Precious Metals Investing Taking a Hit From the Bigger Market

Precious metals have long existed as a complement to the wider market. When the market is down, the demand for precious metals to serve as a hedge goes up to match. When there is little risk of a downward turn, precious metals often go down themselves, as people see less a need to commit cash to hedge their bets on equities. In fact, that's exactly the kind of behavior that has been seen from precious metals in recent days.

A Place for Gold and Silver, But This Just Isn't It

Both gold and silver, in recent days, saw prices go lower and even hitting new daily lows. As of this writing, the spot price on an ounce of gold was $1,516 and silver's spot price per ounce was $17.75. The prices fluctuate routinely, and they're coming back off some recent lows—earlier this week December gold futures were running at $1,497 and Comex silver for December was at $17.87.

The immediate culprit behind these lower prices is the US equity market. Stocks remain on an upward climb, and with that in the mix, it's increasingly clear that the “barbarous metals” class of investing is taking it on the chin. It certainly doesn't help matters that Asian and European markets have been likewise up, which removes gold and silver's other potential markets from showing a lot of interest.

The World is a Bitter Place for Precious Metals

Moreover, one of the greatest sticking points of all to equities—the ongoing US-China trade war—may not be so ongoing after all. Reports suggest that the dueling duo is within striking distance of at least a partial trade deal, dubbed “Phase 1” by those close to it and that in turn should spark more conventional deals and drive further interest in stocks, drawing all the more attention away from gold and silver.

Just to round things out, many of the biggest geopolitical and economic hotspots—including the Middle East among others—have been comparatively quiet. That also adds up to drag on the gold and silver market, especially with OPEC announcing that shale oil production from the US will likely keep its own production efforts at a reduced pace for at least the next five years. That basically announces to the world that the chance of gas wars has just fallen to somewhere around “pretty slim,” which should help to keep the lid on a lot of tensions out there.

Technical Advantages Bringing Hope, But Will the Conditions Follow?

There is still, however, at least some hope for recovery in gold and silver. Gold bulls, by some figures, still have a technical advantage, at least in the short term. However, a lot of the trading fronts don't seem too interested in that advantage, and trading has been less than brisk. With the next upside, resistance said to be at $1,525, gold is actually fairly close, but will need just a little extra juice to make the next upswing happen. Silver's picture, meanwhile, is surprisingly similar, as December silver looks to offer the same short-term advantage as gold has. Silver prices have been running higher than normal for the last five weeks, and a breakout may occur if prices hit $18.35 an ounce by Kitco's figures.

Essentially, the gold and silver markets are victims of the success enjoyed in grand fashion by the stock market. Back in April, President Trump noted that stocks had hit record levels “close to or over 100 times,” and there have been several such record-breaking days since then. With gold and silver commonly regarded as backup measures and hedges against declining stocks, they just haven't had a lot of purpose lately. Many have likely even regarded such purchases as wasted opportunity, especially in an equities market that's still seen expanding even now.