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Metals Stabilise on Monday
The metals market is attempting to stabilise on Monday following sharp losses seen last week. Silver prices in particular were hit hard last week with XAGUSD plunging more than 8% as USD turned higher. Gold prices were a little more resilient though were still seen softening over the week. The fall in metals prices came as various Fed members were seen voicing opposition to expectations of Fed rate cuts this year. Citing stickiness in inflation, Fed’s Jefferson and Bowman argued that rates would likely need to stay at higher levels for longer, diluting the recent uptick in market projections for Fed rate cuts this year.
US Rate Cuts In Doubt
On Friday, a spike in US consumer inflation expectations (3.2%) underscored this argument sending USD higher into the end of the week. While USD has been a little softer across the European open on Monday, the risk of a further rally in USD this week remains high. Along with further US data this week (Fed manufacturing, retail sales, industrial production), debt ceiling negotiations will also be in focus. Given the current uncertainty ahead of the looming deadline, USD has clearly been deriving safe-haven demand. With this in mind, any negative news-flow around the talks (due to resume tomorrow) should keep USD supported via the same mechanism. Near-term, this should keep metals pressured lower. However, should any resolution be agreed this will likely lead to a bounce in risk appetite and a weakening of USD which should help metals recover.
Technical Views
Gold
The rally in gold prices has stalled recently into a test of the 2069.41 level. Momentum studies have softened, highlighting risks of a near-term pull back. However, while the 1973.51 level holds as support, keeping the bull channel intact, the focus is on a continuation higher.
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Silver
The recent failure at the latest test of the 26.0974 level has seen the market reversing sharply lower. Price is now testing the 24.0073 level and with momentum studies bearish, the market is at risk of a further push lower. While this level holds, however, the longer-run bull view holds.
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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.