Gold surged higher yesterday, and this morning it broke above $2,050 to hit its highest level since early May. This was just after gold made a fresh all-time intra-day high, just above $2,080. It’s now possible that gold is on course to take out its record closing high of $2,070 from August 2020.
This rally in precious metals has been a long time coming. It could be that the multi-year consolidation is now over, triggered by a sharp pull-back in bond yields and dollar weakness. This morning the US 10-year Treasury yield fell to 4.28%, a long way below the 5% level hit just over a month ago, as investors continue to speculate that the next interest rate move from the Federal Reserve will be a cut. The CME FedWatch tool predicts that the first 25 basis point reduction could happen by Spring next year. There’s good news for silver bulls as well. Yesterday silver broke above $25, and while it has pulled back since then, sell-offs have been shallow so far, indicating buyer interest.
Again, it will be important for gold to hold above $2,000 on any future pull-back, while $24 per ounce is the key support level for silver. The MACD for gold on the 4-hour chart isn’t particularly stretched to the upside, so there’s still room for this rally to continue. But there’s always the risk of a sharp downside move to try and unseat those riding the bull. In particular, longs should keep an eye on US Treasury yields and the dollar, as a rally in these could test the downside pattern.
This rally in precious metals has been a long time coming. It could be that the multi-year consolidation is now over, triggered by a sharp pull-back in bond yields and dollar weakness. This morning the US 10-year Treasury yield fell to 4.28%, a long way below the 5% level hit just over a month ago, as investors continue to speculate that the next interest rate move from the Federal Reserve will be a cut. The CME FedWatch tool predicts that the first 25 basis point reduction could happen by Spring next year. There’s good news for silver bulls as well. Yesterday silver broke above $25, and while it has pulled back since then, sell-offs have been shallow so far, indicating buyer interest.
Again, it will be important for gold to hold above $2,000 on any future pull-back, while $24 per ounce is the key support level for silver. The MACD for gold on the 4-hour chart isn’t particularly stretched to the upside, so there’s still room for this rally to continue. But there’s always the risk of a sharp downside move to try and unseat those riding the bull. In particular, longs should keep an eye on US Treasury yields and the dollar, as a rally in these could test the downside pattern.