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XAUUSD

Gold’s upside attempt being scuppered by silver

Commodities 5 minutes to read
Picture of Ole Hansen
Ole Hansen

Head of Commodity Strategy

Summary:  Golds break to a fresh 8 year high has been scuppered by silver's inability to join the rally. As a result we have seen profit taking from recently established longs. Overall we maintain a bullish outlook for both metals.

What is our trading focus?

XAUUSD - Spot gold
XAGUSD - Spot silver
XAUXAG - Gold-Silver ratio
GLD:arcx - SPDR Gold Shares ETF
GDX:arcx - VanEck Gold Miners ETF

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Gold’s break to a fresh 8 year high has been missing one key ingredient for it to proper challenge the next key resistance at $1800/oz. Silver’s inability to break above $18/oz despite the tailwind from gold has triggered some weakness across these two metals from sellers of recently establish longs, especially in silver. The gold-silver ratio has spiked back above 101 while platinum, another metal that often enjoys gold’s tailwind, has seen its discount to gold temporarily reach $970/oz.

The underlying fundamentals have not changed and we still see gold trade higher to challenge $1800/oz and beyond. But in order for the rally to have legs we need to see demand for the minor metals pick up as well. That has clearly not happened yet according the latest move.

24olh_pm1
Silver’s failure with support from gold to build a base above $18/oz has triggered profit taking. (Char source: Saxo Group)
24OLH_pm2
As a result traders have for now abandoned attempts to push gold higher to $1800/oz (Chart source: Saxo Group)
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That silver is driving the profit taking move can be seen through the gold-silver ratio’s spike above 100 (Chart source: Saxo Group)
24OLH_PM4
Platinum often enjoys some ‘catching up’ buying from relative value players. So far that has not happened with the discount to gold instead reaching a fresh record at $971/oz. (Chart source: Saxo Group)

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