Gold and silver finishes higher despite outperforming greenback, oil plummets

Both gold and silver find a slight footing despite improved risk appetite and stronger dollar, oil plummets on both demand and supply side factors.

Silver Source: Bloomberg

GOLD: Finishing higher despite reduction in trade risks and an outperforming dollar

Gold has managed to find a slight footing at its current short-term support level despite a US dollar that outperformed in the FX market yesterday and safe haven dropping on an improved trade outlook (or at the very least a reduction in the risk of a worsening trade war). Easing likelihoods are dropping ahead of the Fed’s meeting next week, making the non-yielding asset ideally less attractive. And while tonight’s US CPI figures will be important for the pair’s USD aspect, it’s the ECB that’ll be important given any significant easing package would take bond prices higher, and a reduction in rates into negative territories placing preference on non-yielding assets like gold. The slight gains have given some retail longs a chance to take profit, with the bias dropping 3% in the process.

GOLD Source: IG charts

GOLD Source: IG charts

SILVER: A second consecutive day of small gains keeps its bull trend technical overview stalling

As with gold, its price has managed to find a slight footing following the retracement off the highs, and giving it a second consecutive day of gains, albeit small. Most of its technical indicators are back at neutral but managing to post gains against a strengthening greenback in the FX market is a positive touch. The lack of change hasn’t given enough opportunity for retail traders to do much, and hence the bias remains extreme long at 82%.

SILVER Source: IG charts

SILVER Source: IG charts

OIL – US CRUDE: Down but not out as weak demand and possible increased supply take energy lower

EIA posting a 6.9M deficit that was similar to API’s would normally take oil prices higher considering it’s another week of drawdowns whereby we’ve seen reductions in 11 out of the past 13 weeks, and an oil rig count that has failed to edge higher. However, demand side factors while buoyed by US-China goodwill gestures, has been hit by lower oil demand forecasts out of OPEC (and others) as troubled auto sales out of China and India show no signs of recovery. On the supply side, a potential easing on sanctions on Iran could result in plenty of barrels coming back online to the market, and easily offset shale troubles in the US. While the daily (and weekly) technical outlook remains consolidatory, upcoming fundamental events include the ECB’s effect on risk appetite and OPEC+ discussions of slowing demand today, and the Fed’s expected rate cut next week. Meanwhile, retail bias has shifted back to a heavy long 65% as range-trading shorts get out and longs get stuck.

OIL Source: IG charts

OIL Source: IG charts


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