As far as gold and silver go, it’s back to fundamentals

Today we saw a mixed bag in the precious metals complex, with silver, palladium, and platinum posting substantial gains and gold closing fractionally higher. Market participants and traders are awaiting more details about the outcome of President Biden’s proposed $1.9 trillion stimulus package. Concurrently we have the precious metals that are also highly used in industry posting substantial gains on the day. In other words, market participants are witnessing the precious metals moving on their fundamentals rather than the failed short squeeze by the Reddit forum Wallstreetbets.

Gold basis the most active April 2021 Comex contract, gained $1.10 (+0.06%) in trading and is currently fixed at $1834.50. Although the precious yellow metal is showing stability after yesterday’s dramatic decline, currently gold futures are trading below all three major moving averages, the 50-, 100- and 200-day moving averages. There has also been a convergence as the 50-day moving average gets closer to the 200-day moving average. A break below that would form a death cross. However, that would dramatically change if President Biden can have his $1.9 trillion fiscal stimulus aid package passed. This would move gold pricing substantially higher.

The president has held firm in his commitment and promise to the American public to quickly enact fiscal aid that is greatly needed by lower-income households and those unemployed. He is willing to compromise on who would get a $1400 stimulus check by narrowing the recipients to those who really need it. Today, the president told House Democrats that he would not change the amount of the proposed $1400 check, but rather narrow the payments to a smaller group based on income.

Silver gained substantial ground today as it reacted to robust U.S. equities markets and the continued demand for the industrial applications that silver is used for. Silver futures basis the most active March 2021 Comex contract, saw a net gain today of $0.55
(+ 2.09%), and is currently fixed at $26.96. Not only do the fundamentals warrant higher pricing in silver but technical studies have backed up that assumption, especially when compared to gold. Silver continues to trade above all three of its major moving averages, the 50-, 100- and 200-day moving averages, and above the 23% Fibonacci retracement. After yesterday’s sharp and dramatic decline, silver recovered exceptionally well today. We can also identify a two-day Japanese candlestick pattern called a bullish Harami. This pattern is also labeled as an inside trading day to Western market technicians.

This bullish market sentiment is shared by the head of commodity research division at Goldman Sachs who believes that if the fiscal aid package is passed silver could run as high as $33. The division of Goldman Sachs is forecasting silver to run back to $30 per ounce by the end of the year without the passage of more fiscal stimulus.

Wishing you as always, good trading and good health,