Saturday, 1 January 2022

Rough year for the precious metals

The precious metals of Gold and Silver saw net December gains of +$52.10 (2.9%) to $1828.60, and +$0.54 (2.3%) to $23.35 respectively. For the year, Gold and Silver saw net yearly declines of -$66.50 (3.5%) and -$3.06 (11.6%) respectively.

Gold, monthly1b 

Silver, monthly1b



Gold: ending the year on a positive note, settling in the $1828s. Price momentum is starting to tick upward, if remaining on the moderately low side. The December candle offers a short term floor from the $1753s. I would note the monthly 10MA at $1794. For bullish confidence, gold bugs need to see a decisive monthly settlement >psy' $1900, which looks feasible for January.

Silver: printing $21.41, but recovering to settle at $23.35. The December candle is distinctly spiky from key price threshold, and leans s/t bullish. Momentum ticked lower for a seventh consecutive month, and is on the moderately low side. I would note the monthly 10MA at $24.63, which silver settled below. Price action has been a broad chop fest since August 2020. Things turn decisive for the silver bulls, with a break AND hold above $25.50.

Gold, Silver, and Copper...

Across the years, the trio of gold, silver, and copper broadly trade together. 

Yet silver was a truly bizarre laggard in 2021, especially when compared to copper, which broke a new hist' high this year of $4.88. Silver only managed a high of $30.35 - a literal one day wonder, via Wallstreetbets short-squeeze chatter. 

The only positive for silver is that old multi-year resistance of the $21s... is holding as new support. Gold is certainly holding up better, relative to silver.

The gold to silver ratio stands at 78.31, which is surprisingly high. A valid natural target would be the 32s, as silver could be expected to outperform gold in an inflationary environment. For now, gold is still far more resilient than silver.

Considering the broadly stronger USD, Gold fared better than it might at first seem. Both can rise together, especially in times of crisis.

Its arguable that the gold bugs need to see the USD break below its seven year trading range floor of the DXY 88s. Right now there is no sign of that happening any time soon... arguably at least not before H2 of 2022.

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