Gold and silver prices pulled back slightly Wednesday as
traders took profits following a three-month surge as the dollar
weakened against the euro. Traders are also in wait-and-see mode
ahead of the European Central Bank meeting Thursday, when it's
expected to announce a stimulus plan.
SPDR Gold Shares (
) shed 0.26% in low volume.PowerShares DB U.S. Dollar Index
), measuring the dollar against a basket of foreign currencies,
shed 0.13% while hovering near a four-month low.CurrencyShares
Euro Trust (
) rose 0.30% to a two-month high.
Asset inflow into GLD ballooned by $1.9 billion in August,
according to Ned Davis Research. "The last four times since 2010
when net inflows have topped $2 billion, we have seen diminishing
returns in the ETF gold composite 15 market days after this level
is breached," Neil Leeson, ETF Strategist at NDR, wrote in a
client note. "It is time to keep an eye on too much optimism, and
short-term overbought conditions."
Leeson recommended buying gold funds in late June and remains
bullish on the yellow metal. But he believes they're due for a
short-term pullback. September historically has been one of the
best months for gold and one of the worst for stocks. "Since
1980, gold has been up 69% of the time in September, and has a
monthly average gain of 2.1%," Leeson wrote.
On the other hand, the sharp rise in gold may attract an
onslaught of buyers who jump in for fear they'll miss out on the
move, says Brett Manning, senior market analyst at
"Big jumps into overbought territory have the chance to
extend, and extend in a manner that is very much like a short
squeeze," Manning wrote. "People, in effect, may 'panic' into
gold in coming days/weeks if it gets some more momentum going,
because it will feel like the train is leaving the station."
In the futures markets, gold shed 0.25% to $1,693 an
"Gold is finding strong resistance on approach of $1,700, with
the market keen to sell on approach of this level," Walter de
Wet, a commodities strategist at Standard Bank, wrote in a daily
report. "This level should remain strong resistance ahead of the
ECB meeting tomorrow. We expect the ECB action to be supportive
of gold. A stronger euro and weaker dollar could see gold move
Market Vectors Gold Miners ETF (
) added 0.19%.
IShares Silver Trust (
) fell 0.58%, while holding near a five-month high. Silver
futures fell 0.59% to $32.27 an ounce.
"Silver is too far from key support or resistance to have a
low-risk entry for new money," said Simon Maierhofer, founder of
. It is trading high above its 50- and 200-day moving averages
and a normal pullback to those key levels would lead to a loss
from current levels.
Global X Silver Miners ETF (SIL) was flat.
"The markets are bipolar right now. There's little rhyme and
reason to their action and interaction," said Maierhofer.
"Perhaps silver and gold have caught on to the fact that the Fed
in particular and the ECB to a certain extent have only been
bluffing for months. I've found technicals to be the more
reliable than fundamental reasoning."