Silver Slips 4% on the Day, Gold also Negative by Almost 1%
- Silver slips as the retail rally lose steam
- Gold is fairly muted as investors flock to equities
Silver Slips 4% on the Day
Silver and gold are trading into negative territory today as market participants pull back from the precious metals and flock into riskier assets. Equities gain traction today, as both European stocks and US futures point higher. The markets’ optimism on the expected stimulus package and accelerated vaccination rate outpace the retail speculation activity taking place in silver.
Down over 4% on the day at its lowest point, silver has eased off its Monday highs. Trading around $27.50 to $27.70, silver is on its way to close the first daily loss, following three straight days of gains. The top reached yesterday, $30.04, acted as a resistance level and a double top formation in the medium term. Prior to that, silver had reached a high of $29.84 on August 7 last year. That level remains unbroken now that the trend has turned and the price was not able to close above it. In between the two highs, silver mostly traded sideways, caught in the range of $22.50 to $27.00.
Retail Traders Target the Big Banks
The recent spike in the price of silver was attributed to a group of retail traders, who, through a collaborated effort, attempted to bring down big banks. The move was similar to the one performed in the GameStop scenario. In the silver market, Reddit-inspired traders took on large banks who were suspected of holding short positions in silver as a way to manipulate the price. The silver market, however, is a lot bigger than the market capitalization of GameStop. Additionally, hedge funds have held net long positions in silver since August 2019, according to a report from the CFTC. Both gold and silver are considered a haven during uncertain times in the market. The recent attempt by the retail trading crowd to bring their valuations higher continues to be challenged.
Gold also had its few moments of appreciation this week, although not as much as silver. On Monday, the yellow metal climbed a little over 1.00% from $1,847 to $1,871. Gold’s move to the upside was not strong enough to close in the green and the price dipped back below the opening levels by the end of the day. Presently, gold is trading to the downside for a second consecutive day, slipping 0.82% to its lowest intraday level of $1,844. The lowest point was also the area of the 200-day moving average, which usually acts as a support level. Gold is now hovering towards $1,850 as traders and investors have taken a risk on approach to the market today.
During January, gold registered a drop of roughly 3%, while silver is down 0.42% for the same period.
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