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Silver tumbles nearly 5%, dropping below the $50 level for its largest single-day loss since April.
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The correction follows a surge of retail FOMO, often seen as a contrarian signal by seasoned investors.
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Key factors include easing US political risk, renewed US-China trade optimism, and a technical breach of the accelerated uptrend line.
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Silver tumbles nearly 5%, dropping below the $50 level for its largest single-day loss since April.
-
The correction follows a surge of retail FOMO, often seen as a contrarian signal by seasoned investors.
-
Key factors include easing US political risk, renewed US-China trade optimism, and a technical breach of the accelerated uptrend line.
The correction follows a period where images of queues outside physical bullion shops circulated globally, suggesting a surge of FOMO (Fear of Missing Out) among retail clients previously unfamiliar with precious metals. The entry of the least experienced investors into a market is frequently considered a contrarian signal.
While the market's underlying fundamentals remain robust, pullbacks are a regular feature, especially when several catalysts align:
- US Political Risk Eases: News emerged yesterday of a potential deal between Republicans and Democrats this week, paving the way for the US government to resume operations. This development potentially removes a layer of geopolitical risk from the market.
- Trade Optimism: Donald Trump has declared that a trade agreement with China will be "magnificent," and he plans to meet with Xi Jinping at the APEC summit later this month.
- COMEX Inventory Shift: Silver inventories at COMEX have begun to decline, a trend that could signal the metal's return to London.
Silver is recording its largest daily decline since April. Historically, movements of this magnitude have been exceedingly rare. Source: Bloomberg Finance LP
The drop in COMEX silver inventories could signify a normalization of the situation on the exchange and the return of some metal to London. Source: Bloomberg Finance LP
Technical Snapshot
The price is retreating significantly today, falling not only below $50 per ounce but also breaching the 2011 peaks. Furthermore, the accelerated upward trend line, initiated in the second half of September, is being broken. Should this correction extend beyond a one-off profit-taking event, the next key support level will be around $47 per ounce, coinciding with the 30-day moving average.
What’s going on with gold?
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