Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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.