Top Story

Precious metals shine

Gold’s sharp recovery from December continued in the first week of 2018, though it lost some steam as mixed-bag US economic data provided some support for the dollar. Still, a couple of bucks shy of $1320, gold was trading at its highest level since September at the time of this writing. September was also when last year’s high was made at $1357. This level is now within sight and we expect gold to breach it in the coming weeks, so long as the bulls don’t lose support at $1300 again. Gold’s advance has been supported mainly by weakness in the US dollar rather than stock indices, for the latter has been hitting new all-time or multi-year highs in a number of advanced economies. Thus, for gold to maintain its bullish bias, it will need the dollar to remain depressed. That being said, gold priced in other currencies – including the euro and pound – have also been pushing higher, pointing to internal strength. It is possible that Bitcoin’s apparent desire to stay below $20K has seen some funds flow back into the original fiat currency alternative. Another reason is that some market participants may be anticipating a long-overdue correction in equities, and are mitigating those risks by buying protection in the form of gold, a perceived safe haven asset. Whatever the reason, the sharp increase in net long positions in gold and silver as highlighted by the CFTC’s positioning data certainly suggests that the price upsurge in precious metal prices has been caused above all by speculation. As a result, there is scope for prices to fall back should these speculators reduce their long exposures again. Like gold, silver has also been on trending higher in recent weeks. This metal has managed to break above its 50- and 200-day moving averages after forming a higher low around the key $15.65 area in mid-December, as we had previously highlighted the possibility. Silver now needs a higher high above $17.45 in order to confirm the trend reversal. 

Source: eSignal and FOREX.com

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.