Reasons for having an inflation hedge and crisis protection asset have not disappeared

By the end of the last week, spread between gold and silver widened, but it still remains much tighter than the levels seen in late February.

Selling at the beginning of last week took the market down almost 9% from the year’s peak. The spike in investor nervousness came two weeks ago and now all the elements of the Greek debt deal are in place.

Gold prices have adjusted since then and found levels of renewed investor demand. The reasons for having an inflation hedge and crisis protection asset have not disappeared.

However, the most important factor to judge this week’ gold performance will be how much investors’s demand for gold is out ther. A break back above 1727 trading range would trigger stops and attract buyers to 1743 / 49. It is this last area marked by the 62% and 66% correction of the February / March decline that are the key confidence barriers near term. Short term support sits at last week’s low at 1664.8.