There was not much good news yesterday, and the markets meandered south shortly after the opening. Some earnings disappointments kept a limit on any rebound attempts while slumping home prices added to negative sentiment.
The metals headed south again as it appeared that hedge funds had lightened their holdings. Oil slipped as well as did commodities in general. Not helping matters was a crummy report on Britain’s economy as it was reported that the GDP dropped 0.5% during the last quarter.
So what caused the turnaround?
After all the bad news was out, and the commodities markets had closed, the focus remained on the only positive of the day, which was a rise in U.S. consumer confidence that was more than forecast indicating that the jobs outlook had improved.
That was all it took; the markets turned and raced out of the basement to close around the unchanged level. Not bad considering that this day could have ended up very poorly for the major indexes.
At this moment, global economic uncertainty has not been a news factor. While the U.S. recovery has been slower than hoped for, no serious adverse reports have surfaced to cause anxiety. I believe that complacency and overall market optimism have been a factor as well to push the metals off their lofty levels.
I believe that precious metals along with commodities should be a part of anyone’s portfolio, as long as these asset classes remain in an uptrend and don’t violate their respective trailing sell stops.
We are living in a volatile world. While all appears calm right now, uncertainty can appear in no time at all, which can push the metals back in other direction. Remember, nothing matters until it does.