Muted Start for Metals
It’s been a lacklustre start for the metals markets with gold prices currently sitting around the same price they were two weeks ago. Silver prices are seeing firmer demand so far today though, again, the market remains well within its recent range. Precious metals have failed to capitalise on the recent correction lower in USD. The sticking point for metals has been that equities markets have been rebounding recently, leading flows away from lower yielding assets, such as metals, and into higher yielding targets such as equities and high-beta currencies.
On the USD side of things, the near-term outlook looks tricky for metals. With the Fed widely expected to hike rates by a further 1% over this month and next, further USD upside looks likely. The only real hope for metals now is that the recent conversation around a potential post-July paise from the Fed, gains traction. If the Fed’s guidance appears to moderate and point to the likelihood of an assessment period following the planned, upcoming hikes, then this would likely create some room for a correction higher in metals.
With this in mind, the key event this week will be US CPI on Friday. Last month, the first signs of an inflation slowdown were seen in the US with CPI slowing by half from March. However, this time around, the market is looking for a modest pickup over May. If such an increase is seen, this will likely derail any suggestion of a near-term pause from the Fed, sending USD higher and weighing on metals. However, if data undershoots forecasts, this will no doubt throw the prospect of a pause into greater focus, weighing on USD and sending metals higher.
Technical Views
Gold
For now, gold prices remain capped by the 1871.04 level resistance. While within the bear channel, focus is on further downside. However, continued pressure against this level, alongside bullish MACD and RSI readings, suggests room for a break. If we do move higher form here, 1919.92 will be the next big resistance to note.
Silver
The correction higher off the May lows has seen silver prices trading back up to test the 22.3205 level resistance. This area remains unbroken for now. However, with both MACD and RSI bullish, a break higher cannot be ruled out. If bulls can get back above the broken bullish trend line, focus will be on 24.0073 next.
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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.