Zaner Spot Precious Metals Report
Spot gold edged to a new one-week high in earlier trading, but has since retreated to lower on the day. The yellow metal has been garnering support in recent sessions from a weaker dollar.
The dollar index is trading lower for a fourth consecutive session, amid hopes that the low-level trade talks scheduled for this week between the U.S. and China will lead to some easing of tensions. In addition, President Trump is once again attempting to exert some pressure on the Fed.
The President said on Monday that he is “not thrilled” with Fed Chairman Powell and the current pace of rate hikes. Minutes from last FOMC meeting come out tomorrow and may provide some additional clarity on Fed optimism about the economy, as well as any concerns they might have about trade tensions and rising emerging market volatility.
At this point, risk appetite is on the rise and we’re seeing some flows out of Treasuries and the dollar and into commodities and shares. As noted over the past several months, the precious metals have been trading more like commodities than safe-havens, hence the bid this week.
With the spec position in the gold futures market net short as of last week, it’s also time to put their feet to the fire. Those short from higher levels may be inclined to take some profits, while the market now tries and shake out some of the weaker shorts.
Spot gold has traded above the 9-day moving average at 1191.64 today. The 9-day has been a pretty consistently good selling level, with risk above the 20-day MA (1206.27 today). With gold already fading intraday, that 20-day looks to be well protected.
Upticks in the silver market remain comparatively lackluster ahead of the $15 level. The 9-day MA (14.90 today) provides intervening resistance.
The gold/silver ratio remains firm above 80, although well off last week’s high at 82.02.
An ascending wedge seems to be forming on the hourly chart for silver. This continuation pattern portends further short-term tests of the downside, keeping the dominant downtrend highlighted.
Platinum probed above its 9-day MA (797.15 today) before retreating into the range. All of last Wednesday’s sharp downside extension has been retraced, but only slightly more than half of last week’s near-$75 total decline has been recovered. Upticks are deemed to be corrective in nature.
Palladium remains comparatively well bid above $900. More than 61.8% of the latest leg down was retraced yesterday and price action today has been confined to the upper reaches of Monday’s range and above the 20-day MA.
The technical for palladium suggest that a bottom may be in place, but a period of consolidation may be needed, while the other precious metals try and find their footing.
Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Group LLC, unless otherwise expressly noted.