Editor’s note: Keep up to date with our quick summary of today’s must-read news stories and expert advice moving the precious metals and financial markets. Sign up here!
(Kitco News) The euphoric summer rally came to an abrupt end on Tuesday as gold saw its steepest one-day high since 2013. And while the massive turnaround in prices does not mean the rally is over, get back to the new all -time of gold heights will not be a quick walk in the park, according to Commerzbank.
“Both precious metals were floating: gold was up nearly 6% to offset the biggest daily loss since the historic sell-off in April 2013. Silver was hit even harder, falling by almost 15% – the most pronounced decline in one day of trading since October 2008, ”said Commerzbank analyst Carsten Fritsch. “Compared to Friday’s high, this means a fall of about $ 200 for gold and a good $ 6 for silver.”
It has taken almost seven years to return to its highs after the 2013 price drop. This time, the recovery will not be nearly as slow, but a quick turnaround will also be ruled out, Fritsch said.
“We are unlikely to see prices return rapidly to the highs they reached at the end of last week,” he noted on Wednesday.
A turning point this time around, however, is the macro environment, which remains very supportive for higher gold and silver prices.
“This is all thanks to negative real rates, an unusual increase in the money ban and balloon debt. As Fed Chairman Powell made clear at the last press conference, a debate over tariff increases – which is one of the factors that caused the sell-off more than seven years ago – is unlikely to happen for a very long time , “explained Fritsch.
However, a speedy recovery is not yet the likely option, as Tuesday’s drip caused too much technical damage, the analyst added. “This is already indicated by the outflow of ETFs reported by Bloomberg. Outflows of gold ETFs have now been recorded for three days in a row, while silver ETFs yesterday saw their biggest daily outflow of the year, “Fritsch pointed out.
Continuing, a period of price consolidation is likely to follow and last for several weeks. “That would also be a healthy state of affairs due to the excessive price increase,” Fritsch said.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is strictly for informational purposes only. It is not solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept any liability for loss and / or damage resulting from the use of this publication.
.
