Top Story

Precious metals ease back but outlook remains supportive

Thanks to further improvement in risk appetite, precious metals were easing back after yesterday’s big rally that saw gold surged through $1500 for the first time in six years and silver took out $17.00. However, this could just be a hiccup as the fundamental backdrop remains supportive for precious metals.

The bond market sell-off has paused for breath, allowing yields to bounce a little. The slightly firmer yields have helped to undermine the noninterest-bearing metals today. Also weighing on prices is the rebound in stock markets, reducing the need for safe-haven precious metals.

However, nothing has changed fundamentally with regards to the US-China situation, or the global economic outlook with today’s positive trade figures from China coming in on the back of very weak German industrial data from the day before. Although the probabilities of a further 25 basis point cut in the Fed’s September meeting as implied by Fed fund futures may have fallen from as much as 85%, the markets are still pricing in a 76.5% chance of a cut. Further rate cuts should help to boost precious metals.

From a purely technical point of view, silver’s pullback today comes as no surprise given the extent of yesterday’s outsized-rally. The metal remains in a bullish trend for now, so we continue to prefer looking for bullish signs to emerge around support than bearish near resistance. Key support comes in around $16.65, or slightly lower. We will maintain out bullish view on the metal until and unless it forms a key reversal.


Source: eSignal and FOREX.com.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account