Gold Closes Fractionally Lower as Silver Continues to Rally

Although gold futures have exhibited solid gains over the last two months today traders and market participants kept the precious yellow metal in a narrow and defined trading range. Gold futures basis most active August contract traded to a high today of $1430.80, and a low of $1423, resulting in a tepid eight dollars trading range. This is in stark contrast to recent moves in gold in which we saw increased volatility and an expanded trading range.

On Thursday of last week gold traded from a low of $1415 per ounce to a high of $1449 resulting in a $35 range between the daily high and low. Last Friday contained a range of just over $32 as gold prices reached the highest value achieved this year when market forces took gold pricing to $1454.90.

Dollar strength provided some mild headwinds however silver and palladium prices were able to score respectable gains with each precious metal gaining well over a percent in trading today. Platinum traded flat gaining $0.70 on the day, as gold exhibited fractional gains throughout the day and as of 4:10 PM EDT is currently trading down by approximately one dollar and fixed at $1425.70.

The fundamental factors that have been moving the precious metals higher are still solidly in play. Tension in the Persian Gulf with the recent boarding of a British oil tanker last week remains high. Bullish market sentiment as traders and market participants continue to factor an upcoming interest rate cut by the Federal Reserve at the end of this month continues to be highly supportive of recent gains in gold, silver, platinum and palladium. However, uncertainty as to the extent of an interest rate cut, and whether the Fed will reduce rates by 0.25% or .50% continues to weigh heavily on the investment community.  Lastly, the trade war between the United States and China are no closer to a resolution.

The recent awakening of silver futures continues with solid gains resulting from today’s trading activity continued to narrow the gold silver ratio. Silver gained 1.14% in trading today and closed at $16.38, after factoring in a net gain today of $18.5. Most noteworthy is the recent contraction of the gold silver ratio which hit an all-time record high of 93 two weeks ago. The highest the gold silver ratio had been since 1998 was just over 83.

This ratio had traded to a low of 66 at the beginning of 2016 and had been widening over the last 2 ½ years. Today’s strong gains in silver and gold’s lackluster performance took that ratio from just above 93 to 87.07 in trading today.

Wishing you as always, good trading,