A string of poor macro data is supporting the precious metal sector.
Gold looked as if it has topped out when prices plunged on September 30 below $1,500. But that downward dynamic was soon countermanded. Prices rebounded quickly back into the $1,520 area.
However, there seems to be a lack of genuine demand for gold. The metal evidently *wants* to go down. The consolidation into $1,490-1,500 of late is a sign of this. Perhaps gold is now impacted by the day-to-day volatility of the macro data.
For Silver, prices remain choppy after surging to $19.50. That acceleration phase was clearly unsustainable and resulted in a violent correction into $17.0. I suspect the pullback is not yet over. The bears will continue probing downside support at $17-$16 (see below).
Palladium, on the other hand, remains in demand. The metal broke new ground in the third quarter to $1,700. The stability of its uptrend indicates continuing investors accumulation. If a consolidation emerges here, the first downside support is noted at $1,600.
In sum, gold is being supported by a climate of fear – fear of a recession and fear of market volatility. In the real world, gold is still being accumulated by central banks. But financial markets have a life of its own. The year-long rally has taken a pause and I expect this consolidation to continue for the time being.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.