While the period after Christmas and before the New Year is meant to be quiet it has so far been far from it in some areas. The recent changes in markets were quiet to begin with, in the lead up to Christmas, unless of course you were trading Crypto currencies - with Bitcoin being one of the majors to take a tumble. The flow on effects from 30% of the value being whipped out were not plain to see on the currency markets, nevertheless markets don't like volatility like that and some traders have been quick to hedge themselves in metal markets in case we do see further falls. One of the reasons behind this is that some people believe that Crypto currencies may be a thing of the future, and at this stage they could potentially be a bubble and have the uncertanity of causing some sort of financial crash, that would have a flow on effect into real markets. As a result gold and silver have bucked the trend during this period and jumped higher as a result.
For me gold is going to be the obvious target for traders looking to hedge themselves in the markets and thus the recent lift higher bodes well for the bulls as it lifted above resistance at 1282.20 with the potential to lift higher to 129443 and 1310.32. Any gold bull will tell you that if any recession were to occur or panic in crypto currencies it could in turn lead to a jump in the value of gold. However, markets are volatile and we could also see a recovery, and of course in crypto currencies, which in turn would lead to pressure on gold prices to shift lower to support levels at 1282.20 and 1266.68. If markets however do get spooked then gold would be ideal to watch.
It's also the same story for silver but perhaps a little clearer as the movements thus far have been a little more like a recovery from the bearish sell-off we see a few weeks ago. What at first seemed like a recovery in the price has now lead to strong bullish activity with silver rising to resistance at 16.537 and with the potential to extend higher to 16.820. The upper Bollinger band is also a key area where we might also see some resistance. In the event that thing stabilise and we see some sort of sell-off much like gold then I would expect support levels at 16.355 and 16.100 to be candidates to slow the pace down in the event of a drop.
All in all, it's clear that metal markets could become a keen hedge and something to be aware of if you're looking to profit from crypto downfalls. The question is how much the market will get behind such an idea in the long run, and if it's positive for speculators.
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