Silver pushing up against resistance
Gold was trading below $2,570 ahead of the Fed’s announcement. It topped $2,600 to hit a new intra-day record on news of the 50 basis point cut (bps) before reversing sharply and breaking below $2,550. Since then, it appears to have found a floor and has been pushing higher throughout the morning. Silver has traded in a similar, yet more volatile, pattern. The main difference between the two is that silver managed to exceed its post-Fed high today, while gold has not. The 50 bps cut was the high end of expectations. Prices of all risk assets swung wildly on the news, and it’s only since the Asian Pacific session got going that this steady upside move became established. The rate reduction has been dollar-negative, and so good for assets priced in dollars. Risk assets are also getting a boost from the FOMC’s quarterly Summary of Economic Projections which forecasts an additional 50 bps of cuts before the year-end. But yesterday’s volatility in the wake of the announcement should provide a warning. Prices rarely go up or down in a straight line for very long. Gold is in uncharted territory, so picking new levels of resistance relies on projections which have yet to be tested. But silver is currently pushing up against prior resistance around $31.35, with $32 beyond that. The next few sessions could prove to be a big test for the metal, which could see bullish sentiment take a hit on another significant pull-back.
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