Precious metals, for a second consecutive day, are conceding some value as chart consolidation takes center stage. With that said, however, both gold and silver are on course to post solid weekly gains for the first time in a few weeks now. Of all the days this week, Tuesday was one that really stood out due to the fact that both gold and silver spent most of the day adding ridiculous amounts of value. It was widely believed that metals would concede these gains a day later, but that did not happen as Wednesday brought about more stagnation than anything else.
Yesterday, however, metals began consolidating some of the gains made earlier in the week, but even then the losses were of very little significance. Now, the real test will come over the weekend to see if metals can open up next week in the same fashion that they closed this one.
Crude Oil Remains In the Headlines
For the past month or more, crude oil has been in the headlines because its spot value has been on an almost direct downward trend. Though prices have since more or less evened out and stopped falling, the reality of crude oil hovering near 5-year lows has had a harsh impact on the commodities market. For gold and silver, much of the past month was marred with losses simply because flagging oil prices were dragging all other commodities down too.
Just this week, a report was published claiming that an increase in the supply of US oil is a major reason behind why prices have fallen. With more oil on the market able to satisfy an unchanged demand, simple economics will tell you that the price of oil has no choice but to drop. Making matters worse, though, is the fact that oil from the US does not carry the lofty premiums you will find tacked on to purchases of oil from conflict regions of the Middle East and Africa. So, in summation, not only is there more oil on the market, there is more, cheaper oil and that is causing spot values to decline steadily.
For gold and silver, however, recently growing worries regarding a global economic slowdown are causing safe-haven demand for precious metals to tick upward. With equity markets really struggling as of late, it is no surprise that a good number of investors are seeking safety in precious metals. Though US stocks rebounded nicely on Thursday, many people are still wary that recent volatility could continue as we head deeper into the month of December. It will be interesting to see how the progress, or lack thereof, of equities affects the forward movement of metals. In all likelihood, should stocks bounce back through today and into next week, metals will pull back from their current positions.