Gold stabilised overnight following yesterday’s sharp sell-off. Once again, investors rushed to exit perceived safe-haven trades after the US and China revealed the significant progress made in their first round of trade talks.
It has only been three weeks since gold hit a record high of $3,500 per ounce. This means that establishing new areas of likely support, and other significant levels, is a work-in-progress. Yet it looks as if $3,200 is establishing itself as the first area to watch on future pullbacks.
Gold has only tested it twice so far. But it has held above here on both occasions.
Source: TN Trader
Meanwhile, silver’s performance yesterday was noteworthy. While it sold off hard in the first hour of the European trading session, it subsequently recovered, having bounced back over $32 on all pullbacks.
It rallied sharply higher in this morning’s Asian Pacific session, but subsequently pulled back from its best levels. It went on to slice below potential support at $33, and then struggled to give a coherent response following the latest update on US inflation.
This showed an unexpected improvement, with Headline CPI dropping to 2.3% year-on-year, from 2.4% last month. The news triggered a spike lower in the US dollar on the somewhat spurious interpretation that the data makes it more likely that the Federal Reserve can now rush out and cut interest rates.
Meanwhile, could it soon be silver’s turn to shine? Maybe. Although it has had many opportunities to rally and challenge old record highs, yet has shown little inclination to do so, so far. It’s chances will improve as long as it holds above $32 on all pullbacks.
