While stocks are selling off today following two days of fresh all-time highs, after President Trump issued words of caution on China trade talks, gold and silver may be prepping for a bigger tick up.
Gold prices are modestly down in U.S. trading Tuesday. According to Kitco, “The daily chart for gold shows a “collapse in volatility,” whereby the past three sessions have seen significantly quieter price action. This suggests that a bigger price move is right on the horizon, probably yet this week. Given that the daily gold chart remains bullish, odds favor that bigger price move being to the upside”
The positive news is that despite the respite in volatility, gold prices are under pressure but continue to hold above $1,400 an ounce as it competes with rising “risk on sentiment in the market place” as U.S. consumers spend more than expected last month, as Tuesday U.S. retail sales rose 0.4% in June following May’s revised increase of 0.4%, according to the latest data from the U.S. Commerce Department; the data was better than as economists were expecting to see an increase of 0.1%.
“The old adage is still true: Never underestimate the spending power of the US consumer,” said Adam Button, managing director of Forexlive.com. “As for the Fed, the worry isn’t generally about the consumer. Powell said consumption was solid in his testimony last week.”
Meanwhile, silver is showing signs of life. According to Kitco, “September silver futures bulls have the slight overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the June high of $15.625 an ounce.”
“Silver behaved more like an industrial metal” on Tuesday, buoyed by hopes of a U.S.-China trade deal and better-than-expected U.S. retail sales numbers, said Chintan Karnani, chief market analyst at Insignia Consultants.
Market participants say that the backdrop of a strengthening dollar and bullish moves in stocks has been keeping gold and possibly silver prices in check, but their uptrend remains in force.
Investors looking to invest in gold exchange-traded funds (ETFs) could try the SPDR Gold MiniShares (NYSEArca: GLDM) and SPDR Gold Shares (NYSEArca: GLD) as a great way to play the market, while silver bulls could try the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest exchange traded funds backed by holdings of physical silver.
For more investing ideas, visit ETFtrends.com.