Gold and silver got caught up in the sell-off as investors rushed to slash their exposure to all risk assets. The carnage that began just under a week ago, and accelerated into Monday, triggered a cascade of selling across all financial markets – except bonds. This phenomenon is often met with surprise by market participants who are so used to seeing precious metals described as ‘safe havens’ during a period of derisking. But the fact is that gold and silver are both heavily traded by speculators through futures and ETFs. This leveraged ‘paper’ market is worth many times more than the actual physical one. This means that gold and silver also get hit when investors/traders need to raise money quickly to cover margin calls elsewhere. So why aren’t they both shooting higher along with everything else as traders get their collective mojo back? Well, a look at the charts suggests that a recovery could soon be underway. For one thing, there was no significant damage done to the bullish set-up that has been developing since earlier this year. This is especially true of gold where the daily chart shows a clear set of higher highs and higher lows. That’s not the case for silver. Yet a glance at the daily MACD shows a market that is very oversold. While that’s not a guarantee that prices are about to head higher, the set-up is certainly there.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.