Investors still accumulating gold

What now? British PM May won her leadership contest yesterday but at a huge cost. She had to step down as party leader before the next general election. After her win, the PM is now trying to ‘renegotiate’ the Brexit deal. Will she succeed?  50-50. Sterling (GBPUSD) did rally on Wednesday but remains beneath its recent range.

With risk appetite a little more ‘risk on’, equities rose gently from their recent lows. However, traders remain cautious. This can be seen from the stability of precious metals prices, particularly gold. Investors buy gold in times of turbulence.

The yellow metal broke to new multi-month highs recently and are now coiling into a tight range above the prior resistance. Higher highs and higher lows are patterns of an uptrend (see below). Thus, another leg up is a distinct possibility.

For Silver, it looked like it is about to complete a base pattern. Prices have recovered from its range lows at $14.00 and are now challenging the range resistance just beneath $15.00. Given silver’s multi-month downtrend, obviously there are plenty of silver shorts out there. Thus, any short covering may cause a temporary spike in silver prices.

 

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