Lower policy rates elevate many asset prices. Just look at Nasdaq this year.
Another beneficiary of lower borrowing costs is gold. The yellow metal bottomed out near $1,180 late last year at the same time when Treasury yields peaked. Once the market suspected the Fed was done with hikes, capital moves into precious metals, gradually at first ($1,200 to $1,340) but with haste in May.
And after a brief consolidation, gold is soaring once more this week. The upside breakout at $1,420 to $1,440 removes doubt as to its medium-term directional bias. With the near-term round number at $1,500 nearby, gold bulls will be tempted to make a run for it. A fall below $1,410-1,400 is needed to remove gold’s near-term upside bias.
Another interesting feature of the current bullishness is that Silver appears to be playing catch up.
Silver was suppressed beneath $15.50 for some weeks before this resistance gave way. Not only that, prices took out the $16.00 resistance as well in one shot (see below). A breakout as strong as this often signals a drastic trend change. Buy the dips.
Platinum might be worth taking a look, although it may retain its laggard status (within the precious metal sector).
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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.