BTIG Analysts Advise Taking Profits in Precious Metals

Investing.com — BTIG analysts suggested on Thursday that investors should consider taking profits in precious metals, particularly gold and silver, following strong year-to-date gains.

Despite remaining constructive on precious metals over the next 6-12 months, BTIG notes that current market conditions provide a tactical opportunity to sell and potentially buy these assets back during a pullback.

Gold has surged by approximately 29% year-to-date, while silver has jumped 34%, making it an opportune time to secure profits, according to BTIG.

“We believe we are at one of these inflection points, despite the constructive momentum and trends,” BTIG stated in their note.

They pointed out daily charts indicating signs of “upside exhaustion,” while weekly charts show “negative momentum divergence in overbought territory.”

Historically, October has been a weak month for gold, averaging a decline of 0.32% over the past 25 years.

BTIG also observed that gold and real rates (inverted) have been trading closely in recent months. However, since the last FOMC meeting, real rates on the 10-year Treasury have risen from 1.55% to 1.60%, despite gold rallying by around $100. This divergence leads BTIG to recommend profit-taking.

BTIG suggests that a pullback in gold prices could offer a more attractive re-entry point, especially if the SPDR Gold Shares ETF (NYSE:GLD) drops into the 225-234 range, reflecting a 5-8% pullback.

For silver, BTIG noted that it has yet to surpass its May highs, and they expect a dip in October. After this dip, investors could consider adding to their positions in anticipation of a more significant breakout.