In a notable turn of events, the prices of gold and silver have displayed remarkable strength at the beginning of the US trading session on WednesdayGold prices have surged close to historic highs, capturing the market's attention significantlyThis week saw both of these precious metals experiencing an influx of buy orders driven by a mix of risk-averse sentiment and technical analysis—an indication of the market's ever-evolving landscape.

April gold futures rose by $8.40, reaching $2957.40, showcasing robust upward momentumSilver prices for March also increased notably, adding $0.077 to settle at $33.45. Several factors are at play behind this uptick in precious metal pricesOne key driver is the growing speculation surrounding the potential reevaluation of the US gold reservesSince the last time the US pegged its gold reserves at $42 per ounce back in 1973, the current spot gold prices have skyrocketedA report from broker SP Angel indicates, “There are signs suggesting that this could allow the US Treasury to borrow against the debt ceiling, thereby postponing the 'X date' for debt renegotiation.” If this initiative is put into effect, it will have far-reaching implications for the US's financial health and the financial markets, prompting investors to reassess the intrinsic value of gold.

Furthermore, prompted by reports of Elon Musk's call for an audit of Fort Knox's 4,580 tonnes of gold reserves, market interest has surged tremendously

Advertisements

SP Angel added, "A heightened awareness of gold’s potential value may support an uptick in gold inflowsWith retail investors increasingly showing favor towards gold, ETF inflows are on the rise." The enthusiastic participation of retail investors has significantly bolstered demand in the gold market, driving prices higher continuously.

From an international perspective, the performance of the global stock markets has been mixed, with Asian and European indexes experiencing fluctuations overnight, indicative of vigorous market competition between bulls and bearsHowever, when the New York markets opened, US indices were predicted to open lowerDespite being in close range of the all-time highs recorded at the end of last year, the uncertainty surrounding the market remains prevalentA pivotal piece of news that caught the market's attention involved the US's potential imposition of approximately 25% tariffs on imports of automobiles, semiconductors, and pharmaceuticals, which could be announced as early as April 2. The US did not specify which countries would be affected, increasing uncertainties and highlighting potential impacts on the global economy, thereby continuing to encourage the market's demand for gold as a safe haven.

Against the backdrop of global economic integration, adjustments in trade tariffs could destabilize existing supply chains, influence corporate production and profitability, and consequently instigate investor concerns, steering their funds toward safe-haven assets like gold.

On the same day, the US also released minutes from the latest Federal Open Market Committee meeting, providing an essential data point that the market eagerly scrutinized

Advertisements

These minutes could reveal the Fed's future monetary policy trajectory, which has a direct influence on the financial marketsFor instance, if the minutes suggest a tendency towards rate hikes, the dollar may strengthen, consequently placing downward pressure on precious metals like gold; conversely, if the minutes signal an inclination towards easing, gold prices could potentially surge further.

In external markets, the dollar index experienced a slight uptick, which created some pressure on gold pricesTypically, there is an inverse relationship between the dollar and gold; a stronger dollar makes gold, priced in dollars, more expensive for holders of other currencies, thus curtailing demandNevertheless, gold prices have maintained a strong trajectory, indicating that other supporting factors have significantly outshone this pressureFurthermore, crude oil futures on the New York Mercantile Exchange also observed substantial performance, trading at around $72.50 per barrelThe fluctuations in oil prices not only impact the energy markets but also ripple through the entire economic systemElevated oil prices can escalate production costs for businesses, thereby driving inflation expectations, which is a favorable factor for gold price appreciation.

As for the current yield on benchmark 10-year US treasury bonds, which stands at 4.56%, fluctuations in bond yields will also influence investors' asset allocation decisionsWhen bond yields rise, investors often pivot their capital from risk assets like gold to treasuries, whereas a decline in yields typically entices greater investments in gold.

Additionally, other economic data released from the US on that day, including applications for MBA mortgage loans and new housing starts, provided further insight into the economic landscape

Advertisements

The mortgage application data serves as an indicator of the real estate market's activity level, while new housing starts are directly related to construction industry growth and overall economic developmentChanges reflected in this data can greatly influence market expectations, ultimately shaping investor decision-making.

From a technical analysis perspective, the bulls in the April gold futures market are currently displaying a formidable overall technical advantage in the short termThe daily candlestick analysis depicts a pronounced upward trend, echoing the prevailing optimism within the marketThe next upward goal for the bulls is to close above the solid resistance level of $3000.00; breaching this critical point could usher in a fresh round of price increases for goldConversely, the bears' next immediate downward price target is to push prices below the solid technical support level of $2850.00; however, the current market momentum suggests that bears are under considerable pressureThe first resistance level stands at $2968.50, followed closely by $2985.00, while the first support level is at $2925.00, then $2900.00.

Overall, we assign a market rating of 9.0 to the gold market—reflecting its strong position in the current landscapeLike gold, silver futures for March have also demonstrated commendable performanceWith prices exhibiting an upward trend on the daily chart, bulls currently enjoy a solid technical advantage in the short termThe next upward target for bullish silver investors is to close above the sturdy technical resistance level of $34.24, the high recorded in FebruaryIf this resistance is broken, silver prices anticipate further appreciation

Advertisements

Advertisements