BTIG Analysts Advise Taking Profits in Precious Metals

BTIG analysts issued a note on Thursday suggesting that investors may want to cash in on recent gains in precious metals, especially gold and silver.

While they maintain a positive outlook for the next 6-12 months, they argue that current market dynamics present a good opportunity to sell now and potentially buy back during a future pullback.

Gold prices have increased approximately 29% year-to-date, while silver has risen 34%. BTIG believes it's an optimal time to secure profits.

> "We think we are at one of these inflections, despite their constructive momentum and trends," BTIG stated.

The analysts noted signs of "upside exhaustion" in daily charts and pointed out "negative momentum divergence in overbought territory" on weekly charts. Historically, October has not been favorable for gold, averaging a 0.32% decline over the past 25 years.

BTIG highlighted that gold prices have been closely aligned with real rates in recent months. They noted that since the last FOMC meeting, real rates on the 10-year Treasury have increased from 1.55% to 1.60%, while gold has rallied around $100. This discrepancy influences BTIG's profit-taking recommendation.

They suggest that a drop in gold prices could create a better buying opportunity, particularly if the SPDR Gold Shares ETF (NYSE:GLD) falls to the 225-234 range, indicating a 5-8% pullback.

For silver, they pointed out that it hasn't yet surpassed its May highs, and they expect a dip in October. After this expected decline, investors might consider increasing their positions ahead of a more substantial breakout.