The major beneficiaries of the current derisking have been precious metals. Gold surged to a fresh all-time high overnight, having barged its way above $4,700 in the early hours of this morning.
Gold’s rally since the new year is a complete vindication for the bulls, and a slap in the face for those (like me) who have continually warned that the metal required more of a pullback and consolidation before it could push up to fresh highs.
Of course, the higher it goes, the bigger the possibility of a large downside correction. But timing is everything, so congratulations to all those traders who have managed to hang on for the ride. Don’t forget to book some profits.
Source: TN Trader
The same goes for silver, but times ten. While silver’s overnight rally was unusually subdued when compared to gold’s, it was more than enough to drive it to a fresh record high above $95 per ounce. Geopolitical uncertainty has boosted demand for both precious metals, just as they were taking off in a near-parabolic fashion. They have become the havens of choice for investors, and this has been bolstered by recent US dollar weakness.
Silver also has a strong back story. It is a relatively small market, at least when compared to gold, and stories of supply shortages and a short squeeze have added to the bullish narrative. In such situations, the obvious fact that it remains exceedingly overbought according to its daily MACD is not an issue – until it is.
So again, congratulations to all bulls who have ridden this to all-time highs. But be mindful of the rising risks up here.
