Gold and silver’s historic rise, fueled by economic stimulus and geopolitical tensions, could face a limit if falling crude prices herald a shift in global markets.
Gold prices rise in early trading on Thursday and reach another historical maximum of US$2,708.70, in December Comex futures. Silver prices are also up sharply, reaching their highest level in almost four months today.
More economic stimulus from China and demand for safe haven assets are supporting buying interest in these two precious metals. Technical charts also remain firmly bullish for gold and silver. December gold was last up $17.60 at $2,702.30 and December silver was last up $0.717 at $32.735.
Gold bulls are certainly on a roll, but they are paying close attention to the oil market. Price appreciation in any major commodity, including precious metals, will be very difficult to sustain if crude oil prices reverse course and start to fall.
Put another way, weakening crude oil prices may be the leading indicator of when gold and silver markets will top out.” That’s what I wrote on Wednesday, and later this week, crude oil prices are starting to weaken. This is not good news for precious metals bulls who have been so strong so far.
What’s behind this rally
The military conflict between Israel and Hezbollah has escalated, with Israel ordering its army to prepare for a possible ground invasion of Lebanon, following recent heavy airstrikes. This situation continues to maintain interest in gold and silver as safe haven assets, and is likely to get worse before it gets better.
US oil oil companies
Asian and European stock indices were mixed to firm overnight. U.S. stock indices point to a solidly higher opening when the New York session begins. The S&P 500 hit an all-time high during the last session, while the Nasdaq index hit a nine-week high.
Today’s key external markets show the US Dollar Index on the downside. Crude oil prices on Nymex are solidly lower, trading around $68.00 per barrel. Reports indicate that Saudi Arabia is considering increasing oil production. A headline from DowJones Newswires reads: “The increase in OPEC-plus production will lead to an oversupplied market.” The yield on the 10-year US Treasury bond is on the decline and currently stands at 3.779%.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
