The precious metals market was under pressure in today's trading session as the USD continued its three-day increase streak. December gold futures fell $23 to $4,56%, down to $4,016 an ounce.
Silver was also under stronger pressure, futures fell by 0.45 USD, or 0.93%, to 48.28 USD - maintaining the discount compared to spot prices. However, spot silver has been more stable, falling just $0.24, or 0.50%, to $48.64.
The slight recovery in yesterday's session made investors ask: is this just a temporary bounce in the downtrend, or is it a signal for a new, well-founded increase? To answer that, it is necessary to look back at the factors that have caused the precious metal to adjust from the recent record level.
The initial sell-off came from profit-taking, when traders took advantage of high profits in the context of the market being seen as having increased excessively.
The optimism was later heightened by two factors: the prospect of a lull in US-China trade and the reported "hawl" of Federal Reserve Chairman Jerome Powell at a press conference after the Federal Open Market Committee (FOMC) cut interest rates by 25 basis points.
However, when looking at it more closely, these factors seem more technical than reflecting fundamental change. Profit-taking activities, although creating downward pressure on prices, do not mean that the market foundation will weaken.
The trade deal between Washington and Beijing has yet to resolve the core conflict. Furthermore, Mr. Powell's statement can be understood as cautious and dependent on data, rather than turning to a tough stance.
From that, it can be seen that the current adjustment is likely to be just a technical adjustment, not a structural change. If there are no new factors or major changes in policy, the precious metal is expected to find support around the current level and soon recover the uptrend.
The strength of the US dollar may continue to cause short-term fluctuations, but the fundamental factors supporting gold and silver remain strong.
See more news related to gold prices HERE...
