While we think the gold market has posted a moderately reliable low with the Wednesday washout, we also expect volatility to increase in both gold and silver ahead and we expect both markets to retest and perhaps temporarily violate recent lows.
However, the gold market showed signs yesterday that it was receiving a flight to quality bid from renewed economic uncertainty and perhaps more importantly from escalating concerns of potential trouble in the financial markets from the debt ceiling situation.
In fact, a significant jump in credit default swap rates has surfaced and according to Reuters, those yields reached the highest levels in more than a decade, with some analysts suggesting the prospects of a technical default are no longer insignificant...[MORE]
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