Precious metals, gold and Silver taking up their safe haven appeal


  • Spot Gold was trading at $1,502, higher by 0.92%.
  • The Gold and Silver ratio is down 1.83 % at the time of writing.
  • Markets will also be looking to the Federal Reserve meeting this week. 

Precious metals have perked up again at the start of the week, especially noted in futures whereby Gold futures ended at their highest price in just over a week following the attack on Saudi Arabian oil production. Spot Gold was trading at $1,502, higher by 0.92% having travelled from a low of $1,488.75 to a high of $1,512.14 while silver has jumped 3%, currently trading at $17.91 having moved higher from a low of $17.41 to a high of $18.00.

If it were not for the strength in the Dollar, precious metals would be much higher.  The Gold and Silver ratio is down 1.83 % at the time of writing, lower from the highs of 85.35 to a low of 83.77, making back 50% of the last week's rally. As for futures, December gold on Comex added $12, or 0.8%, to settle at $1,511.50 an ounce, after registering on Friday a weekly decline of 1.1% while Silver for December delivery put on 45.7 cents, or 2.6%, to settle at $18.026 an ounce, following a weekly loss of 3%. 

Focus will be on the Fed 

Markets will also be looking to the Federal Reserve meeting this week. "But, with the market nearly fully pricing in a 25bp cut for this meeting, the focus will likely reside on the distribution of the dot plot as June saw divided committee, analysts at TD Securities argued.

"With little pushback from Fed members for another cut following this one, we continue to see room for the signalling of another cut in 2019. Further, markets will watch Powell's statement for any mention that the Fed will do what is 'necessary to sustain expansion', which was previously interpreted as a dovish acknowledgement of the need for further cuts, along with the potential omission of the 'mid-cycle adjustment' remark which was scrapped from Chair Powell's Jackson Hole speech."

Gold levels

The bearish pin bar and subsequent negative close at the end of the week painted a compelling bearish case on the daily chart, although the price, has so far, held up in the 1480s and has been unable to break and hold above the 21-day moving average, accumulated around a 38.2% Fibonacci retracement. On the downside, a 50% mean reversion of the late June swing lows to recent highs around 1470 that guards the 19 July swing highs at 1,452.93. Bulls have attempted space in the 1500s but they really need to get through the 1,550 level which then guards prospects for 1,590 as the 127.2% Fibo target area. 

Silver levels

Technically, Silver printed a fresh new low for the month at 17.39 on Friday following slide below the 21-daily moving average to below a 50% Fibo of 2016 highs to recent swing lows. However, safe-haven flows are supporting the precious metals and silver, in particular, has gained 2.5% into the close on Wall Street which opens prospects for a rerun of the 18.00 handle and trend line resistance which guards a run to the Sep highs of 19.64. 


 

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