Gold and silver divergence amidst upward momentum
Both gold and silver are closing the week in the green and in record territory. Silver futures are ending the week up $3.34 or 5.68% at $62.13 a record weekly close for the precious white metal. Gold futures gained $103.50 or 2.45% this week at the time of writing are trading around $4,332, also the highest weekly close on record for the precious yellow metal.
The biggest gainer this week in the precious metals complex was palladium which gained $110.60 or 6.68% and was last seen trading at $1,765. Today the metal reached price point not seen since 2011 when it hit a high over $1,800 at $1,804.30.
The star this week undoubtedly was silver which even with today’s decline of $1.87 (-2.92%) silver futures are still up for the last three consecutive weeks equaling a rise of $12.28 or an astonishing 24.64% in less than a month’s time. Spot silver is still posting gains of 114% for the year, compared to around 64% gains seen in spot gold for the same period. Silver (spot and futures) made four consecutive new record highs this week so the daily decline is not a surprise as profit taking after such a record breaking week is to be expected, that is why trading at the start of next week will be of upmost importance for the metal in terms of whether we see a correction here or continue to soar higher still.
If silver does manage to continue to new record highs next week traders should be cautious as silver has exceeded our year end target of $60 and while more upside is possible our belief is its upside would be likely capped near $70. On the other hand, silver futures have held onto and shown an increase in open interest trading volume, a noteworthy feat seeing as we are in the midst of the holiday trading season, a time when volume tends to drop off in all markets until after New Years. Other than October 9th volume in silver futures today was at the highest level for the entire year at 180k contracts traded which could be signaling to us that the momentum has not yet left, and higher prices could be expected.
In contrast gold futures have held onto steady volume instead of diminishing which is the norm for this time of the year. Today’s open interest of over 280k contracts is the highest daily volume since October for the precious yellow metal. This is fitting as todays gain of $20 puts gold futures in territory not seen since October, and represents the third highest close on record. Gold’s strong intra-day high at $4,387.80 was only $10.20 shy of the record high reached on October 20th. Gold futures have had four consecutive daily gains and consecutive days of higher volume that point to a renewed interest in the precious metal, while today’s long upper wick or shadow on a candlestick chart illustrates that there is strong resistance at the all-time high of $4,398.
