Gold ended Thursday's session little changed, despite another sharp drop in stocks. The DJIA plunged 1190 points, its biggest one-day point drop on record, yet the yellow metal ended up a mere $2.16.
It was the six consecutive daily loss in the Dow, which is now more than 4,000 points (13.7%) off the 29,594.20 record high that was set just two weeks ago. That means the DJIA is officially in a correction, and less than 2,000 points away from being in a bear market.
Nonetheless, gold was unable to sustain intraday gains and ended the session only slightly higher. This is likely attributable to mounting pressure from deleveraging; where investors sell profitable positions to cover margin calls stemming from stock market losses.
We saw a sizable correction in gold back in 2008 as the housing crisis morphed into a full-fledged banking crisis and stocks tumbled. I'm not expecting a 34% drop in gold at this point, but volatility is likely to be high as the desire for a safe-haven meets the headwind of deleveraging and broad-based pressure on commodities.
Even mounting expectations of a Fed rate cut and the attendant pressure on the dollar couldn't provide a sustained tailwind for gold today.
Silver remains under pressure within the recent range and approached the 100-day SMA at 18.56. A breach of this level would put the recent lows at 17.44/38 in play.
Platinum tumbled for a sixth consecutive session, breaching its 200-day SMA. The next supports to watch are 882.00 (05-Dec-19 low) and 863.50 (12-Nov-19 low).
Palladium jumped to a new record high today at 2875.50. Mounting global growth risks don't seem to be a deterrent in the Pd market at all.
As noted this week in the Zaner Precious Metals Report, "The trade seems to view the palladium market as the 'new gold,' with traders seeing it as having safe-haven and supply-shortage appeal."
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