A golden time to take profits in precious metals: BTIG

Investing.com -- BTIG analysts said in a note Thursday that investors should consider taking profits in precious metals, particularly gold and silver, after strong year-to-date gains.

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

Gold has surged by about 29% year-to-date, while silver has jumped 34%, making it an ideal time to lock in profits, according to BTIG.

"We think we are at one of these inflections, despite their constructive momentum and trends," BTIG said in their note.

They added that daily charts are showing signs of "upside exhaustion," and the weekly chart points to "negative momentum divergence in overbought territory."

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

BTIG also observed that gold and real rates (inverted) have been trading closely over the past few months.

However, they acknowledge that since the last FOMC meeting, real rates on the 10-year Treasury have risen from 1.55% to 1.60%, even as gold rallied by around $100. This divergence is another factor leading BTIG to recommend taking profits.

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

For silver, BTIG noted that it has yet to break above its May highs, and they anticipate a dip in October, after which investors could consider adding to their positions ahead of a more significant breakout.

Source: Investing.com