Gold and silver are heading into a risky zone. Both precious metals have fallen for the past four years but it looks like more declines might be around the corner.
LBMA gold since 2014. Graph: MetalMiner.
Gold tried to rally this year but the rally wasn’t sustainable. Gold is now back to $1,150 an ounce and seems ready to hit another multi-year low. Despite all the global economic uncertainty, “gold’s safe heaven thesis” is not really playing out.
A strong dollar and bearishness across commodities are what’s really driving gold prices down.
Silver since 2014. Graph: Metalminer.
Not surprisingly, silver is following the same pattern as the same price drivers are applying. Indeed, silver is already hitting a multi-year low. Interestingly, the same thing happened last year when silver fell and then gold followed.
What This Means For Metal Buyers
The outlook remains bearish not only for base metals but also for precious metals. Gold and silver at approaching key support levels and if not able to hold, we could see prices sinking. The buying strategy to take on gold and silver is pretty clear: don’t buy weakness.
by Raul de Frutos