Gold and silver prices spiking higher on geopolitical fears

New York (Jan 6)  After Friday’s big rally in metals, we are seeing a repeat this morning. The terrorist attack in Kenya last night and the continuation of the issues with Iran are causing global fears, pushing metals to highs not seen in months.

What does this mean in the big picture of gold and silver? Although we are long both gold and silver, this action is actually more bearish for long-term pricing than bullish. This entire rally went from being driven by a solid technical pattern to one of fear.

Markets that are driven by fear are doomed to fail, and we would expect this rally to fail miserably. We will maintain our long-term bullish views on the metals; however, in the short run, we are looking for a place to sell. We are expecting a 2-3% sell-off in the next couple of days before this rally resumes. The move up is too fast and can’t be maintained. The bigger the rally from these events, the bigger the sell-off we will see.

KitcoNews

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