expectations of a 2% rise. At one point it looked like the bottom was well and truly going to fall out of the sector, but then the latest news from Russia and the Ukraine hit the headlines.

The deteriorating situation there, and the increasingly hostile rhetoric from both sides sparked a wave of short covering in both metals, with gold rallying back almost all the way to USD $1300oz in minutes.

Friday wasn’t quite so exciting, with gold grinding higher to close above USD $1300oz, with the major news from the US mixed, comprising a beat to expectations on consumer sentiment, but a miss on the Markit Services PMI, which fell to 54.2 in April.

At present, with gold trading at USD $1304oz , the charts look semi-constructive, with the yellow metal some $20oz above its 100 DMA and just above the 200 DMA, which sits at USD $1300oz exactly, though the violent nature of the moves in the past 48 hours make it a hard market to call right now. I'm neutral, although did pick up some physical silver on Thursday as a long term position.

This week is pretty active on the data front, starting today with retail trade in Japan, then pending home sales and the Dallas Fed manufacturing in the US.

Tuesday is all about Europe, with money supply, economic sentiment, business climate and consumer confidence, whilst on Wednesday, attention will turn to Japan for the BOJs interest rate decision. We will also see European CPI figures and a look at Q1 GDP in the US alongside MBA mortgage applications and ADP employment figures.

Later in the week its all about the FOMC meeting (another taper is the consensus, bringing the monthly QE total down to $45bn with no change to guidance) and non-farm payrolls, with some institutions like Barclays forecasting that 250k jobs were created in the US.