Gold and silver drop against stronger USD, oil outperforms on stimulus talk

Both gold and silver prices retrace off the highs as bull trend technical overview stalls, oil outperforms thanks to stimulus talk.

Gold&silver Source: Bloomberg

GOLD: Stalling at the highs as risk-off event takes some shine off the precious metal

Although most of the pair’s technical indicators are still flashing green (especially on the weekly chart), from a daily standpoint it has taken a dent stalling at the highs following a risk-on scenario yesterday that hurt safe haven products such as the yen and gold. Furthermore, Rosengren’s interview has taken rate cut expectations out of the Fed back down, and taking some shine off the non-yielding precious metal. Other factors are still in play however, including geopolitical tensions that have failed to subside, central bank demand, and (thus far) trade risks that still haven’t abated. Fed minutes tomorrow and Powell’s speech on Friday will be crucial for the US dollar directly, and for safe haven assets indirectly.

GOLD Source: IG charts

GOLD Source: IG charts

SILVER: Mimicking gold as greenback strength takes the pair back down off the highs

As with gold, the pair’s price here mimicked its precious metal cousin in falling off recent highs with the US dollar outperforming in the FX market and denting commodities including precious metals in the process. The pair’s bull trend technical overview continues to stall at the highs with more indicators turning neutral, and with the pair’s price no longer above all its main short-term moving averages. Institutional traders were quick to reduce longs and increase short positions last week taking the bias a couple percent lower, but overall remain majority long at 63% and well off retail bias of an extreme long 88%.

Silver Source: IG charts

Silver Source: IG charts

OIL – US CRUDE: Stimulus talk aids demand for oil prices though slight bear trend channel still holding

Taking crude’s price higher has mostly been down to demand side factors what with recessionary fears rising and outlook for the energy commodity weakened. And hence talk of stimulus and tax cuts certainly aided oil’s price in rising to cross above both its 50-day and 200-day moving averages, and with the former crossing above the latter in the process. Its weakened bear trend line is barely holding now, and with the channel on the verge of being breached. But the catalyst has been a classic risk-on event, and hence any dent in risk appetite would make it prone to retracement. Retail traders aren’t complaining however, reducing retail bias by 7% on long profit-taking while institutional bias remains at an extreme long 77%.

Oil Source: IG charts

Oil Source: IG charts


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