(Kitco News) – Thin holiday trading with North American markets closed for holidays is creating some volatility in the precious metals market, with gold prices benefiting and silver prices suffering.
U.S. markets are closed in recognition of President’s Day, and major Canadian exchanges in Ontario are closed for Family Day. In the low liquidity environment, gold continues to recover from last week’s selloff after testing support at $2,000 an ounce. April gold futures last traded at $2,028.30 an ounce, up 0.20% on the day.
At the same time, silver is seeing some significant selling pressure as prices were unable to hold critical psychological support above $23.50 an ounce. Silver prices last traded at $23.110 an ounce.
Some traders note that silver could see some profit-taking after last week’s strong recovery. After testing support at $22 an ounce, silver managed to end last week with a 7% rally off its lows.
Although gold is starting the shortened trading week with a modest gain, some analysts have pointed out that it remains stuck in a well-defined trend with support at $2,000 and resistance around $2,050 an ounce.
With gold going nowhere anytime soon, some analysts have said that silver is the key metal to watch in the precious metals space.
“If inflation gets ugly, silver has a lot of room to the upside,” said Michele Schneider, director of trading education and research at MarketGauge, in an interview Friday with Kitco News.
Last week, both consumer and producer prices rose more than expected, demonstrating that the ongoing inflation threat is far from over, some traders have said.
Although gold is stuck in a range, some analysts have said it is not an asset you want to dismiss entirely. James Hyerczyk, market analyst at FXempire.com, said that the precious metal remains an important safe-haven asset as further chaos in the Middle East is increasing geopolitical uncertainty.
“The recent rise in gold prices is primarily driven by a softening U.S. Dollar and increasing tensions in the Middle East, particularly concerns around political stability and oil supply disruptions, which enhance gold’s status as a preferred safe-haven asset,” he said in a note Monday.
Looking at gold’s technical outlook, Hyerczyk said investors should keep an eye on $2,030.37 an ounce.
“This price is likely to act like a pivot over the next few days,” he said.
Along with gold’s safe-haven appeal, analysts warn investors to watch Asia’s insatiable appetite for the precious metal.
Fred Hickey, creator of the The High-Tech Strategist investment newsletter, pointed out in a social media post that gold’s rally started Sunday evening after Asian markets opened. Chinese markets were closed all last week for Lunar New Year celebrations.
Well, that didn’t last long (Chinese New Year gold selloff). Chinese investors are back tonight for a couple of hours & gold’s already up $10 to $2022, essentially wiping out all of last week’s loss despite heavy futures selling (& shorting) last week by Western speculators.
— fred hickey (@htsfhickey) February 19, 2024
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