Gold
The safe haven asset has started the week on a somewhat softer footing with net sales kicking in at the European open. However, price remains firmly higher on the month following the breakout above the 1826.71 level. The key focus for gold continues to be the US inflation story. With prices on the rise in the US and the Fed still pushing back against any near-term rate hikes, gold is deriving demand form its traditional “inflationary hedge” mechanism. Given that the Fed looks unlikely to raise rates until well into next year, the short-term outlook remains favourable for gold.
Additionally, any downside across the risk complex, as a result of a stronger US Dollar, should also see gold benefiting form safe haven demand. The biggest material risks for gold are from any surge in US data which might raise the prospect of the Fed bringing forward its rates guidance. However, with the Fed focused mostly on restoring employment, this dynamic would likely only come about as a result of a bumper set of labour market readings.
This week, the focus will be on US retail sales. Given their importance as part of the GDP calculation there is room for USD/gold volatility in response to the release if we see any significant deviation from forecasts.
Silver
Silver prices are largely tracking the moves in gold for now. The market has started the week on a softer footing following a solid rally last week. With the US Dollar a little weaker today also, there is room for silver (and the metals complex as a whole) to recover today. The key focus will be on US data this week with any USD upside likely to curtail the rally in silver. Any disappointments, however, should see USD unwinding near-term, creating room for a continuation higher in the metals .
Technical Views
Gold
The recent rally in gold has seen the market advancing above the 1826.71 level, confirming the channel break. While above here, the focus is on a further push higher towards the 1919.92 level next, with both MACD and RSI supporting such a move.
Silver
The channel break in silver has seen price advancing higher, recently taking out the 24.0073 handle for a second time. Price is currently stalled just ahead of a test of the 25.5384 level. With both MACD and RSI bullish, the focus remains on continued upside in the near term with a break of 25.5384 targeting 26.5711 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.