Are you looking for ways to be prepared for future uncertainties? Morgan Stanley strategists say the solution for some may be investing in precious metals like gold. They also point to silver as an alternative to gold. However, they warn investors about 4 issues!
Golden advice for investors from Morgan Stanley strategists
Silver is more tied to the global economy
According to the World Silver Survey, half of silver is used in heavy industry and high technology. Gold, on the other hand, has limited uses beyond jewelry and investment purposes. That’s why silver is more sensitive to economic changes than gold. When economies are on the rise, the demand for silver tends to increase.
Silver is more variable than gold
The fluctuation in silver prices can be two to three times greater than that of gold on a given day. It is possible for investors to benefit from this. However, such volatility will be challenging when managing portfolio risk.
Gold has become a stronger diversifier than silver
Silver can be considered a good portfolio diversifier with moderately weak positive correlations with stocks, bonds, and commodities. However, gold is recognized as a stronger diversifier. Unlike silver and industrial base metals, gold has very limited industrial uses. This floating gold is less affected by economic downturns.
Silver is currently cheaper than gold
Silver tends to be cheaper per ounce than gold. This makes it more accessible to small individual investors who want to own precious metals as physical assets.
A quick look at the technical picture of gold
Gold prices rose to $2,055 on Friday, as a slight decline in U.S. GDP and weak labor market data pushed the dollar to four-month lows. With this move, gold managed to break the $ 2,000-2,050 range. Depending on the latest developments in the US economy, expectations that the Federal Reserve will cut interest rates in 2024 have increased. This strengthened the position of gold. These macroeconomic trends and interest rate cut expectations positively affect gold markets.
Market analyst Arslan Ali interprets the technical picture of gold as follows. The gold price is trending cautiously optimistic, with a rally to $2,055. The precious metal is trending above the key pivot point. Thus, it faces the immediate resistance at $2.065. There are also other hurdles ahead at $2,088 and $2,108. Support levels hold at $2,018, $1,999, and $1,974. These provide potential protection against declines.
Meanwhile, the Relative Strength Index (RSI) is heading towards the overbought territory at 70, indicating that investors should be careful. The Moving Average Convergence Divergence (MACD) crossed the 1.26 to 6.64 signal. Thus, it indicates upward momentum. The chart patterns are indicating a bullish break above the $2,055 level, reinforcing the short-term bullish view. Overall, gold remains bullish above $2,055 with expectations of testing higher resistance levels. However, traders should remain vigilant due to impending overbought conditions.
To be informed about the latest developments, follow us twitter‘in, Facebookin and InstagramFollow on and Telegram And YouTube Join our channel!