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Gold and Silver Prices Cross Borders

Both gold and silver experienced significant drops in trading this week, crossing psychologically important lines with prices that have brought us on a new phase in the gold and silver markets. For some time now we have been watching the gold and silver markets with some attention and trying to discern how and why there has been so little action toward the up or the downside. The market has been moving sideways essentially for three months, since the New Year’s rally promised great things for precious metals this year.

Those who craved action in the gold and silver markets over these past months have had their wish granted them this week with gold moving below the $1,600 per troy ounce line and silver passing below the $30 per troy ounce line. These levels, above all else, are very psychologically significant. This week’s moves will do much to confidence in the market and we can expect further downward momentum from that.

Also significant to the market fundamentals are the breach of the one-year moving average by the gold price. This is a significant indicator used by market watchers and investors to decipher the moves of the gold price over a period of time. Gold has been on the topside of the moving average, indicating a strong market movement to higher prices. After the movement this week, we are seeing a different dynamic in which prices reflect a downward market.

How far down the market will go is a topic of debate for market participants and will be for some time to come. A correctional phase in gold and silver is overdue at this point and we will see the market move significantly lower before consolidating and achieving even higher levels before the end of the year.

Asia is continuing its trend of buying on the dip, but American markets will probably wait a few days to see stronger indications of a bottom established before getting in the market. The market could correct another 20 percent by liberal analysts, but gold and silver prices are still projected to be much higher by the end of the year according to major banks in the US.

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