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Metals market today: Gold's 4-week winning streak, XME breaks 200-dma

13:00, 12 August 2022

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In this article:
  • Palladium
    Palladium
    2339.43 USD
    95.98 +4.330%
  • Platinum
    Platinum
    938.35 USD
    34.02 +3.800%
  • Silver
    Silver
    21.062 USD
    0.358 +1.730%

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Bank reserve gold bars arranged in rows
Gold saw its fourth consecutive weekly rise this week – Photo: Shutterstock

Precious metals were fairly mixed on Friday morning, ending the week on a lacklustre note, with silver up, but platinum and palladium down. Gold was trading mostly flat, at about $1,787 per troy ounce, just shy of the critical $1,790 mark, however, was on track for its fourth consecutive week of gains.

Gold was on track for its 4th consecutive weekly rise 

Analyst views on metals

According to Piero Cingari, analyst at Capital.com, “University of Michigan consumer sentiment is something to keep an eye on today. Analysts expect a slight increase in August to 52.5 from 51.5 in July. However, this would still be very close to the record lows (50) set in June.

A lower-than-anticipated reading could be interpreted as a sign of further economic deceleration, thereby bolstering market expectations of a less hawkish Federal Reserve. This could provide a further boost to gold and silver prices.

A stronger-than-expected print in the US Consumer sentiment would indicate that a rebound in US economic activity is now ongoing in the third quarter, following the technical recession in the first half of the year. This could keep markets unsure about an upcoming Fed stance shift, somewhat limiting gold’s upside.

A rebound in US consumer sentiment would benefit growth-sensitive metals such as silver and copper, which, among other things, now enjoy a tailwind from the US Inflation Reduction Act, which promotes investment in green transition sectors.”

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Metals market performance

Silver traded mostly flat at $20.3 per troy ounce, with a weekly rise of about 2.2%, following gold’s footsteps, as the precious metal also benefited from a weaker US dollar (DXY).

Platinum inched lower 0.4% to $951 per troy ounce, but rallied about 2% in the last three days, following Sibanye Stillwater (SBYSF) predicting a steep drop in platinum group metals production at its US mines due to flooding. This caused palladium to also see a weekly rise of about 6.3%, trading at about $2,264 currently.

Copper dropped 1.2% to $3.6 per pound, eroding away some of the gains seen by the base metal due to lower-than-expected US inflation numbers for July. However, copper still saw gains of more than 5% since the beginning of the month. Iron ore inched lower from CNY 773 per tonne in the last trading session to CNY 771 on Friday. Aluminium dropped 0.5% to $2508 per tonne. 

The US dollar (DXY) inched up from $105.1 from the previous trading session to $105.4 on Friday morning, recovering somewhat from its recent declines.

The US Treasury yields dropped 1 basis point to 2.8%.

Top mining ETFs and mining stocks

Piero Cingari highlights, “When it comes to mining stocks, the SPDR S&P Metals and Mining ETF (XME) has shown some interesting technical signals, with prices breaking above the 200-day moving average for the first time since early February 2022.

Gold

1,725.72 Price
+1.560% 1D Chg, %
Long position overnight fee -0.0156%
Short position overnight fee 0.0055%
Overnight fee time 21:00 (UTC)
Spread 0.18

Silver

21.06 Price
+1.730% 1D Chg, %
Long position overnight fee -0.0115%
Short position overnight fee 0.0026%
Overnight fee time 21:00 (UTC)
Spread 0.020

Natural Gas

6.95 Price
+5.030% 1D Chg, %
Long position overnight fee -0.1782%
Short position overnight fee 0.1325%
Overnight fee time 21:00 (UTC)
Spread 0.005

Oil - Crude

85.82 Price
+3.610% 1D Chg, %
Long position overnight fee 0.0235%
Short position overnight fee -0.0429%
Overnight fee time 21:00 (UTC)
Spread 0.03

In that instance, XME then delivered a 52% rally to the high of 18 April. For the first time since April, the daily RSI is also flirting with overbought technical levels. If the bullish price momentum continues, June’s high at $56.9 could be the next resistance to test.”

XME crosses the 200-day moving average

The S&P Global Metals and Mining ETF showing the index crossing the 200-day moving averageXME has recently crossed the 200 day moving average – Credit: Trading View

The Van Eck Gold Miners ETF (GDX) dipped 1.9% to $26.6, with a weekly rise of about 2%.

The Van Eck Junior Gold Miners ETF (GDXJ) dropped 2.2% to $33.6, dropping 0.7% this week.

The S&P Global Metals and Mining ETF (XME) inched up 0.8% to $51.5, with the index also crossing the 200-day moving average.

Glencore (GLEN) dropped 1.4% to GBP 4.6, with a weekly decline of about 8.7%, following the company breaking things off with a Chinese trader over copper worth about $500 million going missing.

Rio Tinto (RIOgb) traded mostly flat at AUD 95.3, dipping about 0.5% over the last week.

Antofagasta (ANTO) dropped 2.4% to GBP 11.4, following the miner warning of copper mining challenges in Chile due to the country’s new tax plans.

Anglo American (AALI) inched lower 2.2% to GBP 29.5, inching up more than 1% in the last week.

Today’s market moving events

The University of Michigan consumer sentiment index is releasing later in the day. In July, the index had inched up to about 51.5 from a record low of 50 in June. However, this month, analysts expect it to touch about 52.5.

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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