Summa Silver Corp. (TSXV: SSVR, OTC: SSVRF, FRA: 48X)
Silver Lives Here
A day after gold prices hit a new record high, as investors rushing to take profit, gold prices fell deeply on Tuesday. By the close of trading, the Nymex April gold futures closed at $2,918.8 per ounce, down 1.50 per cent.
Data from the U.S. Conference Board showed that the consumer confidence index fell to 98.3 from 104.1 in January, well below economists’ expectations of 102.7. This was actually the largest single-month decline since August 2021, triggering panic and heightened investor concern about the risk of recession in the U.S. economy.
After the data was released, dollar, U.S. stocks, U.S. bonds and commodities such as gold and crude oil weakened all together, which is not usual at all.
Stephanie Guichard, senior economist at the Conference Board, said consumers became pessimistic about the future of the business environment, and pessimism about future employment prospects climbed to a ten-month high. These pessimistic expectations should have provided some support for the safe-haven asset gold.
The report noted that for the first time since June 2024, the expectations index, which measures consumer confidence over the next six months, fell below the 80 threshold that usually signals the onset of a recession.
Meanwhile, consumer inflation expectations are picking up, with the 12-month average soaring from 5.2% to 6%. Finally, the percentage of consumers expecting a recession in the next 12 months rose to its highest level in nine months, optimism about the stock market also waned.
Jim Wyckoff, senior market analyst at Kitco.com, sees the drop in gold prices as normal profit-taking after they rose more than 12 per cent in the first two months of the year. The sell-off has yet to cause any significant damage to technical charts, he added. Considering that risk aversion is still high, gold prices will return to the uptrend after the drop.
Wyckoff cautioned investors that if April gold falls below the strong technical support level of $2,845, it could cause near-term technical damage and may suggest that a market top has formed.
