Precious metals - pull-back in progress

9月30日

Global equity markets have put in a strong performance this September, in what can often be a problematic month for stocks. But it is shaping up to be an even better one for precious metals – assuming they can make it through today without too much damage. For the month up to Friday’s close, which saw a modest pullback in both precious metals, gold had tacked on 6% while silver added an impressive 10%. But it feels as if investors are exercising some caution now as both metals, and gold in particular, have made their gains without suffering any significant sell-off, so far. Silver has experienced some brief spells of consolidation, which would appear to put it in a healthier situation than gold. But it is having real trouble breaking through, and then holding above, resistance around $32.50. It has to achieve this to establish a bridgehead for further gains, as it remains around 40% below its all-time high just under $50 from back in April 2011. In contrast, gold has been carving out a succession of record highs this summer, the most recent being last Thursday at $2,785. Both metals were sharply lower in early trade this morning, suggesting that a correction may be in progress. We’ll find out this week how protracted and deep this proves to be.