Gold/Silver – New breakout levels in Gold and Silver with your buy level in Platinum
Precious Metals had a volatile week led by a fury of economic data that the Federal Reserve is closely monitoring. The upward surprise in the ADP figure on Thursday was enough to take Platinum, Palladium, and down 1.5-2%, pushing Platinum below the psychological $900 mark. Following the data release, the ISM Services number came in at 53.9 versus the expectation of 51.3 driving the odds of a July interest rate hike up to 93.6%. The sell-off in the market was not limited to Precious Metals but broadened, with the S&P and Dow having the largest one-day sell-off since May. A reversal of fortune occurred on Friday, with seemingly opposite data showing 209k jobs created versus the expectation of 230,000, leaving the Federal Reserve scratching their heads. Will the Fed raise one more time or two? Either way, a Fed pivot is near, and the bottom in Gold is closer.
Daily Gold Chart
After four straight weeks of losses, we have the first signs of "exhaustive selling," indicating the potential for "bottoming action" in Precious Metals. Gold briefly tested the 200 DMA at $1904, where bargain hunters are beginning to emerge. The critical level we will watch next week will be $1943, where Gold futures failed on July 5th. Any close above could trigger a short covering rally to $1985. You will want to watch the psychological $2000 level and ultimately $2008 as your breakout level. Any close over $2008 should trigger a wave of buying up to all-time highs and eventually extend to our long-term target of $2500/oz. We anticipate that the Fed's reckless acceleration in interest rates will ultimately catch up with them, leading to a reversal in policy once a contraction in U.S. GDP occurs in Q1 2024 while an acceleration in the Euro Zone and China pressure the U.S. Dollar and Interest Rates.
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Daily Silver Chart
Silver futures traded on either side of the 200 DMA for most of the week near $23, where new speculators are entering the market looking for a higher beta asset class to participate in once Gold breaks out. While a price setback would be temporary, our long-term thesis remains that tightness in the physical markets, a decline in mining supply, and solar and E.V. demand should offset any potential for prices to decline further. The new breakout level in Silver is $23.53, where traders will begin to cover shorts frantically. Our thesis remains that over the next 18-24 months, we expect Copper to make new all-time highs and Silver to break $35/oz.
Having the flexibility to enter and exit the market quickly makes it essential for Precious Metals investors to have a futures trading account alongside their core Physical Precious Metals holdings. If you are interested in speculating on the rise and fall of the price of Precious Metals on a shorter-term basis, such as two weeks or two months, or If you have never traded futures or commodities, check out this new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.
By
Phillip Streible
Contributing to kitco.com
Tim Moseley