FxWirePro: Bullion market trends and hedging strategies

The precious yellow metal prices surged as the US dollar eased on the yield curve trampled after April’s US unemployment data. Currently trading $1315 (which is well above 21DMA).

While we lately boosted our gold price forecasts and recommended longs in Dec’18 CME gold foreseeing further upside risks. Gold futures prices for June delivery on the Comex division of the NYME was up $3.1, or 0.2%, to $1,317.9 a troy ounce, while silver futures added gains by 0.33% to $16.570 a troy ounce by 04:16 GMT.

We saw the early March pullback as an advantageous level to add length and lower our average entry cost.

Went long in CME gold for Dec’18 delivery at $1,352.80/oz in February. Added an equivalent unit at $1,327/oz in March, with a new entry level of $1,339.90/oz for a trade target of $1,540/oz and with a stop at $1,273/oz.

Stay long CME silver for Dec’18 delivery: On the back of upward revisions on gold, we have further boosted our silver forecasts and, amid a broader medium-term precious metals rally, see the potential for silver to outperform gold as the XAU/XAG ratio moves lower toward 70 over the second half of the year.

On the fundamental side, silver’s linkage to industrial demand makes it more exposed to a late cycle demand thrust, which should also boost its pricing prospects, if anything.

As such, we look for silver to break out higher over the medium-term, particularly given its much cleaner investor positioning.

Added long Dec’18 silver at $17.10/oz in February. Added an equivalent unit at $16.59/oz in March, for a new entry level of $16.85/oz for trade target of $19.37/oz with a stop at $16.00/oz.

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