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PM Bulletin: Gold
29 Jan 2016
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29 Jan 2016
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28 Jan 2016
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28 Jan 2016
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27 Jan 2016
AM Bulletin: Crude still driving equities
27 Jan 2016
PM Bulletin: Tomorrow’s FOMC meeting
26 Jan 2016
AM Bulletin: Equities slide on crude sell-off
26 Jan 2016
PM Bulletin: Silver chart
25 Jan 2016
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25 Jan 2016
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22 Jan 2016
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22 Jan 2016
PM Bulletin: Dovish Draghi triggers euro sell-off
21 Jan 2016
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21 Jan 2016
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20 Jan 2016
AM Bulletin: Stocks slide as oil slumps
20 Jan 2016
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19 Jan 2016
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19 Jan 2016
PM Bulletin: Crude oil - long-term charts
18 Jan 2016
Weekly Bulletin: China and oil weigh on equities
18 Jan 2016
PM Bulletin: Long-term gold bullion chart
15 Jan 2016
AM Bulletin: More woe from China
15 Jan 2016
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14 Jan 2016
PM Bulletin: Equities: bull or bear?
14 Jan 2016
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14 Jan 2016
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13 Jan 2016
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13 Jan 2016
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12 Jan 2016
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12 Jan 2016
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11 Jan 2016
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11 Jan 2016
January: Non Farm Payrolls Out Today
08 Jan 2016
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08 Jan 2016
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08 Jan 2016
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07 Jan 2016
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07 Jan 2016
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06 Jan 2016
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05 Jan 2016
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04 Jan 2016
 
 
 Monday 25 January 2016

PM Bulletin: Silver chart

 

 


Oil isn’t the only commodity that has hit multi-year lows recently. Base metals have also come under sustained selling pressure. Likewise, gold and silver have been in decline ever since soaring to record highs two years after the peak (or should I say trough) of the Great Financial Crisis. A combination of US dollar strength and the economic slowdown (most recently in China) has helped to bring the so-called “commodity super-cycle” to a grinding halt. The question now is if this sell-off has finally run its course. It’s tempting to believe it has and that some buying opportunities are appearing. However, we have to consider that the majority of major exchange-traded commodities are priced in dollars. Consequently, as the US dollar strengthens, these commodities become more expensive (relatively speaking). Any slowdown in economic activity also means less demand.



Gold has fallen around 14% so far this year while silver is down 22% over the same period. As we can see from the above chart, silver appears to be consolidating following the relentless sell-off between October and December last year. I’ve applied a Fibonacci Retracement from the 28th October high of $16.37 to the 14th December low of $13.66. If we just consider this snapshot then it looks as if the low may be in for the metal as it has crept higher over the last month. However, it keeps on running into resistance around the $14.30 area. This marks the 23.6% Fibonacci Retracement of the October-December sell-off. If silver can break and hold above here then further gains look possible. But another failure could lead to a retest of December’s low. That would open up the possibility of further losses. At the moment gold and silver are negatively correlated to the US dollar, so that’s another consideration. But if we were to experience another financial or geopolitical shock, then we can expect gold, silver and the US dollar to all move higher on safe-haven demand.


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Posted by David Morrison

Category: PM Bulletin


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