Gold and silver ratio higher as silver bulls capitulate

  • Gold hp, silver down, eyes on the Fed and Dollar.
  • ECB failed to deliver in a meaningful way and euro stays firm.

Precious metals were mixed on Thursday, as investors weighed the likelihood of a Federal Reserve rate cut next week despite positive US data while balancing up the risks associated with the European Central Bank's announcements earlier today.

Gold spiked to a high of $1,524.24 on Thursday, travelling from a low of $1,489.39 but settled back to just a touch below the psychological $1,500 handle. Silver, meanwhile, failed to maintain a bullish posture and was way down from a high of $18.46 to print lows of $18.00 and skid along the bottom of the range for the best part of the US session. The gold and silver ratio was higher by 0.25% having climbed form a low of 82.23 to a high of 83.41 as silver struggles to maintain the pace of corrections of late. 

ECB, Fed, US CPI all playing their part

As for futures, December gold on Comex added $4.20 an ounce, or 0.3%, to settle at $1,507.40 an ounce while silver for December delivery settled 0.04%, at $18.177 an ounce. Meanwhile, the Dollar is now the central focus with the Federal Reserve approaching fast. The European Central Bank was unable to pull any punches, doing the bare minimum to spur growth and calling on more fiscal stimulus.

Nevertheless, the euro was heavily offered before bouncing back sharply and the US Consumer Price Index wasn't enough to support the Dollar despite coming in at the best level in 10-years, marginally beating market expectations. However, being a lagging indicator and the Fed more concerned about importing an economic recession and global growth, markets continue to expect a rate cut at next week's meeting. 

"US core (ex-food and energy) consumer price inflation for August has posted the third consecutive 0.3%MoM reading, above the 0.2% figure expected by the market. This has pushed the annual rate up to 2.4%YoY, the highest reading since September 2008 while the 3-month annualised rate is now running at 3.4%,"
analysts at ING Bank explained. 

"Inflation pressures are building just at the time the economy is showing signs of slowing. It is the latter that will drive Fed policy with another 25bp rate cut expected next week," analysts at ING Bank argued. 

"With the dollar remaining firm and other central banks embarking on policy loosening the Federal Reserve will cut rates 25bp next week and we expect additional policy loosening in December and 1Q20."

Gold levels

The 21-day moving average was pierced but only momentarily and there has been a bearish pin bar left on the daily chart, signalling further downside to follow. Indeed, the price remains below the 23.6% Fibonacci (Fibo) retracement of the July lows to recent swing highs as well as trading below the psychological 1500 handle. Below the 1,480 target, 1,478 comes as the 13 August volatility spike low which guards the 19 July swing highs at 1,452.93. Bulls will need to get back above 1,550 which then guards prospects for 1,590 as the 127.2% Fibo target area. 

Silver levels

Silver is holding above the 21-day moving average, although there are prospects of a drop from here considering the 18.50 levels caps on bullish attempts. Eyes will be on the 17.50s as being the 50% Fibo of 2016 highs to recent swing lows. 



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD struggling to hold onto 1.10 as USD gains ground

EUR/USD is trading close to 1.10, as the US dollar gradually advances. Two White House advisers expressed contradicting accounts of US-Sino trade talks, causing confusion. Germany refrained from adding fiscal stimulus.


GBP/USD trades around 1.25 as EU pours cold water on Brexit hopes

GBP/USD is trading around 1.25, off the two-month highs of 1.2582 as EU officials cast doubts about the seriousness of the new UK proposals on Brexit. 


USD/JPY drops to one-week lows on trade war headlines

The USD/JPY fell during the American session following reports that the Montana Farm Bureau said China's delegation has canceled a planned trip to view US agriculture.


Gold climbs further beyond $1500 mark, lacks follow-through

Gold edged higher for the second consecutive session on Friday, albeit remained well within a familiar trading range held over the past two weeks or so.

Gold News

Top 3 price prediction Bitcoin, Ripple, Ethereum: Ethereum points to the Moon as Bitcoin takes a break

ETH/USD exceeds $220 and is bidding to lead the market. Bitcoin sets a bear trap and recaptures $10,000. XRP stalls between technical levels and fails to consolidate $0.30.

Read more