Precious Metals Rally into the New Year

January 6, 2021 at 09:53 AM

The new year started in a bullish mood, and precious metals surged on Monday as it looks like bullish fundamentals are finally starting to matter again.

Gold rose 2%, and silver jumped 4% at the time of writing. Still, it seems like gold has finally managed to cancel the medium-term downtrend as the bullion jumped above the strong bearish trendline, which has been limiting its upward movement since August. 

Thus, the short-term outlook now seems bullish, and if the price closes above this trend line on a weekly basis, the medium-term trend could also change to bullish.

Additionally, many analysts and traders have observed the multi-year bearish trend in commodities, which is ending nearly everywhere. Thus, most of the major commodities might start building their respective long-term uptrends.

That theory should be supported not only technically but fundamentally as well. As long as central banks continue to print a lot of money into the financial system, currencies will weaken, and that is the time for precious metals to shine. Real yields are also falling across the globe, while on the other hand, the amount of negative yields debt is rising sharply, along with deficits. 

Therefore, we might argue that a new bullish leg has started in precious metals, and they could rise for 10 to 15 weeks before correcting.  Dips could be bought in this environment, and gold’s new target will probably be August highs above 2,000 USD, while silver should aim to reclaim the 30 USD threshold. 

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