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Precious metals continue to struggle

Last updated 6/22/2012 12:20 PM ET (GMT -5) 0 Comments - Add your comment

Gold and silver continued to come under selling pressure today and are struggling to find support as we head into the weekend. Both metals fell sharply yesterday, with gold posting its largest daily fall since the end of February. For the week, gold is now down 4% while silver has lost more than 7% of its value. Gold came close to retesting support at $1,550 and a break below here puts December’s intra-day low of $1,522 within easy range. Silver has broken back below $27 and a close below here makes its own December intra-day low of $26.26 the next downside target. The trouble for silver is its importance as an industrial metal. With economic data from the US, China and the euro zone continually coming in below expectations, the outlook for global growth is poor. Investors fear that silver demand will fall if manufacturers respond by reining in production. In this respect it is behaving much like copper, the metal most in demand for its industrial uses. Ultimately, silver, like gold, is also sought for its importance as an investment metal. But for now, both are being sidelined as investors continue to favour the liquidity and depth offered by the US Treasury market.

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About The Author

David Morrison has worked in financial markets for over 25 years. He joined GFT in February 2009 to deliver commentary and research for derivatives products. Before then David had been instrumental in setting up two spread betting companies, managed trading desks, and implemented and ran successful risk-management strategies.

He has appeared on Bloomberg, Reuters, and Sky TV, and is widely quoted by financial newswires. He has written numerous articles covering economics and trading strategies using fundamental and technical analysis.

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