Safe Haven Asset Class Favors Bullish Market Sentiment

The precious metals experienced a recovery today. However, the degree of upside momentum varies greatly from metal to metal. Gold had the smallest percentage gain on the day, with most active June 2019 Comex futures trading up by +0.13%. This amounts to a net gain of $1.70 on the day, with current pricing now at $1296.80.

Yesterday’s low occurred at $1286 just below the .38% Fibonacci retracement level. Today’s low occurred at $1291.30 which is just above the .38% retracement level of $1290.80. This indicates at least on a short-term basis, potential support at this price point.

Silver was next in line, with most active futures gaining +0.91%. This gain resulted in a increase of almost $.14 per ounce, taking silver back above $15 to $15.11. Platinum futures gained $10.70 which is an increase of +1.28%.

But the precious metal which had the largest percentage gain today is palladium. After dropping approximately $200 on Wednesday and Thursday, palladium futures gained +3.2% which added $42.30 to current pricing. This move took pricing to $1352. Even with a $200 decline over a two-day time span, palladium continues to hold the position of the most expensive precious metal.

On a technical basis the low achieved on yesterday as well as today in palladium occurred precisely above its 100-day moving average which resides at $1303.30. On a short-term basis this indicates some real potential support at this price point.

This swift and immediate recovery across the board in the precious metals leaves market analysts with two major questions. First, was the selloff which occurred yesterday an exaggerated downside move? Second, if yesterday’s selloff was overdone, can we characterize Thursday’s price decline as a “one and done” event?

My personal feeling is that yesterday’s sharp decline across the board in precious metals was a “one and done” event. Considering that the fundamental factors which have been supportive of the precious metals complex as a whole have not changed, we should see a return of the recent bullish market sentiment.

The current trade dispute between the United States and China is still having an effect on the global economy, which data suggests is slowing. Secondly, there is still tremendous uncertainty in regards to Brexit, and how Britain will leave the European Union. Lastly is the pivot made by the Fed in which their new extremely dovish demeanor will leave interest rates alone this year, with only one rate hike in 2020.

As long as these variables remain intact, we should see continued bullish sentiment for the precious metals.

Wishing you as always, good trading,