For gold bugs, and even for their lesser brethren in silver, not only is the sun shining in the summer months, but the sun is truly shining on gold as a confluence of factors helps to propel the precious metal ever higher, and one wonders when the angst laden doom mongers will appear forecasting an overbought position.
The current bullish trend for copper shows no sign of slowing just yet with the red metal touching a 3 year high largely driven by increasing demand from China(FXI, quote), along with a fall in inventories in the London warehouses.
Do you remember the halcyon days when rising interest rates and increasing interest rate differentials were the precursor to a stronger currency?
Last week was an interesting one for oil traders (USO, quote) and speculators, as crude oil continued to move lower from Monday to Thursday, before bouncing strongly on Friday and closing in positive territory for the day, with a deep wicked candle on the daily chart and associated with high volume.
There seems to be no end in sight just yet for silver, which continues to remain beaten down and unloved, and dragging its more illustrious cousin gold down with it.
For US equity traders and investors these are worrying times, as the NQ emini continues to blast its way ever higher, and leaving its sister indices becalmed and lacking direction, with the ES emini a classic example.
Whilst gold and silver have a relatively close relationship in terms of associated price action, in the last few weeks these relatively close bedfellows have diverged somewhat, with silver continuing the bearish sentiment initiated in mid April, whilst gold pauses and reflects, with neither metal appearing to benefit greatly from recent weakness in the US dollar (UUP, quote).
The recent rally for crude oil, came to a shuddering halt this week with Wednesday’s wide spread down candle driving oil prices firmly back towards the $50 per barrel region, and wiping out much of the gains of the last few weeks.
US equity markets continued to wallow again yesterday, as risk on appetite wanes as global tensions continue to weigh on risk asset classes, bringing to a halt the strong bullish moves post Trump.
As markets return to full participation following the Easter recess, and as a new trading week get’s underway, I thought it would be apposite to consider the three primary currencies of the US dollar, the yen and the euro on the daily timeframes.