Gold and silver had a good start to the year. A weakening dollar and a correction in the stock market might help explain the advance these two precious metals made since the beginning of 2014. However, recently we saw some weakness that might question their ability to trend higher through the balance of the year.
Last month, when gold prices were soaring, we commented that gold was likely to find resistance at the $1,375/oz level and indeed it did. Gold prices decreased last week and we still need to see gold making new highs to make us bullish.
The strong relationship between gold and silver is unquestionable. Two weeks ago we pointed out that silver was starting to weaken and lower prices could be expected, having also a depressing effect on gold prices.
During the past few weeks, the stock market resurged, confirming to be in good shape. This doesn’t help push gold prices up, because when the stock market is healthy, investors usually tend to pour money into stocks, leaving less money for gold. Finally and most importantly, the dollar soared last week and this is usually negative for gold and silver:
What This Means For Metal Buyers
The next few weeks will give us important clues about where gold and silver will head trough the rest of the year. Despite their good start of 2014, we still don’t see these precious metals skyrocketing through the end of the year. We would recommend buyers wait for bullish signals before taking long-term positions.