In today’s fast-paced world, most folks want news and analysis that cuts out the fat and gets straight to the point. So here goes my two-minute bull and bear cases, at present, for the gold (GCJ26) and silver (SIK26) markets.
-
Geopolitics are fully bullish for the safe-haven metals. The Middle East war is playing out and it’s very likely there are still some surprising developments lurking around the corner.
-
The longer-term technical postures for gold and silver remain significantly bullish. Both markets have seen their near-term chart postures also improve over the past few weeks. This will continue to invite the chart-based speculators to the long side.
-
The U.S. stock indexes have seen their price uptrends stall out and trading has turned wobbly, amid elevated trader and investor risk aversion. That’s a positive for the safe-haven metals, from a competing asset class perspective.
-
Investor and commercial demand for silver, and investor and central bank demand for gold, remains solid.
-
The moves by major economies to stockpile rare-earth minerals continue to support the gold and silver markets — and especially silver.
The war in Iran, arguably the biggest and potentially most destabilizing geopolitical event in decades, has not significantly moved the needle on gold and silver prices. When a market cannot rally on fresh, bullish fundamental news (like the Iran war for metals), then that’s a sign the bulls are exhausted and the major markets have run their course.
The surging U.S. dollar index ($DXY) that hit a more-than-3.5-month high this week is a bearish outside-market element for the two precious metals.
U.S. Treasury yields are on the rise due to inflation concerns.
The inflation worries have prompted the marketplace to dial back U.S. interest-rate-cut expectations. Same goes for other major central banks such as the European Central Bank and the Bank of England.
Buying gold and silver is “a crowded trade.” It’s likely the smart money has taken its profits in the metals and has moved on to seek out profits in markets that are not in very mature bull runs.
