Weekly Commodity Update: High Silver Demand?
GOLD
Gold opened the week on a positive note, opening higher than last week at $1783.89 and moved up on Monday for the only gain of the week, before the price basically collapsed on Thursday and Friday as Bond yields rose and the U.S dollar took off. This drops on Friday, with Gold down to $1727 per oz, finishes the month of February, with four weekly declines in a row, as the worst monthly decline since 2016. With higher Treasury yields this year, which has made Gold much less competitive, even with the Covid-19 Pandemic crisis with all its uncertainty. The only thing that can help is if the Federal Reserve can hold down the surging Treasury yields. While this will find an equilibrium, for the time being as the pandemic crisis slows down the demand for Gold is languishing especially as it is a non-yielding asset and is out of favor with other interest-bearing investments. The next major support level is down around $1675 set during the early months of the pandemic in April, May and June of 2020.
SILVER
This week Silver opened at $27.27 per oz and moved up initially early in the week, but like other precious metals moved down Thursday and Friday as Treasury yields rose. Even though it dropped to finish the week and month, we are sitting at a good support level at about $26 per oz and Silver has a good deal of industrial demand that if the post pandemic economy picks up, could help push the price of silver back above the $28 per oz resistance level. From a technical point of view Silver is sitting right on the 50 period Moving Average which if it holds at this level could be a very good support level to move higher from. As the congress is working toward a new COVID-19 Stimulus bill, if passed should spur new demand for and silver, so the next couple of weeks will tell, but expect a choppy sideways range in the meantime.
OIL
Oil opened the final week of February at $58.93 per barrel and moved up to a new yearly high of $63.79 before dropping back a bit on Friday as the U.S dollar strengthened due to higher Treasury yields. While the week will still end higher than it started the rally was also tempered by new expectations for higher OPEC production which could lead to increased supply and lower Crude prices over the next several months. Crude prices are constantly trying to balance demand and supply and the changes to either of these. Adding into this mix is the complication of new green deal policies which if enacted will surely push prices higher over the long run.
Bill Poulos is a financial writer, president, and co-founder of Profits Run. The name Profits Run comes from a popular saying among traders, “Cut your losses and let your profits run.” The company’s mission is to encourage people to invest while reducing the possibility of risk. Poulos brings a wealth of experience and knowledge about the stock market to the company from his decades of trading. Profits Run has authored and administers many products and programs, such as Premium Income Alert, Crypto Profit Alert and 20/30 Wealth Trader. Poulos has an engineering degree, an MBA in finance, and 45 years of business experience. Bill has lived in Michigan with his wife for 50 years. Please follow this account for weekly commodity updates!
