A corrective wave started on Precious Metals to keep Elite Traders
Precious metals' plummet in yesterday's trading session came after they failed in continuing their upside rally. However, this isn't the end of the road for the bullish wave on precious metals, but it seems like there are numerous speculators in metal markets that are attempting to profit-take after acquiring good returns on their investments.
This bearish wave can be considered as a correction and speculative profit-taking; where profit-taking overshadowed the market after the considerable gains, which could breakdown the purpose of investments on precious metals separating speculators from haven seekers; We can consider it as a bearish wave that would keep the elite traders such as banks and large investment portfolio managers, whom are in fact diversifying their holdings.
Gold fell in trades yesterday by 1.30% and closed at 1102.30; silver also fell by 2.22% to end New York trading at $17.18 per ounce; whereas platinum fell as well by 1.39% and closed at 1351.00.
However, we see that gold was the least to fall compared to the other top three metals; whereas silver was the most metal to fall, providing more evidence that yesterday's trading session witnessed speculative profit-taking powered as well by the strengthening dollar.
Main commodity indices also feel yesterday; S&P GSCI index dropped by 9.46 points and closed trading at 503.73 points in New York. Profit-taking overshadowed most financial markets around the world, where US stock indices also fell and we see that Asian stock indices faced volatility and mixed trading today as well, ending with the Japanese Nikkei index shedding 0.35%.
The current situation in financial markets can be described as confusing between optimistic traders that are convinced about the global economy's successful recession exodus, and the pessimistic traders that think otherwise; although the truth of the matter is that the global economy has not reached stability just yet! Exiting the economic recession is one thing and returning to stability and growth is another, where all we currently witness is improvement in major economies is a reflection to the provided stimulating packages and central banks measures, alongside massive governmental plans to support the economy.
Meanwhile, the German economy managed to exit the technical economic recession after expanding by 0.7% in the third quarter following growth by 0.4%; whereas we witnessed the first steps by the US economy to exit the economic recession by setting 3.5% growth throughout the third quarter.
As for the European economy, it is expected to witness growth by 0.5%, of course this does not mean that economies have stabilized; thus, making traders jittery in search of higher yields, where they will go through major profit-taking at the first sign of the bullish wave ending.
Today, precious metals returned to rise slightly; where gold rose by 0.23%, and silver also gained 0.47%, while platinum followed and witnessed a rise by 0.44%. The arrangement of the amount of gain witnessed is precisely similar to the plummet witnessed yesterday; thus, pointing out strong speculations according to the cattle theory that bullish waves follow market dips, where such waves do not extend or last long, which therefore makes us expect the return of the bearish correction for precious metals today.
Gold is trading today at $1104.80 per ounce, precisely at 02:51 EST; while silver traded at 17.26; whereas platinum is circulating $1357.00 per ounce.
From that standpoint, alongside the release of some important fundamentals today, we expect a slight upside move that might be followed by another decline for metals that could cause major fluctuation with downside bias; however, on the medium term for gold, specifically, we don't expect it to change since the price is till targeting technical levels around $1195.00 per ounce.