On Wednesday Fresnillo, the precious metals mining company, will give the markets an update. The year 2014 has been tough with issues revolving around pay and conditions at its silver mine in Mexico dampening expectations. The shares currently sit up just 1.86% on the year, having at one point traded at £10.37 up almost 38% on the year.
The link between precious metals and the state of global health has become less tangible over the last few years. The state of equity markets after US mortgage-backed securities caused panic saw retail clients and institutions alike charge into holding gold. It may be the unwinding of all this exposure which has seen global events and military intervention triggering diminishing movements from both gold and silver.
It looks like the growing concern over the German economy, and the implications for the rest of the eurozone, has finally given the precious metals market the boost it needs.
Once again the threat of testing the 700p level was enough to entice investors back into Fresnillo. The strength of this current bounce in the gold and silver prices will go a long way in dictating how much of a move higher the company can make. With the 50-, 100- and 200-day moving averages all converging around the 850p level this would appear to be the limit of short-term expectations.