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12 Jun 2013
Commodities Brief: Precious metals fall victim to “risk off” selling
FXstreet.com (Barcelona) - In a day in which a “risk off” selling theme rumbled throughout both equities and commodities, precious metals unable to shake off the bears with gold closing down 0.57% at 1378, and silver closing down 1.14% at 21.59.
BoJ meeting and Rumors of Fed Tapering
The Westpac Global Strategy Group pointed out a few catalysts worth noting that seemed to plague risk assets the most. Additionally, the Westpac team pointed towards weakness in global equity markets, which for the most part had been holding up better on days such as today. “Risk appetite was curbed in the wake of the Bank of Japan’s decision not to add further stimulus. The Nikkei 225 closed down 1.5%, the Eurostoxx 50 -1.3%, with the S&P500 currently down 0.7%. Markets had hoped for additional BOJ measures which may have led to increased investment flows from Japan into global asset markets,” noted Westpac. In going on to discuss other catalysts, the Westpac team noted rumors of the Fed possibly tapering asset purchases in September could also have contributed to the decline in stock prices.
Gold approaching key trend line support
The current technical set up on the precious metals daily charts remains strongly bearish. Trending following indicators such as the short term moving averages remain strongly downward sloping, with price being unable to achieve substantial follow through above either. Furthermore, the RSI (14) on gold is sitting just above the 40 level, which if broken could help lead to an accelerated downside move. Momentum studies on the daily silver chart are even more bearish, with the RSI (14) not being able to recover any ground above 40. To conclude, it should also be pointed out that is currently gold resting just above a key trend line which connects the swing lows mid April and late May. A close below this trend line (1373) would be an additional bearish development.
BoJ meeting and Rumors of Fed Tapering
The Westpac Global Strategy Group pointed out a few catalysts worth noting that seemed to plague risk assets the most. Additionally, the Westpac team pointed towards weakness in global equity markets, which for the most part had been holding up better on days such as today. “Risk appetite was curbed in the wake of the Bank of Japan’s decision not to add further stimulus. The Nikkei 225 closed down 1.5%, the Eurostoxx 50 -1.3%, with the S&P500 currently down 0.7%. Markets had hoped for additional BOJ measures which may have led to increased investment flows from Japan into global asset markets,” noted Westpac. In going on to discuss other catalysts, the Westpac team noted rumors of the Fed possibly tapering asset purchases in September could also have contributed to the decline in stock prices.
Gold approaching key trend line support
The current technical set up on the precious metals daily charts remains strongly bearish. Trending following indicators such as the short term moving averages remain strongly downward sloping, with price being unable to achieve substantial follow through above either. Furthermore, the RSI (14) on gold is sitting just above the 40 level, which if broken could help lead to an accelerated downside move. Momentum studies on the daily silver chart are even more bearish, with the RSI (14) not being able to recover any ground above 40. To conclude, it should also be pointed out that is currently gold resting just above a key trend line which connects the swing lows mid April and late May. A close below this trend line (1373) would be an additional bearish development.