Precious metals take a dive
Precious metals flew higher in the wake of yesterday’s Federal Reserve monetary policy announcement. There was a dovish surprise in that the US central bank’s FOMC indicated that they still expect to cut rates by 75 basis points this year, despite a recent uptick in inflation. The US dollar dropped sharply, giving dollar-denominated commodities a boost, while the prospect of lower borrowing costs boosted the attractiveness of holding gold as an asset. The move took gold to a fresh all-time high, breaching $2,200 for the first time. Silver rallied too. But while gold managed to hang on to yesterday’s gains in early trade today, silver pulled back after a positive start.
But everything changed mid-afternoon. Without an obvious trigger, the dollar suddenly surged higher while silver, and then gold, slumped. While gold remains above support at $2,150, it has given back a large chunk of yesterday’s post-FOMC gains. But silver is currently down around 3.5%, giving back all yesterday’s gains and more. There’s no obviously significant area of resistance, but it will be interesting to see if it can hold $24.50, around 20 cents below current levels. Could this be the shake-out which weeds out the weaker hands and sets the stage for a bigger rally? Or have we already seen the top this year for precious metals?
But everything changed mid-afternoon. Without an obvious trigger, the dollar suddenly surged higher while silver, and then gold, slumped. While gold remains above support at $2,150, it has given back a large chunk of yesterday’s post-FOMC gains. But silver is currently down around 3.5%, giving back all yesterday’s gains and more. There’s no obviously significant area of resistance, but it will be interesting to see if it can hold $24.50, around 20 cents below current levels. Could this be the shake-out which weeds out the weaker hands and sets the stage for a bigger rally? Or have we already seen the top this year for precious metals?
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