Gold’s Upside Attempt Being Scuppered by Silver

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Published: Jun 24, 2020, 14:32 GMT+00:00

Golds break to a fresh 8 year high has been scuppered by silver's inability to join the rally. As a result we have seen profit taking from recently established longs. Overall we maintain a bullish outlook for both metals.

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XAUUSD – Spot gold
XAGUSD – Spot silver
XAUXAG – Gold-Silver ratio
GLD – SPDR Gold Shares ETF
GDX – VanEck Gold Miners ETF

Gold’s break to a fresh 8 year high has been missing one key ingredient for it to proper challenge the next key resistance at $1800/oz. Silver’s inability to break above $18/oz despite the tailwind from gold has triggered some weakness across these two metals from sellers of recently establish longs, especially in silver. The gold-silver ratio has spiked back above 101 while platinum, another metal that often enjoys gold’s tailwind, has seen its discount to gold temporarily reach $970/oz.

The underlying fundamentals have not changed and we still see gold trade higher to challenge $1800/oz and beyond. But in order for the rally to have legs we need to see demand for the minor metals pick up as well. That has clearly not happened yet according the latest move.

Silver’s failure with support from gold to build a base above $18/oz has triggered profit taking. (Char source: Saxo Group)

As a result traders have for now abandoned attempts to push gold higher to $1800/oz (Chart source: Saxo Group)

Platinum often enjoys some ‘catching up’ buying from relative value players. So far that has not happened with the discount to gold instead reaching a fresh record at $971/oz. (Chart source: Saxo Group)

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

About the Author

Ole Hansencontributor

Ole Hansen joined Saxo Bank in 2008 and has been Head of Commodity Strategy since 2010.

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