Gold has now had two attempts to break above $3,900 this week and has failed both times. Despite this, on both occasions, gold managed to post fresh all-time highs, hitting $3,895 on Wednesday and $3,897 yesterday. It feels as if it’s just a matter of time before it gets there.
Although, as has been noted repeatedly over the past month or so, the daily MACD continues to indicate that the market is overbought. This week has seen some evidence that traders are aware of this.
There was a sharp selloff on Tuesday and again yesterday as gold pushed up to fresh record highs. This suggests that traders are getting a bit cautious with prices at current levels.
Having said that, both selloffs steadied after a few hours, giving traders the opportunity to buy in at cheaper levels. Of course, that’s a strategy that has worked rather well in the stock market. But it can be extremely dangerous in commodity markets, which have very different drivers.
Source: TN Trader
Yet again, silver mirrored gold’s moves and experienced similar selloffs this week in terms of timing, although the pullbacks were more violent. Yesterday afternoon, silver briefly broke above $48 an ounce before sellers flooded in to drive the price back down below $46. This $2 drop (over 4%) happened in little more than an hour.
Since then, silver has managed to make back a decent proportion of those losses. But traders should expect to see more of these volatile moves as the MACD continues to push higher into overbought territory.
