Both gold and silver futures have experienced declines, detaching from their respective record highs as investors capitalized on the overextension by taking profits.
Silver has already shed 5% of its value within the past three sessions and today is down by almost another 5%, trending near the $50 per ounce level, whereas gold managed so far to hold onto most of its last week’s gains, despite the negative pressure and fluctuates around the $4220 per oz area.
Easing tensions between the US and China were the primary fundamental reason for the pullback, as the Trump administration realised that antagonizing the Chinese on trade matter could be rather “unsustainable” and detrimental rather than beneficial, hence the backing away. Worries for further escalation however, despite being sidelined, are a reason of concern for markets over the long run.
Hence, we stress that the possibility of another flare up between the two, would most likely escort risk-taking behaviour out the door and instead hurry in, bids for safe haven assets such as gold and silver, supporting their respective rallies into new uncharted territory.
Safeguarding the safe haven assets from a prolonged and deeper contraction and instead forming somewhat of a base underneath, have also been the recent credit worries from US regional banks, which stoked fears for an imminent repeat of the mini banking crisis of 2023, when the Silicon Valley Bank collapsed. Zions Bancorp and First Brands disclosed multimillion dollar losses from real estate loans gone bad, challenging temporarily the credibility of the wider banking sector, yet markets quickly shook the worries off, branding the event as insignificant and non-threatening, for the overall creditworthiness of the US banking sector.
Technical Analysis
XAGUSD Chart – Silver futures snap winning streak and fall to their former ATH on enhanced selling pressure
Resistance: 51.20 (R1), 52.50 (R2), 54.20 (R3)
Support: 49.54 (S1), 48.40 (S2), 47.30 (S3)
