Silver outperforms gold month to date
Gold futures climbed to their highest finish since 2013 and silver rallied to a more than two-year high on Tuesday, with losses in U.S. stocks and a drop in Treasury yields providing a boost to the precious metals as investors hopes for progress on U.S.-China trade talks faded.
Gold for December delivery GCZ19, -0.12% on Comex rose $14.60, or 1%, to settle at $1,551.80 an ounce. That was the highest finish for a most-active contract since April 2013, according to FactSet data. September silver SIU19, +0.56% added 51.2 cents, or 2.9%, at $18.153 an ounce. Prices settled at their highest for a most-active contract since April 2017, according to FactSet data.
The action Monday in gold “provided fodder for both the bull and bear camps, as a new six year high emboldened the bull camp at the same time the reversal from that high provided hope for the bear camp,” analysts at Zaner Metals said in a daily note.
“Unfortunately for the bull camp, the markets must see consistent anxiety from noted losses in equities to continue the gold and silver rallies straightaway,” they said. In Tuesday dealings, U.S. benchmark stock indexes traded broadly higher.
“In the near term the lack of clarity on the trend in trade talks is likely to narrow ranges but leave two-sided trading in place,” the Zaner Metals analysts said.
On Tuesday, however, the 10-year Treasury note yield TMUBMUSD10Y, -0.35% was down by 6.8 basis points at 1.481%, contributing to haven appeal in gold and silver.
Last week, gold also closed at more than six-year highs, boosted by safe haven bids as the U.S.-China international trade battle escalated. Gold pulled back modestly on Monday as both Washington and Beijing struck a more conciliatory tone, though analysts remained wary of the potential for further deterioration and expressed concern that elevated tariffs announced so far will add to global economic weakness.
“Overall if trade tensions remain elevated, gold can count on this issue as being flat out supportive,” said Stephen Innes, managing partner at Valour Markets, in a note. “From my seat, it sure feels like the risk roller coaster has crested and may be setting up for the next drop soon.”
Technical analysts also pointed to more near-term gains for the yellow metal.
“Gold is breaking out of its recent range, and has room to run,” wrote Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, in a note.
“Resistance should come in next at psychologically-important round numbers ($1600, $1700) and the February 2013 high ($1615). Support will likely be found at the 50-day moving average ($1435), followed by the 200-day moving average ($1321), and the recent low ($1269),” Samana said (see chart below).
Meanwhile, silver has outpaced gold’s gains in August, posting nearly 11% rise so far this month versus an almost 8% rise for the yellow metal.
“It should also be noted that silver is beginning to get a chorus of bullish analyst forecasts suggesting the metal will begin to outperform gold,” said analysts at Zaner Metals.
In other metals trade, September palladium PAU19, -0.49% rose 0.4% to $1,478.30 an ounce, while October platinum PLV19, +0.62% gained 1.2% to settle at $868.20 an ounce.
September copper HGU19, +0.20% was 0.2% higher at $2.5475 a pound.