The US market has returned from the long Presidents’ Day weekend to find all four precious metals breaking down. Seemingly friendly news for the precious metals out of Europe was not enough to combat technical selling and developments in China. In Brussels, the Greek Finance Minister refused to request an extension of his country’s existing bailout program. This broke down a potential agreement on debt restructuring between Greece and its creditors. Geopolitical concerns were also at the fore in the Crimea region with the cease fire between Ukraine and Russia on shaky ground after reports of renewed exchanges of fire. Neither of these factors could attract safe haven bids for gold and the precious complex though.
Gold instead tumbled to a six week low on concerns that Chinese demand will fall for the upcoming Lunar New Year holiday. Volume on the Shanghai Gold Exchange dropped today to the lowest in a year and the Chinese market will be closed for five sessions starting Wednesday. Gold broke below its 100 day moving average for the first time since early January and the next critical area to watch for is $1,180. Silver followed gold’s trajectory lower and closed below its own 100 day moving average for the first time in about a month as well.