Gold experienced a rollercoaster ride overnight, surging well over $US100 as the US Dollar weakened before surrendering over 70% of the gains. Similarly, silver surged the most since 2008, as gold roared past $US5,000/oz for the first time, extending a precious metals rally fuelled by US President Donald Trump’s reshaping of international relations and investor flight from sovereign bonds and currencies. Spot silver surged more than +13.6% on Monday to a record above $US117/oz in its biggest intraday gain since the GFC before closing up closer to 3% in a relatively weak and volatile close.
We’ve left our roadmap on the gold chart below this morning and now see elevated risk that the overnight move in precious metals could be a blow off style top – in the short term at least. For us to have confidence in that call, we need to see a reversal this week, otherwise we’ll go back to the proverbial drawing board – the risks of this upside follow through is why we trimmed our precious metal exposure last week as opposed to cutting it.
- We believe the next $US500 move is now more likely on the downside, but this week will be important in shaping what comes next for Gold.
