GOLD and SILVER OUTLOOK
Gold and silver prices have retreated in recent weeks, but their outlook remains constructive.
If bond yields continue to push lower, precious metals could shine heading into 2024.
This article explores XAU/USD and XAG/USD’s key levels to watch this week.
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Gold and silver have declined over the past couple of weeks as the geopolitical premium built up in both metals after the Hamas terrorist attacks on Israel early last month have started to unwind. This is because the situation in the Middle East, while still tragic, has not degenerated into a wider conflict involving other countries, such as Iran or Lebanon.
Another factor that has contributed to the weakness in XAU/USD and XAG/USD is reduced demand for safe-haven positions. Recently, U.S. stocks have gone on a bullish tear, with the Nasdaq 100 rising for eight consecutive sessions and on the verge of reclaiming its October high. Fear of missing out has, therefore, pushed traders to redirect their attention on the equity market rather than on non-yielding assets.
Despite recent market dynamics, there are reasons to be optimistic about precious metals. That said, one catalyst that could put upward pressure on their prices is the pullback in rates. Last month, the US 10-year yield topped 5.0%, but has since corrected sharply lower, falling below 4.6% today. If this correction accelerates in the near term, the backdrop for both gold and silver would become more constructive.
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