Gold & Silver Threatening to Break Lower
Gold and silver prices have started the week under mild selling pressure. Both metals were knocked heavily lower last week amidst the resurgence in USD. While the Dollar failed to break out to fresh yearly highs, silver prices were seen plumbing fresh 2022 lows with gold prices breaking through key support.
Looking ahead this week, there is plenty to focus on and both metals are at risk of further losses if we see a continuation higher in USD. The FOMC meeting minutes on Wednesday are likely to fuel further USD upside in the near term. Given the heavily hawkish stance seen from the Fed at the last meeting, traders are expecting hawkish details from the meeting. The key issue is likely to be any discussion around the size of the upcoming July rate hike. With the bank opting for a larger .75% hike in June, traders are now looking to gauge the likelihood of a similar hike this month.
Following the FOMC minutes, focus will then shift to the next round of US labour reports due on Friday. Last month we saw some stickiness in the data with earnings and unemployment rate remaining unchanged while the headline NFP was above expectations. This month, traders are again looking for earnings and unemployment rate to remain unchanged while the NFP figure is expected to have fallen back to 275k from 390k prior. Should we see any upside surprise to any of these figures, metals are likely to head lower as USD rallies. However, should we see any downside surprises, this might take the shine off the current USD rally, allowing metals to trade higher near term.
Technical Views
Gold
Recent price action in gold has seen the market caught between support at 1791.63 and resistance at 1871.04, while still within the bear channel from YTD highs. While price attempted to break down last week, we are still sitting atop that support level for now and, with clear bullish divergence in momentum studies there are risks of an upside break while that level holds. To the downside, should price slip beneath support 1722.37 is the next support to note.
Silver
The sell off in silver prices last week saw the market slipping below the prior 2022 lows at 20.6398. While price remains below this level, and with both MACD and RSI turned bearish here, the focus is on a continuation lower towards the 18.4421 level next. To the topside, bulls need to see price back above the 22.3205 level to affect a shift in momentum.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.