Precious Cargo Moving

March 9, 2022

Commodities have been at the center of our analysis for over a year now. There have been times when base metals have done well. And here have been times when agri commodities have done well. But every single time, precious metals stayed out of it.

Precious metals have been the worst place to be in over the past one and a half years. But it looks as though things are about to change.

Why?

Gold and Silver seem to be interested in jumping on the bullish bandwagon. Are they there yet? Let's take a look!

Precious metals have been the worst place to be in for the longest time. But with commodities across the globe taking off, precious metals finally got the memo. The cargo is on the move, folks!

Here's Gold finally making its way above the crucial resistance of 50,688. The price is now trading near mid-2020 levels. Currently, the price is hovering near 52,650. A move above this level could take the price higher towards 56,200. Notice how the indicator is in overbought territory, supporting the newfound momentum in Gold. Historically speaking Gold is a defensive asset. But not all defensive assets are behaving in the same manner. So it does look like the trend is beginning to become clear in Gold.

We are bullish Gold above the risk management level of 52,650 with a target near 56,200.

Click on the chart to zoom in.

Silver is not far behind, thankfully. The reason is that Gold and Silver move together. Silver is more volatile than Gold and tends to move about more erratically. But in an event where Gold is on the move and Silver isn't, there is room for doubt. But well, currently we don't seem to be dealing with such a situation.

Silver is rallying too, albeit not outperforming Gold yet. The price is currently trading above the resistance level of 67,125. As long as the price sustains above this level, the next target to track would be 72,570.

Take a look at the Silver/ Gold ratio. This is the ratio chart we turn to when precious metals are on the move. You can see that the ratio chart made the same low, however, the indicator pane marked a higher low. The bullish divergence signal is indicative of Silver picking up pace in the current market scenario.

Notice that when the precious metals were rallying post the 2020 correction, a similar relationship of Silver outperforming Gold was playing out.