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Dark clouds ahead?
29 Jul 2016
BOJ underwhelms – JPY soars
29 Jul 2016
PM Bulletin: BOJ look-ahead
28 Jul 2016
AM Bulletin: FOMC leaves rates unchanged
28 Jul 2016
PM Bulletin: Yen swinging wildly on stimulus talk
27 Jul 2016
AM Bulletin: Fed rate decision and FOMC statement in focus
27 Jul 2016
PM Bulletin: FOMC look-ahead (and Japanese stimulus talk)
26 Jul 2016
AM Bulletin: FOMC meeting begins today
26 Jul 2016
Platform Tours: CFD Trading - Check Open P & L
25 Jul 2016
PM Bulletin: EURUSD breaks below 1.1000
25 Jul 2016
Weekly Bulletin: Fed and BOJ in focus
25 Jul 2016
PM Bulletin: Sterling looking vulnerable again
22 Jul 2016
AM Bulletin: Stocks lower as oil weighs
22 Jul 2016
PM Bulletin: The EURUSD and the ECB
21 Jul 2016
AM Bulletin: ECB rate decision ahead
21 Jul 2016
PM Bulletin: ECB look-ahead
20 Jul 2016
AM Bulletin: Q2 earnings keep markets buoyant
20 Jul 2016
PM Bulletin: A look at the yen
19 Jul 2016
AM Bulletin: More records for US equities
19 Jul 2016
PM Bulletin: Precious metals pull back
18 Jul 2016
Weekly Bulletin: It’s all about stimulus
18 Jul 2016
PM Bulletin: European banks in trouble
15 Jul 2016
AM Bulletin: Sombre mood following Nice atrocity
15 Jul 2016
PM Bulletin: The BoE rate decision
14 Jul 2016
AM Bulletin: All eyes on Bank of England
14 Jul 2016
PM Bulletin: BoE Rate Decision in focus
13 Jul 2016
AM Bulletin: Equities drift lower after record US close
13 Jul 2016
PM Bulletin: Global indices pushing higher
12 Jul 2016
AM Bulletin: Equity rally powers on
12 Jul 2016
PM Bulletin: Fresh record high for S&P500
11 Jul 2016
Weekly Bulletin: The markets called, NFPs answered
11 Jul 2016
AM Bulletin: The calm before the storm; Markets await today’s NFPs
08 Jul 2016
PM Bulletin: Non-Farm Payroll look-ahead
07 Jul 2016
AM Bulletin: As the Fed turns dovish, the markets turn bullish
07 Jul 2016
AM Bulletin: Concerns continue as Sterling touches $1.27
06 Jul 2016
AM Bulletin: Markets open higher, weak UK Construction PMI data removes confidence
05 Jul 2016
Weekly Bulletin: Central Banks react to Brexit vote
04 Jul 2016
AM Bulletin: When Carney speaks, the markets listen
01 Jul 2016
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Gold and silver have both rallied spectacularly this year. The two were trading at multi-year lows in mid-December 2015 with many analysts predicting further losses to come. However, both put in double bottoms and these, together with a pull-back in the US dollar, set the stage for a dramatic turnaround.

It helped that 2016 kicked off with a rout in equities and other risk assets as the Chinese stock market slumped for a second time within six months. There was a further devaluation in the yuan which spooked markets and had investors rushing to safe havens. Even as stock markets recovered, gold and silver continued to rally. Finally, the four and a half year bear market was over. This had seen gold fall by 45% from its high of $1,920 in August 2011 and silver plunge 72% from just under $50 in April the same year to their respective lows of $1,046 and $13.64 in December 2015.

The rally in both metals appeared to stall in early May as both pulled back sharply from multi-year highs. However, last month’s referendum when the UK voted to leave the European Union saw both metals fly higher again. May’s sell-off now looks like nothing more than a healthy correction which allowed both metals to consolidate and create the foundations for another surge higher.

So what’s next for the two precious metals? Both have pulled back today with silver down over 2% at one stage. This sell-off has seen silver break below $20 – a level which appeared to be holding as support for the metal. That could still be the case if silver manages to close above here in tonight’s session. However, it does look as if investors are booking profits in the two metals following substantial gains. Looking at the charts it shouldn’t come as a surprise if both gold and silver pull back further over the summer.

Here’s the daily chart for silver. If $20 can’t hold, then we could see it head back down to support around $18

PM Bulletin

And here’s the daily chart for gold with major support around $1,300:

PM Bulleitn

As to the fundamentals, gold and silver should continue to make gains in the current zero-to-negative rate environment. Neither precious metal pays a yield or dividend unlike a bond or equity. However, this becomes less of an issue when over $10 trillion of sovereign bonds have negative yields and when investors are paying record prices for equities (US) in a low-growth deflationary world. On top of this we have the US Federal Reserve unwilling (or unable) to tighten monetary policy further with the Bank of Japan apparently considering adopting “Helicopter Money”.  If this situation persists, then precious metals should continue to find support going forward.

David: May’s sell-off now looks like nothing more than a healthy correction which allowed both metals to consolidate and create the foundations for another surge higher.


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Posted by David Morrison

Category: PM Bulletin

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