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Gold and silver break higher as yields drop further on ADP

Fawad Razaqzada Fawad Razaqzada 04/08/2021
Gold and silver break higher as yields drop further on ADP Gold and silver break higher as yields drop further on ADP
Gold and silver break higher as yields drop further on ADP Fawad Razaqzada
Precious metals have been fairly quiet considering the big falls we have seen for bond yields in recent times. So, are gold and silver about to storm back to life? Well, I wouldn’t bet against them as falling yields reduce the opportunity cost of holding the non-interest-bearing metals.
 
Bond yields have fallen sharply in recent times on signs of slower economic growth, rising virus cases around the world and more lockdown measures. Central banks have convinced the markets that they are not going to be reducing stimulus measures in a hurry, even if inflation is expected to remain hot or get even hotter in the coming months. Among the most dovish of central banks, the European Central Bank is the reason why German bund yields are the weakest among the major economies, with the 10-year falling to below -0.5% for the first time since February today. But yields have fallen across the world, from the US to China. This should help to keep gold prices supported.
 
While gold has rebounded after testing the $1810 support level for the past two days and it looks poised to break resistance around $1830 next as it continues to make bullish price action on the intraday charts.
 
 
Silver has already broken from its falling wedge pattern to the upside, which makes it more appealing from a technical point of view:
 
silver

Whether or not the moves will hold remain to be seen. The focus is now turning to the US jobs sector with the publication of ADP private payrolls disappointing badly at 330K vs. 695K expected.

The ISM services PMI and its employment component are due at 15:00 BST, ahead of the usual weekly jobless claims data on Thursday and the official nonfarm jobs report on Friday.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Kearabilwe
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Kearabilwe Nonyana
Market Analyst, South Africa

Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives. His career in the financial markets has seen him hold various positions in global investment banks and global CFD and Spread betting firms. He has deep interest in using quantitative methods to help him understand and teach the fundamental drivers of asset prices.
 
 
 

Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Kearabilwe
Kearabilwe Nonyana
Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives.

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