Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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The rally in precious metals suffered a major setback yesterday, with gold registering its biggest one-day drop in over a decade, falling over 5% on Tuesday. Silver fared even worse, emerging from the wreckage 7% lower than the day prior. A dramatic event no doubt, although at first glance the correction appears to be a technical one. A number of analysts had warned that the precious metals market had become overheated in recent weeks and that a pullback was on the cards. The softening of trade relations between the US and China has removed at least some of the appeal of the safe-haven trade; as good a reason as any to trigger the some profit-taking. Initially, capital appeared to rotate into Bitcoin, which briefly pushed all the way to $114k just as metals were experiencing the worst of the drama, but then gave up those same gains hours later.
Another contributor to the flow into precious metals has been the uncertainty surrounding the US economy. The US government has now been closed for three weeks and many of the economic updates that markets would normally rely on have failed to materialise. Financial markets are in the dark about the state of the underlying economy, and when such information eventually does resurface, expectations will have to adjust quickly. Unexpected changes in the labour market, or indeed a shift in inflation data, could change forecasts for future rate cuts which would in turn change the dynamic in precious metals. Still no signs of an agreement as of yet.
Strong earnings reports from General Motors (GM), 3M Company (MMM) and Coca-Cola (KO) helped lift the Dow Jones to a new record high yesterday. Other US indices remained relatively unchanged as traders patiently await the latest quarterly report from Tesla (TSLA) later today. Earnings season is just getting started, with the likes of Microsoft (MFT), Alphabet (GOOG), Meta (META), Apple (AAPL) and Amazon (AMZN) all reporting next week.
Risk Warning : Trading derivatives and leveraged products carries a high level of risk.
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