Trending
Commodities
  • WTIOIL
    79.82 USD -4.4%
  • XAG
    21.84 USD -1.62%
  • XAU
    1757.09 USD -0.43%
  • XCU
    3.75 USD -2.5%
  • XPD
    1823 USD -2.97%
  • XPT
    1032 USD -1.32%
  • ALU
    2439.43 USD 0.53%
  • RICE
    17.88 USD 0.39%
  • BRENTOIL
    84.9 USD 1.31%
  • SOYBEAN
    14.73 USD -0.77%
  • NG
    7.22 USD -3.73%
  • WHEAT
    340.03 USD 1.46%

Commodity analysis

Today I have prepared a commodity analysis. We will look specifically at gold and silver.

Gold

Gold reached its absolute peak on August 7, 2020, at 2077 USD per ounce. At that time, the state of the gold market looked really promising as it was the first one to be able to get back on track from the plunge caused by the COVID pandemic. Likewise, with COVID and various measures, the economy was expected to slow down resulting in investors seeking safe harbor.

However, then the central banks, led by the Fed, began to react and started vehemently releasing liquidity on a large scale into the market. As a result, traditional markets such as stocks and indices continued to grow. People began to get the impression that, thanks to these stimuli, the economy would go up anyway and, therefore, they did not need to invest so conservatively (i.e. in gold). In my opinion, this is the main factor why gold had its maximum last year in August and has been declining since then.

At this point, gold is in this big channel which will have to overcome. Until then, the gold will be still moving in the same descending pattern. As has been the case for almost a year now.

Gold Chart Figure 1: Technical analysis of gold

Silver

The same market psychology that was affecting the gold market, could be applied also to silver. This precious metal had its maximum in the current trend also on 08/07/2020. However, unlike gold, silver did not reach its all-time high, as gold did. After its sharp rise, which happened right after the COVID slump, the silver consolidated and is currently continuing to the side. We can see a nice triangle on the chart. We are held down by a rising trend from below and strong resistance from above, which holds the level of 30 USD.

However, the principle is the same. Silver will go nowhere until it reaches the level of 30 USD. While we are in this big triangle, the silver can make smaller ripples down and up, but the trend will still continue to the side.

Technical analysis of Silver Figure 1: Technical analysis of silver

Conclusion

The fact that traditional markets continue to grow does not look promising for gold and silver. Many investors expected that with the breakout of the COVID pandemic last year, gold and silver would shoot up, which kind of happened, but since then, nothing worth mentioning has happened for almost a year. Of course, from the longer investment horizon, the growth is certain, but at the moment this side movement may take some time. I would recommend observing these key values as well as following the macroeconomic news. As both Gold and silver could be helped by some shocks in the classic markets or by panic sentiment. Should markets remain calm, the gold and silver would not have the need to break through their current state.

Jakub is a crypto trader and founder of Trader 2.0 project, which helps hundreds of traders from central Europe to understand cryptocurrency trading and its challenges. Jakub not o...

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