Precious metals extend gains on falling yields
Fawad Razaqzada June 3, 2019 12:11 PM
Gold and silver have extended their gains today, boosted largely by ongoing “risk-off” trade in the equity markets. But the noninterest-bearing precious metals are finally responding positively to falling bond yields as well. With the German 10-year dipping below its 2016 low earlier today, investors are clearly anticipating the ECB to deliver a dovish assessment of the Eurozone economy and interest rates on Thursday, amid trade and Brexit concerns. Meanwhile, US 10-year yields have weakened to their September 2017 levels. In fact, US yields have been falling more sharply compared to German equivalent yields of late. This is why the EUR/USD has managed to climb back above the 1.12 handle, helping to push the Dollar Index lower as traders start aggressively pricing in (at least) one rate cut by the Fed this year.
Silver breaks bear trend
With safe-haven gold making notable gains against the dollar, silver has also risen but done so more quietly given ongoing concerns about demand for industrial metals from China. Nonetheless, silver has now managed to break above its bearish trend line that had been in place since March. This is a potentially bullish development. The point of the breakout is around $14.60, a level which needs to hold as support moving forward to keep the bulls in the game. At the time of this writing, though, silver was testing a more significant level near $14.80, the lower bound of the $14.80-15.00 resistance range. If it wants to go higher, the bulls will have to reclaim this zone soon…
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