Metals Rallying on USD Selling
The continued selling in the US Dollar has seen gold and silver starting the week in demand. Both metals are in the green so far today as traders look to capitalise on further USD weakness driven by a change in Fed expectations. While the market is widely expecting the Fed to again lift rates by .5% in both June and July, there is now a growing view that the bank might then look to hold off on any further hikes beyond July. We recently heard this view put forward by both Fed’s George and Bostic. With traders increasingly concerned over the impact of the Fed’s tightening program, some players now judge that the Fed will opt for a period of assessment following the July hike. If this perspective gathers traction we can expect the current USD pullback to extend further in the short-term, creating room for further upside in metals.
While the pullback in USD is having a positive impact on metals, strength in equities markets (and the broader risk complex) is offsetting some of this support. With equities rallying on USD weakness, upside for metal appears limited for now. Looking ahead this week, the focus will be on US labour indicators due on Friday. Any weakness in those figures will likely underscore concerns for the economy, putting the idea of a Fed pause further in focus.
Technical Views
Gold
Gold prices are in an interesting place here. The market is currently sitting midway in the bear channel which has framed the correction from YTD highs, but back atop long-term bull channel support. With both MACD and RSI bullish here, if price can break above the bear channel top (1919.92) this will open the way for a fuller run higher. To the downside, 1791.63 is the next key support to note ahead of 1722.37.
Silver
Silver prices have rallied back above the broken 2021 lows around 21.4525 and price is now on its way to making a test of the broken bullish trend line from Q3 2021 lows. If price can get back above this area, there is room for a move higher towards 24.0073, in line with bullish MACD and RSI readings. However, failure to break back above here will keep the focus on further downside in the short-term.
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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.