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Gold and Silver Futures Turn Bearish as International Demand Weakens

JP Buntinx
April 8, 2020

As the week trucks along, any hopes of seeing surprising bullish momentum for both silver and gold have been squashed. Futures for both precious metals have begun to slip, primarily due to lesser demand in overseas markets. 

Gold and Silver Futures Begin to Slip

It was seemingly a matter of time until short-term volatility would affect gold and silver prices once again. When it comes to precious metals futures, the current momentum doesn’t look all that promising. Even in India, the futures for gold and silver are slipping, despite noting higher demand for either commodity compared to the rest of the world.

Silver contracts for May 2020 are down by 1.2%, which is not entirely surprising. This is perfectly in line with what is happening on the international markets. Global silver prices are dropping lower, although the deficit is not all that large as one may think. 

For gold futures, a similar scenario has begun playing out. The gold futures are down by 0.49%, which isn’t necessarily something to be concerned about just yet. However, deliveries for June and August 2020 are also declining, indicating that this negative trend may continue.

It is worth noting that global gold prices are not following this bearish sentiment as of yet. In fact, the gold price has recently gone through a 2.5% increase, as it is now approaching the $1,700 mark once again. Some analysts expect a new all-time high for gold later this year, although there will be some volatility to contend with before that happens. 

Weak International Demand is a Problem

Looking at the overall market sentiment, it is not difficult to determine why the futures for gold and silver are falling. There is a lack of international demand for physical precious metals due to the coronavirus pandemic. That was entirely to be expected, yet it remains to be seen how this situation evolves exactly.

Combined with the lower production of both precious metals, the short-term future remains rather uncertain. That is not necessarily a validation of the bearish trend, as uncertainty can easily trigger upward market momentum. For now, the futures seem to dictate the short-term momentum, but that doesn’t mean the situation can’t turn around. 

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