Gold & Silver Daily Market Recap: August 20th, 2012

Spot gold edged higher to its top end of its trading range to $1621 as there were renewed hopes of QE3 with the Fed minutes being released this week.

The yellow metal was in rally mode touching a high of $1622, the metal has traded in a much tighter range within the last few weeks with the FOMC minutes on tap for Wednesday.

"Technically speaking, both gold and silver are trading in tighter ranges of late with the market perhaps gearing up for a more significant move, perhaps in early September" said Standard Bank.

The metal has resisted attempts to move lower for now with good support coming in at the $1600 level. The euro traded higher with reports that the European Central Bank is considering setting limits for how far bailout country bond yields will be allowed to diverge from German Bunds. This helped push the euro higher to 1.2370, but has since slid back off of its highs.

It was quiet day for U.S data with no reports for the beginning of the week. Federal Reserve Bank of Atlanta chairman Dennis Lockhart gives a press conference as to how the Fed observes the current US economy and the value of USD. His comments may determine a short-term positive or negative trend. The week is followed by the Fed minutes, Existing home sales, and Initial jobless claims. Despite the rally the market is in for a bumpy ride.

China held off of lowering interest rates despite their own slowing economy, this was slightly disappointing to the market. China's demand was 144.9 tons in the second quarter, down a huge 43% from the first quarter, so even if China's second-half demand matches the first, it will total about 800 tons for the full year, only 29 tons more than it did in 2011. Gold demand was buoyed in China over recent years by a rapidly expanding economy and high inflation. As inflation has fallen and the economy has slowed, so have gold sales.

Spot silver had its best day in almost 3 weeks, pushing through $28.60 to touch an intra-day high of $28.80. The gold silver ratio collapsed through support of 56.90 and looks poised to trade lower to touch its June low of 54.70. The dual role metal has outperformed gold over the past 3 sessions. Stronger equity markets and the rally in platinum have helped the metal higher.