Precious Metals: Gold approaching the psychologically figure of $1.300/oz

Gold and Silver prices rose 0.60% during the European session, trading at $1.293/oz and $15.70/oz respectively amid more dovish Federal Reserve and progress on the US-China trade talks. The precious metals managed to recover from the yesterday’s losses of -1%, based on some profit taking after the Gold failed to reach the $1.300 level, and to some temporary strength in the US dollar.

Gold and Silver have been gaining momentum as the Federal Reserve is coming closely to the end of its interest rate hike plan amid the expected slowdown in the US and Global economies in 2019-2020 based on the consequences of the trade war, the rising market volatility and the negative psychology of the investors after the recent collapse of the global equity markets.

Furthermore, the drop of the US 10-year Bond Yields from the highs of 3.25% in early November 2018 to the lows of 2.50%-2.70% during the first days of 2019 amid the reverse of the Federal Reserve policy on interest rate hikes, gave extra steam to the bullish momentum of the non-yielding Gold and Silver prices as well.

On the technical picture, the Gold price has been trading at a Range pattern, consolidating between the support level of $1.280 and the strong, psychologically figure of $1.300 level since the start of the new year. Gold has failed twice to break above $1.300, pulling back to the $1.280 area which seems to be a good support level now.

Silver price also failed to break above $15.80 level yesterday, retracing back to the strong support zone of $15.50-$15.60 during the end of US session last night. The price rose above $15.70 during Friday’s morning session, waiting for a market catalyst to move towards $16 level or retest the $15 level.

Crude Oil:  WTI and Brent continue the uptrend movement

WTI and Brent oil contracts rose by another +1.5% during the Friday’s European trading session, currently at $53.10 and $62.10 respectively, summing a 10% weekly gains, which is the best weekly performance in over two years.

The oil contracts continue the uptrend movement started at the end of the 2018, which gave almost 26% profit from the lows of 24th of December until today. WTI contract rose $11 dollars or 26% from the lows of $42 to the today’s high of $53, while Brent contract rose $12 dollars or 24% from the lows of $50 to the today’s high of $62.

The rise of the oil prices started after Saudi Arabia, the de-facto leader of the OPEC group and Russia agreed a production oil cut started on January 1st, 2019, removing the worries for supply glut and rising global oil inventories for the first half of 2019. Together with the reverse of the market sentiment to the positive after the rally in the US Equity markets and the hope for de-escalation of the Trade War between China-USA, investors felt confidence to buy this risk on asset after the huge price collapse by 40% from the highs in early October 2019.

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Vrasidas Neofytou

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