On Thursday, the prices of gold and silver retreated sharply, putting the precious metals on course to end the week on a low. Several factors could be behind this price movement as the usual suspects, such as a surging USD and rising Treasury yields don’t sufficiently explain this price correction.
Silver was trading at $81.1 an ounce while gold settled at $5,073 an ounce by the end of the trading day. While precious metals struggle when the dollar rises or when yields on Treasuries increase, the current precious metals situation doesn’t quite seem to be amenable to these usual explanations of price retreats.
This is because stronger geopolitical factors like the Middle East conflict exert a strong bullish force on precious metal prices so it is unlikely that traders and investors have suddenly downplayed the war and are now giving other factors greater weight in determining market direction.
After the killing of the Iranian Supreme Leader, there were expectations in the West that the regime would crumble but this isn’t happening. Indicators show that the masses in Iran aren’t as enthusiastic about taking advantage of the current events to rise up against the ruling system, and this suggests that the conflict could last a lot longer. This scenario boosts the safe-haven appeal of gold and silver, so why the price retreat at this point in time when the war is still very much in flux and matters could get a lot worse?
A possible explanation is profit-taking. Precious metals have rallied significantly over the past months and while a number of pullbacks have happened recently, chances are high that many individual holders of these metals hadn’t cashed in their gains and could possibly be doing so now. This could explain why selling pressure is weighing on prices at a time when geopolitical tensions are very high.
Profit-taking becomes a more plausible explanation given that riskier assets like stocks and cryptos took a battering when the Middle East situation escalated to a military confrontation. For investors seeing losses in other asset classes, trimming holdings in precious metals would be a logical step in a bid to free up more capital.
The fundamentals like structural deficits in the supply of silver, rising industrial demand, and the safe haven appeal of precious metals are still firmly in favor of a bullish direction. This recent price drop is therefore unlikely to significantly alter the forecasts of industry stakeholders like New Pacific Metals Corp. (NYSE American: NEWP) (TSX: NUAG).
About Rocks & Stocks
Rocks & Stocks (“R&S”) is a specialized communications platform delivering deep insights into the mining industry. It is one of 75+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, R&S is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, R&S brings its clients unparalleled recognition and brand awareness.
R&S is where breaking news, insightful content and actionable information converge.
To receive SMS alerts from Rocks & Stocks, text “Rocks” to 888-902-4192 (U.S. Mobile Phones Only)
For more information, please visit https://RocksAndStocks.news
Please see full terms of use and disclaimers on the Rocks & Stocks website applicable to all content provided by R&S, wherever published or re-published: https://RocksAndStocks.news/Disclaimer
Rocks & Stocks
Austin, Texas
RocksAndStocks.news
512.354.7000 Office
[email protected]
Rocks & Stocks is powered by IBN
