(OroyFinanzas.com) – The dawn breaks slowly in the east, as day defeats the night. The echo of market voice that greets, the feeble evening light.The gold and silver positioned for further upside potential during the Asian and Europe early today. The intraday view paused; whilst looking to develop a corrective bias without any sign of a sustained reversal just yet.
Some light selling in Comex gold and silver may have occurred after Democrats claimed the House and win the Senate. Visualizing a long-term impact from the election that should expect the dollar to continue to soften, thus potentially should support the gold. However the more steady the precious metals stayed inside the range, the more of a corrective phase we will be forced to see, rather than ending the current up trend including runaway crude.
Crude futures end up 1.7% on distillate supply drop. BUT Gold futures finally fell 1.5 percent at the close after weak investors gave up their longs and ran for shelter. It traded from $629.20 to a six-day low at $618 gradually after Republicans losses its potential power in the U.S. House of Representatives and the Senate. The election outcome was widely seen as voters’ rebuke to Bush’s handling of the unpopular war, thus leading to the resignation of Defense Secretary Donald Rumsfeld.
BUT again the monetary policy played a more vital role in the financial market than the Iraq policy. The Fed are in the latter stage of a tightening cycle that unlikely be in favour of the USD from now to end of the year. The current situation stands in contrast as the market already factored in all these. A USD rally following this election may rely more on the market puzzled the possibility of fed cuts next year and continued USD weakness on a soft outlook for the US economy rather than assigning or removing a political risk premium for the USD in the FX and Metals markets.
BUT with only two observations at hand a direct link between political control and currency performance is difficult to justify. In fact there may be some reasons to believe monetary policy played a larger role in all cases.
I will wait for the days go by with my dream though I am wide awake.
MKS Gold & Silver, Daily Report
by Bernard Sin
© OroyFinanzas.com
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