Yesterday most commodities staged reversal days on the charts. Gold, silver, and copper have been market leaders and made new highs for the year yesterday morning. However, in late afternoon trading yesterday these leading commodities all sold off sharply. Commodities have soared higher since Ben Bernanke announced his quantitative easing program back on August 27th, 2010. All of these commodities have been very extended and overbought on the charts. China is also very likely to raise interest rates very soon and that would definitely curb the appetite for commodities. Since Monday the U.S. Dollar Index has bounced higher and we all know when the U.S. Dollar Index trades higher the commodity markets will usually deflate and trade lower.
Today the SPDR Gold Shares(NYSE:GLD), the iShares Comex Gold Trust(NYSE:IAU), and the iShares Silver Trust ETF(NYSE:SLV) are all trading lower by 1.60 percent. These market leaders look to be in corrective mode at this time. However, after an extended 7.0 to 10.0 percent pullback these leading precious metal names will likely present a buying opportunity again.
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