During the last few articles we talked about the multiple factors that created a clumsy pressure on the price of gold and silver. Of all these factors, two seem to have the greatest impact on creating a negative market sentiment towards safe haven, gold and silver. This is dollar strength, a direct result of rising yields for US Treasury bonds and notes. From March 9 to 11, both metals strengthened because they gained value. After trading to an intraday low on Monday, March 8 of $ 1672, the next three trading days would take the precious yellow metal to an intraday high of $ 1739. The gains seen over three trading days were due to the weakness of the dollar, which contributed to declining treasury yields, as well as market participants actively buying the decline.
This is why the activity of gold and silver today does not respond so badly to the current dollar strength and rising yields. This is 180 ° of the reaction, and in some cases the overreaction is recently seen as the dollar, which has led to prices of ten-year notes falling for less sales and a higher return.
As of 14:47 EST, gold contracts are the most active Comex contract trading in April 2021 essentially unchanged. Gold futures are currently set at $ 1723, after taking into account the current profit of $ 0.50, which is an advance of 0.03%. At the same time, the US dollar index rose just over ¼ of one percent and is currently set at 91.66. This means that the dollar creates headwinds that are overcome by market participants actively buying the precious metal.
This can be clearly illustrated if we look at spot or physical gold prices through the eyes of the KGX (Kitco Gold Index). According to the index, spot gold is currently set at $ 1725 after today’s profit of $ 1.90 was taken into account. If we take a closer look, we can see that market participants are offering gold prices higher by $ 6.70 (+ 39%); in the case of spot or forex silver, which lost $ 0.19 in trading. Today’s price decline has driven the same catalyst, a combination of dollar strength that contributed seven cents from today’s decline, with the remaining $ 0.12 falling directly attributable to market participants offering the precious metal lower.
As reported in MarketWatch, Ross Norman, chief executive of metals daily, said: “It’s just about US Treasury returns again, with a fixed dollar exacerbating the problem for gold.” He also tempered his clumsy sentiment when he said: ‘It is encouraging that physical demand in Europe is fantastically good with supply chains being challenged, and there are many of the same in China where gold is now at a premium of $ 10 per tonne. we traded compared to London prices. the exchange traded fund’s demand is relatively weak. ‘
Even if it was equal, gold did manage to end the week with broad profits. Gold futures in April rose by about 1.3% this week and silver by about two ½%. For the past three consecutive weeks, the price of gold and silver closed below the opening price at the beginning of the week.
The biggest wind currently holding gold and silver in check is the continued rise in treasury yields. Currently, the ten-year note is trading at around 1.62%, just a few ticks from the recent price of 1.624%.
The bearish market sentiment that has recently been so pronounced as to gold and silver seems to be consolidating, which may indicate a short-term bottom. The fact that gold prices are above $ 1700 while trading $ 25 above the price point is impressive, given the rising battle that has boosted the strong sentiment in the market. An issue that is rather baffling is the shyness of gold in the face of an almost absent response to the adoption of President Biden’s US bailout law, which he signed yesterday.
On a technical basis, there are more bearish indicators than bullish. One of the most worrying technical indicators is possibly the three main moving averages used by market analysts to determine whether short-term, medium-term and long-term market sentiment is either bearish or neutral. In the case of all three moving averages, it is currently much higher than the current price, which is a strong indication that we are in an affirmative period. With much less weight, the fact that the recent correction has taken gold and silver prices very close to their 61.8% Fibonacci retracement. The dataset used to create the retracement began in mid-March when gold prices fell to a low of $ 1450 and then began a dynamic rally that closed in August, setting the highest price point for gold in the US. history of $ 2088.
On a technical basis, silver futures contracts did not do the same type of damage in terms of its moving averages, with the most active contract in May 2021 currently trading above the 200 and 100 day moving averages. The 50-day moving average, currently set at $ 26.50, appears to be the current resistance. Silver’s performance, which far outperforms that of gold, may well be due to the fact that this metal has an industrial component and demand, which supports the price of silver, as US stock markets continue to rise significantly. trades. .
Use this link for more information about our service.
I wish you, as always, good trade and good health,
Disclaimer: The views expressed in this article are those of the author and may not reflect the views expressed Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, not Kitco Metals Inc. or the author cannot guarantee such accuracy. This article is for informational purposes only. It is not a request to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept the blame for losses and / or damages arising from the use of this publication.