Since our last market update gold has been somewhat active but still trading within a tight range; or what is now considered to be a tight range. Gold has traded as high as $3,409 and as low as $3,323 and now stands at a crossroad. The move up to $3,400 hundred was led by confusion on Swiss gold being tariffed, gold kilo premiums skyrocketed on the news of tariffs. Kilos that usually go for a few dollars over spot were seen at premiums of $10-$30/oz. Once it was clarified that gold bars would not be tariffed the fear trade on gold was reversed and the market stabilized closer to $3,330. While looking at a chart it is very evident that the bulls have been protecting the $3,300 level and with gold trading around $3342 at time of writing, a decision must be made. If the bulls are successful in protecting that level once again, a move up to $3,400 should be the next play, although it will be a bit of a grind and not a straight up movement. Should the bulls be unable to hold there, the market should test down to $3,280, then potentially a $3,250. At those levels on the downside there should be some support, as there has been the last time we tested down.
Silver sits in the very same boat as gold, it’s been trading in a tight range. The high since our last update was $38.73 and the low was $37.50 for a range of $1.23. The Gold/Silver ratio has also come back into check with it ranging from about 89:1 – 86.76:1 since our last update. The big support on silver seems to be at the $37.50 but the market has been oscillating between $37.80 and $38.20 for some time now with activity building at those levels. If gold can hold and make its way up to $3,400, that should take silver back up to the $39 level easily, but silver is now hanging on to its big brothers back for guidance.
There is chatter amongst traders that a rate cut from the Fed is almost guaranteed next month. Slashing rates would make interest bearing assets less attractive meaning gold would come to the forefront of investors, traders, and market participants minds. Usually, a cut also is accompanied by a weaker US dollar, which is again positive for gold, meaning higher prices. The Fed cutting rates also signals a potential worry for the US economy, again pointing market participants at safe-haven assets like precious metals.
If you’re interested in owning precious metals, be it physically or stored securely, allocated and segregated in a vault in North America, Europe, or Asia, please reach out to you Aurica Team for more information.