Gold and silver prices are trading slightly higher today. The yellow metal is playing with its psychological resistance from quite a bit of time and at the moment of writing this report trading at $1302 per ounce, so what does it suggest for P.Ms? To be precise we believe the precious metal sector lacks a catalyst to push prices to last month's 10 month high however readers should understand that in our report we often tend to focus on the long term movement in gold and silver and tend to ignore daily and really that's what differentiates us from being a typical trader in the market who tries to catch daily in the market and do not focus on the long term and surprisingly that's where the big money is made. However long term movement is hard to catch up on but these big movements are a major catalyst which has the potential to generate immense profit to one's portfolio. ok anyways let's continue- The risk appetite of investors is growing at a moderate rate, resilience in the equity market is also making gold less attractive and investors turning to the equity market. As gold prices have been dragged from it's 10 month high $1350 more investors are getting frustrated( Gold doesn't provide any dividend so investors profits solely relies on the price) as this resistance haven't been broken for more than 8 years.we believe once Gold will break below around $1275-1270 we may see a huge and ugly downfall.
Some analyst is expecting dovish Fed to be the spark to ignite a rally. once again all eyes will be on the fed as the meeting is scheduled next week along with the release of updated economic projections.we believe those who are expecting some out of this meeting in order to favor bulls would be greatly disappointed,the only thing which can work in favor of bulls is the weaker greenback but as the U.S economy still appears strong compared to the rest of the world this view also can't be swallowed. A stronger U.S. dollar index on this day is also working in favor of the metals market bears. The Brexit role will be featured in our next report.
Yesterday The U.S producer price index report for February gets released which came in at up 0.1% from January. The PPI report of 0.2% mom and CPI report also helped to increase U.S treasury numbers.
As a Goldsilver analyst trading and investing in P. Ms from over a decade we believe The market sentiment is one of the many strong indicator which no professional should overlook.we have mentioned this in our analysis numerous times that in order to protect yourself from the herd mentality you need to do the opposite whenever the extreme sentiment surfaces in market or the other safe option is to just wait for prices to confirm your bias either by breaking out to the upside or to the downside as it's really hard or nearly impossible to predict the top whenever a parabolic move came in any asset class but we do know that all parabolic move ends with the same result. Most investors believe that the market tops when people sell but it's just the opposite what they think because sellers always exist in the market no matter how strong the bulls are instead market finds a top when buyers run out of money, when there are no buyers left in the market then the exhaustion phase enter into the market. In other words, whenever Bulls and bears sentiment reached to there extreme aka everyone is or we often see a top or bottom in the market. However, you need to keep in mind that this is just a small part of the bigger puzzle-There are numerous reasons involved behind our sentiment towards precious metal market including the 3-page long term fundamental report.