Metals On the Rise Despite Solid US Labour Data
The metals complex has started the week on a positive footing with both gold and silver rising across the European open on Monday. Indeed, metals prices find themselves better bid despite the US Dollar starting the week in the green also. On Friday, the January US labour reports saw the headline NFP reading coming in well above expectations at 467k vs 110k expected. Average hourly earnings were also higher at 0.7% vs 0.5% expected although the unemployment rate was seen ticking up to 4% from 3.9% prior. In all, it was broadly a solid set of figures which is keeping the market firmly focused on a March hike and looking ahead to at least a full 1% of hikes over the year to come.
Looking ahead this week, the main focus will be on US CPI data due on Thursday. With other central banks in the G10 space having stolen some of the hawkish limelight recently (ECB & BOE), USD bulls need to see a strong reading this week to re-focus traders’ attentions on the Dollar. If this is the case, we can expect metals prices to come under selling pressure into the second half of the week. Alternatively, if there is any disappointment in the latest consumer price data, metals look well positioned to move higher here given the early support we are seeing.
Away from the Dollar, we are seeing residual safe haven interest for gold given the ongoing uncertainty over the situation with Russia and Ukraine. With reports still pointing to an imminent Russian invasion, despite Russia denying this, tensions remains high. If the situation deteriorates, gold prices should find firm support in the near term.
Technical Views
Gold
Gold prices are moving higher once more here off the latest test of the bull channel low. With MACD and RSI starting to turn higher, the focus is on further upside. However, bulls will need to see price quickly back above the 1826.71 level, which remains the key near term resistance to note. Above there, focus will turn to 1871.04 next. To the downside, any drop lower will see 1763.88 come into play as first support.
Silver
Silver prices are sitting on the 22.3205 support level for now, underpinned also by the shallow rising trend line from YTD lows, forming a contracting triangle pattern with the bearish trend line from highs. Unless we can see price break back above the 24.0073 level and bear channel top, the market is vulnerable to another leg lower near 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.