Gold (GOLD): Cyclical bull trend in motion; Silver to play catch up?

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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