Positive Trading for Gold and Silver on Poor Retail Data

Anthony Gallagher Anthony Gallagher

15 May 2019

Wednesday saw a lot of positive movement in the gold and silver markets. XUA/USD was trading slightly up at the time of writing. The XAG/USD was also trading well, while other metals markets were mixed approaching the end of the session. This strength in the precious metals trade comes amid risk aversion from traders who are still awaiting further developments in the US/China trade negotiations. Similar sentiment is causing a positive push for many cryptocurrencies this week.

Gold back on the Front Foot

Following a consolidation period yesterday, and an annual low of $1266 within the last two weeks, gold appears to have found its feet again. Trading at points above $1300, this area of resistance has so far stood firm although tested on several occasions. Many analysts expect this resistance could be broken in the coming days as the trade deadlock continues. The next area of resistance following this would appear to be around $1310.

The gold price looks set to finish the day just below the $1300 mark at around $1297. This slightly downward turn later in the day is likely a direct result of the news that the Trump administration will delay tariffs on EU and Japanese vehicles imported to the United States. This news also delivered a boost to the share prices of major European auto manufacturers. Both BMW and Fiat Chrysler were posting gains of more than 1.5% on the day.

Retail Sales an Additional Driver for Safe Havens

As well as the ongoing trade debacle, safe haven markets were further boosted by the 0.2% decline in retail sales between February and March. This was a turnaround from the 0.2% gain which had been forecasted. China also reported lower than expected retail sales. US industrial production also slid 0.5% in March.

These weaker economic numbers across the board are likely to only empower the sense of uncertainty which has encapsulated traders in recent weeks. It is probable this could further bolster the metals market as investors continue to shy away from risk-taking maneuvers.

Speculation of a rate cut by the Fed looks to be unfounded. Experts say they cannot see a change in position coming any time soon. Economic stimulus packages in Beijing have also been widely rumored as tariffs continue to make life difficult. This however, is difficult to verify.

Further Gains in Sight as Risk Aversion Continues

Until we see some form of concrete resolution to the trade war, it is likely that metals such as gold and silver will continue to hold strong. They are frequently seen as a safe trade in times of uncertainty and a store of value. It is quite likely that we see gold testing resistance levels of $1310 in the coming days according to analysts.

Silver meanwhile posted small gains of 0.1% today, as it stayed within both the 20-day moving average and the 200-day moving average alike. Markets remain delicately poised and awaiting news on the trade front.


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