One of the more impressive performers in the quieter start to the week yesterday was silver. The precious metal rebounded strongly after the setback last week, having failed to hold a push above the $32 mark. But with a jump of over 4% yesterday, price is now back up to trading at around $31.70 levels.
Silver (XAG/USD) daily chart
The rebound also comes after nearing a test of its 38.2 Fib retracement level, keeping near the $30 mark. Sellers failed to really brush up against the figure level but dip buyers didn’t care for that as much. That sees the near-term bias revert back to being more bullish again with eyes on the $32 mark once more.
That being said, the momentum in the price action here is not quite shared by the benchmark for precious metals. Despite a modest bounce yesterday, gold is still failing to convince of much of a turnaround for now.
Gold (XAU/USD) daily chart
In comparison to silver’s impressive bounce, gold posted just a mild recovery with near-term price action still holding below both its 100 (red line) and 200-hour (blue line) moving averages. That suggests the near-term bias continues to remain more bearish for now.
And that is where I have my reservations about the bounce we’re seeing early in the week.
Don’t get me wrong. A break in silver above $32 could precipitate more bullish sentiment in the precious metals space. However, I’d at least like to see gold also start to show a more bullish undertone to support that. For now, we are at least seeing the drop last week get arrested. But we’re not quite at the point of a significant shift in momentum yet, at least not for gold.
In the bigger picture, there’s still good reasons to stay bullish on precious metals as well as copper. That said, we might be overdue a stronger pullback in the commodities space after the action in the last few months. So, I would not be too quick to be complacent on the risk of that after last week’s fall.
For this week itself, month-end flows involving the dollar is also something to consider. And that might not make for a straightforward play on things in the commodities space as well.