Top Investment Manager Advises Taking Profits in Precious Metals Amid Strong Gains
BTIG analysts have recommended that investors should consider locking in profits in precious metals, such as gold and silver, following significant year-to-date increases. While they maintain a positive outlook on precious metals in the next 6-12 months, BTIG believes that current market conditions present a tactical opportunity to sell and potentially re-enter these assets during a pullback.
Gold prices have surged by approximately 29% so far this year, with silver also jumping by 34%, making it an opportune moment to secure gains, according to BTIG. The analysts stated, “We think we are at one of these inflections, despite their constructive momentum and trends.” They pointed out that daily charts indicate signs of “upside exhaustion,” while the weekly chart shows “negative momentum divergence in overbought territory.”
Historically, October has been a weak month for gold, with an average decline of 0.32% over the past 25 years. BTIG also highlighted the correlation between gold and real rates (inverted) in recent months, noting that real rates on the 10-year Treasury have risen from 1.55% to 1.60% since the last FOMC meeting, while gold prices have increased by around $100. This divergence has led BTIG to advise taking profits.
The analysts suggested that a potential pullback in gold prices could offer a more attractive re-entry point, particularly if the SPDR Gold Shares ETF (NYSE:) falls into the 225-234 range, representing a 5-8% decline. As for silver, BTIG mentioned that it has yet to surpass its May highs, and they anticipate a dip in October before a possible breakout, which could provide an opportunity for investors to add to their positions.