In today’s fast-paced world, many people want news and analysis that cuts the fat and gets straight to the point. So here are my two minute bull and bear cases going for the gold (GCJ26) and silver (SIK26) markets right now.
-
Geopolitics is booming for safe haven metals. The war in the Middle East is ongoing and there is a high probability that there are still some surprising developments around the corner.
-
Long-term technical positions for gold and silver remain significantly higher. Both markets have seen their near-term chart positions improve over the past few weeks as well. This will continue to invite chart-based speculators to the long side.
-
U.S. stock indexes saw their gains stalled and trading stalled amid high risk aversion among traders and investors. This is positive for safe haven metals, from a competitive asset class perspective.
-
Investor and business demand for gold, and investor and central bank demand for gold, remain steady.
-
The move by major economies to stockpile rare earth minerals continues to support the gold and silver markets – and silver in particular.
The war in Iran, arguably the biggest and potentially destabilizing geopolitical event in decades, has not significantly moved gold and silver prices. When a market can’t rally on fresh, fast-moving fundamental news (like Iran’s war on metals), it’s a sign that bulls are tired and major markets have run their course.
The U.S. dollar index ($DXY), which hit a more than -3.5-month high this week, is a bearish element out of the market for the two precious metals.
US Treasury yields are rising due to inflation concerns.
Inflation worries have forced the market to dial back expectations of a US interest rate cut. The same goes for other major central banks such as the European Central Bank and the Bank of England.
Buying gold and silver is “a crowd.” It is likely that the smart money has taken its profits in metals and is looking for profits in markets that are not in very mature bull runs.
