Precious metals ease back but outlook remains supportive
Fawad Razaqzada August 8, 2019 11:09 PM
Thanks to further improvement in risk appetite, precious metals were easing back after yesterday’s big rally
Thanks to further improvement in risk appetite, precious metals were easing back after yesterday’s big rally that saw gold surged through $1500 for the first time in six years and silver took out $17.00. However, this could just be a hiccup as the fundamental backdrop remains supportive for precious metals.
The bond market sell-off has paused for breath, allowing yields to bounce a little. The slightly firmer yields have helped to undermine the noninterest-bearing metals today. Also weighing on prices is the rebound in stock markets, reducing the need for safe-haven precious metals.
However, nothing has changed fundamentally with regards to the US-China situation, or the global economic outlook with today’s positive trade figures from China coming in on the back of very weak German industrial data from the day before. Although the probabilities of a further 25 basis point cut in the Fed’s September meeting as implied by Fed fund futures may have fallen from as much as 85%, the markets are still pricing in a 76.5% chance of a cut. Further rate cuts should help to boost precious metals.
From a purely technical point of view, silver’s pullback today comes as no surprise given the extent of yesterday’s outsized-rally. The metal remains in a bullish trend for now, so we continue to prefer looking for bullish signs to emerge around support than bearish near resistance. Key support comes in around $16.65, or slightly lower. We will maintain out bullish view on the metal until and unless it forms a key reversal.
Source: eSignal and City Index
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.