First, let's take a look at the technical analysis. As the chart below shows, gold is having trouble breaking through and holding $1625. Support levels to watch for gold can be found at $1605 and $1585. Although gold had trouble holding above $1625, gold could easily break through this level as the government looks less likely to pass a debt ceiling solution by August 2nd. It also looks inevitable that the U.S. will receive a credit downgrade, which should also be bullish for precious metals.
Much of what can be said about gold, can also be said about silver. Looking at the chart below, silver also has key levels of support and resistance. Silver has been struggling around $41 and support can be found between $38.50 and $39.50. Silver also has the added bonus of being an industrial metal, thus what can be said about silver, can't necessarily be said about gold.
Moving onto the supply and demand side of percious metals, gold miner Goldcorp Inc. (TSX:G; NYSE:GG) made waves on Thursday. CEO Chuck Jeannes believes that China could pass India in gold demand. He explained, "Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India. Now it looks like that could happen as early as the end of this year, and that’s while Indian demand is increasing." He also predicts that gold will reach $1700 an ounce by the end of this year.
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Disclosure: Long AGQ.