By Dr Jeffrey Lewis
Trading action in silver and gold were confined to a range as the Greek drama over obtaining the second €130 billion bailout from the so-called troika, IMF/EU/ECB continued. Even though the austerity measures — which were a condition for the loan — were approved in the Greek parliament on February 14th, the EU now wants to exercise more scrutiny before extending the money.
Greece needed the bailout package, plus €100 billion write-down on bonds held by the private sector, to meet a debt payment of 14.5 billion on March 20th. The EU has approved the package despite some members wanting to postpone a decision until after Greek elections in April.
Protestors burn buildings in Athens
Thousands of Greek citizens protested the austerity measures in Athens and some even participated in burning as many as one hundred buildings in the nation’s capital, as lawmakers voted to approve austerity measures. More protests have been planned.
The measures included cutting 15,000 public sector jobs, cuts in pensions, and a 22 percent cut in the minimum wage which sparked riots in Athens. Finance Minister Evangelos Venizelos stated that, “The choice is not between sacrifice and no sacrifices at all, but between sacrifices and unimaginably harsher ones.”
Range trading in Gold and Silver ended on Greek news
In the midst of uncertainty over the Eurozone, precious metals have seen an extended period of range trading for the past several weeks, between the $1704.54 and 1762.97 level in spot gold and the $32.97 and $34.50 level in spot silver. A break outside of these ranges would be expected to result in a subsequent move in that direction equal to the width of the range.
Gold is currently trading comfortably above its 200-day moving average that currently sits at the $1,661.05 level, while silver is positioned just below that key indicator which now reads at the $34.83 level.
As the European situation continues unfolding, precious metals could breakout in either direction, especially if events lead to more violence and a popular uprising.
