As the last trading day of the month comes to a conclusion, precious metals futures traded moderately to strongly higher on the day. Today’s gains were felt across the metals.
However, none of the other metals could keep up with the precious ore and today could be summed up by the lone ranger himself “Hi-Ho silver away!”. SI futures were running like a horse in the Kentucky derby and in addition to earlier gains this month, silver galloped over 20% higher for the month.
The gains in silver were superb with the precious white metal gaining 2.88%. The July futures contract closed at $18 48 ½ cents, after factoring in today’s gains of almost $0.52. Technical studies indicate that resistance first starts at $18.65 per ounce, with major resistance at $19.
Gold also had a very strong finish closing higher on the day, as well as higher on the month. Gold futures basis the most active August 2020 contract gained $14.70 (+0.85%) and is currently fixed at $1743 per ounce. Our technical studies indicate that the first level of resistance occurs at $1765, with major resistance at $1788 per ounce.
Palladium futures gained 1.73%, a total of $32.90 with August futures closing at $1934.50. Platinum gained $5 in trading today, with the most current July futures currently fixed at $873.10 per ounce.
Strength in the precious metals this month can be attributed to two factors. The first of which is the global pandemic which has resulted in economies worldwide contracting. This global contraction of GDP has resulted in central banks worldwide taking emergency measures to aggressively curtail the economic damage.
The Federal Reserve along with the U.S. Treasury Department have taken dramatic steps infusing approximately $6 trillion in aid relief packages to individuals, small businesses and corporations. The massive government stimulus was a major underlying reason that both global equities and precious metals moved higher this month.
The second factor contributing to this month’s dramatic rise in the precious metals is due to the increased tensions between the United States and China. This tension stems from the recent unrest in Hong Kong, and the response by the United States.
Yesterday U.S. Secretary of State, Mike Pompeo declared Hong Kong to be no longer autonomous from China. That was followed by today’s press conference President Trump held in the White House Rose Garden. During this conference President Trump announced that the United States is leaving the World Health
Organization, and will begin to revoke Hong Kong’s special status. He also said that the United States would move to sanction Chinese officials if they continue to smother Hong Kong.
The economic fallout will take years before economies globally return to their pre-pandemic levels. It is also highly likely that the tension between the United States and China will continue. As such these two factors could have a profound impact on precious metals pricing taking the entire complex higher.