Selling has been the main story today in the precious metals business as gold and silver retreat in the red zone, and with the US currency (USD) weakening, causing both precious metals' glitter to fade.
As of late Monday, physical gold was falling $7.61 and settled at $1498.91. Based on the Kitco Gold Index (KGX), normal trading took current market prices of spot gold at $9.24 lower but a factor in USD weakness, which adds $1.64, investors get a net price drop of $7.60.
Gold markets were initially down during late Monday's trading session, but it looks like it will find a decent volume of support near the $1500 region. This being the case it is quite clear that traders will continue to have buyers on these declines.
Gold futures are showing the same fundamental ratio wherein December futures are at the moment falling by $8.21 and pegged at $1507.31. The figure is a net plunge of .55 percent on the day.
After the recent robust run-up in both safe-haven assets, it is not unusual for these to consolidate or even correct. With both precious metals trading off of their recent peaks there is a chance to find technical support at certain defined levels.
Technical analysis shows there could be strong support for gold futures at the $1496.61 mark, which is a 24 percent retracement from its June lows when gold traded at $1267.91, up until its peak of $1564 for the year.
If the yellow metal can hold above the $1500 region, it would most definitely create a scenario that the strong push upwards, which started early this year, is still very intact as no major chart plunge would happen.
During moments like these when the world economy is unstable, a safe-haven asset like gold is most likely to rise to the occasion. Basking in its stability is silver, another glittery property which also acts as a safe alternative in economic uncertainty.
Prices of domestic silver last week hit a multi-year peak of $581 per kilo. Around late Monday, its prices in the spot market were pegged at $579/kilo, shedding its recent gains. Silver prices have thus failed to maintain elevated levels.
Key elements that have enticed investors to acquire silver are the same as those driving the price of gold. These include a fragile global growth forecast, the lingering trade drama between China and the US, and the weak stance of central banks, to name a few. The result: investment demand for silver has grown.
