With stocks and index ETFs continuing to seek out higher ground, precious metals are falling again, with gold and silver futures augmenting their downtrends from last week.
Gold broke below the 200-day SMA, at $1,800 area, to hit its lowest prices in nearly five months, at $1,775, but has since bounced back a bit to trade down 1.30% at $1790.70, as stocks are gaining amid the Black Friday retail holiday.
Some well-known gold ETFs are lower amid the moves, with the SPDR Gold Trust (GLD) off 1.01% and the iShares Gold Trust (IAU) down 1.1%.
Silver futures have been seeing even more significant losses, as the industrial metal has dropped below $23 an ounce, down 2.75% and testing its September lows. The iShares Silver Trust (SLV) tumbled more than 3% amid the fall in futures.
Investor’s optimism over the potentially efficacious coronavirus vaccines from Pfizer, Moderna, and AstraZeneca as well as the positive sentiment about a more stable political environment has created more risk-on action in markets, as investors eschew precious metals in favor of stocks.
A number of analysts now see more downside for the precious metals, especially silver, which could be good for stock investors who favor index ETFs, as well as savvy investors who are willing to take on more risk and trade inverse metals ETFs like the ProShares UltraShort Silver (ZSL).
“Meanwhile, gold/silver ratio managed to get above the nearest resistance level at the 50 EMA at 77.90 and is trying to settle above the 79 level. If this attempt is successful, gold/silver ratio will move towards the 80 level which will be bearish for silver,” wrote Vladimir Zernov, of FX Empire.
One potential hiccup is that medical pundits are unclear as to how long the vaccine provides immunity and whether or how often people may need periodic booster shots, due to the short quantity of data.
“These vaccines are going to be approved and then rolled out with basically a few months worth of data. You’re not going to do a two-year study to see whether it’s effective for two years with more than 200,000 people dying this year” in the U.S., said Paul Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia.
For investors looking to use ETFs to trade precious metals once they reach lower levels, Aberdeen has quite a collection. Aberdeen’s suite includes the Aberdeen Standard Gold ETF Trust (SGOL), which comes with a 0.17% expense ratio, and the Aberdeen Standard Physical Silver Shares ETF (SIVR), which has a 0.30% expense ratio. Additionally, the Aberdeen Standard Physical Precious Metals Basket Shares (NYSEArca: GLTR), which has a 0.60% expense ratio, is a cornucopia of metals including gold, silver, platinum, and palladium.
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