By Barry Stuppler - MintStateGold.com
Gold increased in value today by $6.20, closing at $1,542.30 on average volume. Some U.S. economic data was released today (See Below) that showed a slowing of the U.S. economy. The dollar rallied and crude oil is up slightly today. The term for gold trading this week is 'range bound', as we have excellent support at $1,533 and resistance at $1,550. I really like the base that gold is building, as it will support the next break out above the recent high of $1,577.00.
One of the benefits of the U.S. Dollar’s declining value (down 9.9% in the past 12 months) is it boosts overseas sales of American manufactured products. The U.S. trade deficit narrowed in April, reflecting a plunge in auto and oil imports combined with record exports. The gap shrank 6.7 percent to $43.7 billion, the lowest since December. Commerce Department figures showed today that purchases of goods from Japan dropped by a record $3 billion in the aftermath of the earthquake and tsunami.
Silver closed today at $37.48, up $0.97 an ounce on active oversees trading. Silver appears to have taken back the leadership role from Gold in the precious metal sector. Volume is picking up and as inflation or deflation news breaks, Silver reacts quickly with a 1% or greater move. I believe the likelihood of any major correction in the Silver price is behind us, and after continuing to build a base in the $35 to $39 area, Silver will break through the $40 level within the next 30 days.
The real question is, how best to profit from the next major move higher in Silver and Gold? I will cover the best option in Monday’s June 13th Weekly Precious Metal & Rare Coin Report being emailed out and posted here on the website. If you are not receiving an email of the Weekly Market Report and would like to, just let us know.
Today's Other Important News:
U.S. initial jobless claims unexpectedly rose last week, a sign that the labor market is struggling to gain traction. Jobless claims increased by 1,000 to 427,000 in the week ended June 4, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 419,000, according to the median forecast. The number of people on unemployment benefit rolls, and those receiving extended payments, decreased.
On the economic front, wholesale inventories rose less than expected in April, but seemed enough to boost stocks and investor confidence. Inventories rose 0.8 percent (economists’ forecasts were 1.0 percent) to $447.2 billion in the first month of the second quarter. Automotive inventories, one of the biggest categories, fell 1.3 percent. Wholesale inventories have increased 16.6 percent since hitting a low in September 2009.
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