Ever brighter precious metals

Ever brighter precious metals

With the dollar struggling to regain momentum and global capital increasingly seeking diversification away from dollar-based assets, gold, platinum, and silver are staging separate but simultaneous uptrends.

The price of gold exceeded $3,400 again on Monday and continued its advance on Tuesday, trading at $3,410. This is the fourth attempt in the last four months for the price to climb higher. Given the increasingly shallow pullbacks from horizontal resistance, a move higher seems only a matter of time, and soon. In addition, the 50-day moving average has been acting as support for the past month, with dips to this level sustaining demand.

Technically, breaking through the zone of highs near $3,450 would signal the start of a Fibonacci expansion pattern with the potential for prices to rise to $4,000. In practice, while a wild rally can't be ruled out, such price movements are typically accompanied by market turbulence on the scale of the 2008 mortgage crisis, the COVID-19 shock, or an unusually sharp rate cut by the Fed — as seen during Greenspan's tenure. At the same time, it is quite reasonable to assume a sharp increase in price volatility when reaching historical highs against the background of a short squeeze, but the expectation of a move towards $4,000 looks very bullish.

Silver rose above $39 on Tuesday, its highest level since September 2011. Unlike gold, it is far from its historic highs of around $50 set in April 2011. However, the steady upward movement confirms the metal mania that has swept the markets this year. The technical target for silver growth is $50.

In May, platinum joined the precious metal rush. For 10 years, this metal has been fluctuating like a pendulum around $980 per troy ounce. However, in May this year, platinum jumped 50% in price, approaching $1,480, its highest level in 11 years. We last saw growth of similar persistence and amplitude in early 2008. The potential technical target this time is close to $1,900, marking an exit into the range of the previous metal cycle highs in 2011. A similar, more than twofold increase was seen at the end of the 2006–2008 rally.

By the FxPro Analyst Team