Gold was little changed in early trade this morning, but picked up sharply as the session progressed, On Friday it had its biggest one-day sell-off since May by my calculations. Gold fell by as much as 3% and briefly broke below $4,200 on Friday evening before buyers stepped in to stabilise prices.
Yet despite the brief pullback, gold continues to trade at elevated levels, maintaining its status as a preferred safe-haven asset, given current global uncertainty and shifting risk sentiment. But a look at the daily MACD shows that it remains extremely overbought.
It could be that Friday’s pullback will be enough to encourage fresh buying. But it feels as if gold will struggle to make solid gains from here, unless the MACD gets down to more reasonable levels. This could be helped by more of a sell-off, or a long period of sideways consolidation. Time will tell how things pan out.
Source: TN Trader
Silver exaggerated gold’s move on Friday. From high to low silver fell the best part of $4 (7%) with prices closing in on $50 per ounce, back to where it began the week. As with gold, as conditions improved around the US-China trade war, and as investors toned down their fears about bad loans and fraudulent behaviour across the US banking sector, the selling pressure eased up.
Prices now appear to be consolidating. But as with gold, the daily MACD is very stretched to the upside. This needs to unwind to give silver the best chance of rallying further to fresh record highs. While prices could rally from here, it seems more likely that silver needs to pull back further, or at least continue to consolidate for several weeks, before it can rebuild a store of upside momentum.
