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Precious Metals Market Update

Solid ECN

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Despite the fact that the US Fed has moved to a decisive tightening of monetary policy and yesterday raised the interest rate immediately by 50 basis points to 1.00%, commodities reacted to this with an increase in quotations. Most likely, traders put the regulator's decision in the prices of trading instruments long before the official announcement. Since the analysts' forecast on the adjustment of the rate value was justified, the USD began a downward correction.

An additional factor that prevented the exchange rate of the XAG/USD pair from continuing the April decline is the restoration of production processes in China. While cities such as Shanghai and Beijing continue to adhere to the principles of a dynamic zero tolerance policy for COVID-19, regardless of the economic costs, Hong Kong announced the easing of anti-COVID measures from May 5. On Monday, the number of new cases of coronavirus infection in the metropolis fell below 300 for the first time in almost three months — to 283. Thus, from May 19, cafes, nightclubs and some other establishments that have been closed since the beginning of the year, when the fifth wave of the epidemic covered the country, will resume work. Against this background, we can count on the fact that other large cities will gradually open up, and this, in turn, will support the demand for precious metals.

The long-term trend remains upward. Last Monday, the bidders tested a strong support level of 22.20, which was held, after which the price of the XAG/USD pair rose to the resistance level of 23.25. If this level is broken out, the upward trend will continue with a target at 24.25.

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The mid-term trend is downward. As part of the decline last week, the quotes reached the target zone 2 (23.14–22.95). This week, the "bears" tried to break it, but the price returned to the area of 23.14–22.95. In case of consolidation above the range, the upward correction will continue with a target at the trend boundary of 24.06–23.89.

Resistance levels: 23.25, 24.25, 26.1 | Support levels: 22.20, 21.45

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Solid ECN

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On the daily chart, the development of the third wave of the higher level (5) of 3 continues, in which wave 3 of (5) has formed. At the moment, there is a downward correction as the fourth wave 4 of (5), within which wave c of 4 is being formed.

If the assumption is correct, after it is finished, the growth of XAUUSD will continue to the levels of 2100 - 2200. The level of 1827.33 is critical and stop-loss for this scenario.

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Solid ECN

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On the daily chart, the development of the third wave of the higher level (3) of 3 started, within which the first wave of the lower level 1 of (3) formed, and a local correction developed as the wave 2 of (3). Now, the wave c of 2 has formed, within which the fifth wave of the lower level (v) of c of 2 has developed.

If the assumption is correct, the XAGUSD pair will move to the area of 24.12 - 26.2. In this scenario, critical stop loss level is 21.4.

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Solid ECN

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Gold prices show moderate corrective growth, consolidating after an active decline yesterday, returning the XAU/USD pair to the local lows of May 3. Currently, the instrument is testing 1860, receiving support from technical factors.

The strengthening dollar and the growth in the yield of US Treasury bonds put pressure on the positions of the metal. Thus, the underlying 10-year securities reached 3.185%, which is the highest level since November 2018, but now, it has corrected to the area of 3.040%, while the USD Index exceeded the high of December 2002 at 104.120, but now it has fallen to 103.590. Also, last week, the US Federal Reserve expectedly increased interest rates by 50 points to 1.00% and announced the start of a phased reduction in its balance sheet. In subsequent comments, the head of the regulator, Jerome Powell, dispelled reports that in the future, officials could accelerate the pace of monetary tightening and, for example, adjust the rate by 75 percentage points. Against this backdrop, gold quotes are supported by the prospects for continued growth in consumer inflation in the US during the current quarter, although it has already reached its highest level in 40 years, around 8.5%. Tomorrow, American investors will be watching the April statistics, which may show the first signs of weakening. In particular, it is assumed that the consumer prices will be only 0.2% MoM after rising by 1.2% for March and may fall 8.5% to 8.1% YoY.

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Bollinger Bands show a moderate decline on the daily chart: the price range narrows, reflecting the emergence of ambiguous trading dynamics in the short term. MACD falls, keeping a poor sell signal below the signal line. Stochastic falls close to its lows, indicating that instrument may become oversold in the ultra-short term.

Resistance levels: 1877.83, 1900, 1930, 1952.53 | Support levels: 1850.2, 1823.09, 1800, 1760.74

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Solid ECN

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The precious metal quotes show a local downward trend, trading around 21.5.

The key factor that led to the global sell-off in commodity markets was the US Federal Reserve's inflation forecast for April, which suggests a decline to 8.1% from 8.5% a month earlier. The main US statistics on the dynamics of consumer prices will be published today at 14:30 (GMT+2). Adjusting the interest rate to 1.00% could not have had such an early effect, and there are no prerequisites for reducing real inflation now: oil quotes are held above 100 dollars per barrel, contributing to fuel price growth, which increases the cost of delivering goods and increases their final cost. Thus, the key factors of inflation, such as fuel and food prices, are rising, but the regulator insists that inflation should come down. Uncertainty in the market forces traders to get rid of their assets in the stock market and commodity market.

A serious outflow of investors from silver is also confirmed by data from the US Commodity Futures Trading Commission (CFTC), according to which, over the past week, the number of net speculative positions decreased to 28.1K from 35.4K a week earlier. Over the past three weeks, the number of positions has decreased from 46.5K to the current 28.1K for the first time since 2020.

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The price left the limits of the rising global channel with dynamic boundaries at 26.50–22.00, breaking the support line yesterday. Technical indicators reversed and gave a sell signal: the range of EMA fluctuations on the Alligator indicator actively expands downwards, and the histogram of the AO oscillator forms downward bars in the sell zone.

Resistance levels: 22.15, 24.4 | Support levels: 21.17, 19.5​
 

Solid ECN

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On the daily chart, the fifth wave of the higher level (5) of 3 develops, within which the wave 3 of (5) formed. Now, a downward correction is ending as the fourth wave 4 of (5), within which the development of the wave c of 4 is ending.

If the assumption is correct, after the end of the correction, the pair XAUUSD will grow to the levels of 2070.42 - 2200. In this scenario, critical stop loss level is 1770.2.

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Solid ECN

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Quotes of XAU/USD are under pressure from "hawkish" rhetoric from the US Federal Reserve and high prospects for the continuation of an aggressive monetary policy at the June meeting, in particular, a sharp increase in the rate by another 0.50%. The "bearish" momentum is expected to push gold prices towards psychological support at 1800. In addition, investors have become more inclined towards risky assets, redirecting their capital from protective ones, which also puts pressure on quotes, while the fundamental picture changes slightly.

Pressure on the position of gold is also exerted by the rising dollar, which is supported by technical factors and high yields on US Treasury bonds. However, the deteriorating economic outlook and the ongoing conflict in Eastern Europe are giving the precious metal some support. At the first sign that central banks will ease their "hawkish" rhetoric, one can expect a noticeable increase in demand for a "defensive" asset.

Among the macroeconomic factors at the beginning of the week, weak Chinese statistics should be singled out, providing additional support to the US currency. Retail Sales in China plunged to a record 11.1% in April after declining 3.5% in March. Analysts had expected a much more modest 6.0% decline.

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Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding from below; however, it fails to catch the surge of the "bearish" sentiment at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic has been in close proximity to its lows for several days already, which indicates the risks of gold being oversold in the ultra-short term.

Existing short positions should be kept until technical indicators are clarified.

Resistance levels: 1823.09, 1850.2, 1877.83, 1900 | Support levels: 1800, 1775, 1752.87, 1730

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Solid ECN

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On the daily chart, a downward correction of the higher level develops as the second wave (2), within which the wave C of (2) forms. Now, the third wave of the lower level iii of C has formed, and a local correction has started to develop as the fourth wave iv of C.

If the assumption is correct, after the end of the correction, the price will fall to the levels of 18.40–15.71. In this scenario, critical stop loss level is 23.25.

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Solid ECN

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XAGUSD, silver prices are consolidating around 21.50

Silver prices show a slight decline during the Asian session, testing the level of 21.5 for a breakdown. The instrument managed to update the local highs of May 11 the day before; however, the "bulls" failed to consolidate on new levels, as a result of which XAGUSD returned to the opening levels. Pressure on the positions of the instrument was exerted by optimistic macroeconomic data from the USA.

Tuesday’s statistics on the dynamics of Retail Sales in the US was better than market expectations. In April, Retail Sales volumes slowed down from 1.4% to 0.9%, while analysts expected a decline to 0.7%. Retail Sales excluding Autos for the same period slowed down from 2.1% to 0.6%, which turned out to be twice as good as experts' forecasts. Retail Sales Control Group declined marginally from 1.1% to 1.0% in April, while forecasts suggested a sharp slowdown to 0.5%. Thus, sales figures do not yet reflect a dramatic slowdown in consumer activity within the country. This removes some of the risks from investors who are concerned about a possible slowdown in the pace of monetary tightening by the US Federal Reserve.

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Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of multidirectional trading dynamics in the short term. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its highs, indicating the risks of overbought instrument in the ultra-short term.

Resistance levels: 22, 22.4, 22.7, 23 | Support levels: 21.39, 21.12, 20.81, 20.39

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Solid ECN

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The precious metal quotes are being corrected in a downtrend, being around 1814 dollars per ounce.

The asset is declining amid fears for global demand due to the coronavirus outbreak in China, which led to serious restrictions. The negative effect on the Chinese economy can be assessed now. Yesterday, industrial production data were published in April, which fell by 2.9% after rising by 5.0% in March. Retail sales fell 11.1%, well above the 3.5% decline in March. Due to the introduced lockdown, the unemployment rate also increased, which amounted to 6.1% compared to 5.8% in March.

According to the Commodity Futures Trading Commission (CFTC), since mid-March, the number of net speculative positions in gold has decreased from 274.5K to 193.3K, and over the last week, the outflow amounted to 5.9K positions. Thus, the overall speculative position in gold is approaching the minimum levels of the middle of last year at 165–175K positions, which indicates an extremely low demand for the metal.

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On the daily chart of the asset, the price is moving within the global ascending channel, approaching its lower border. Technical indicators maintain a stable sell signal: indicator Alligator’s EMA fluctuations range expands, and the AO oscillator histogram, having moved into the sell zone, continues to form downward bars.

Resistance levels: 1850, 1917 | Support levels: 1790, 1700​
 

Solid ECN

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On the daily chart, the fifth wave of the higher level (5) of 3 develops, within which the wave 3 of (5) formed. Now, a downward correction has developed as the fourth wave 4 of (5), within which the wave c of 4 has formed.

If the assumption is correct, the pair will grow to the levels of 2070 - 2200. In this scenario, critical stop loss level is 1785.69.

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Lateral Thinking Forex

Well-known member
View attachment 2375

On the daily chart, the fifth wave of the higher level (5) of 3 develops, within which the wave 3 of (5) formed. Now, a downward correction has developed as the fourth wave 4 of (5), within which the wave c of 4 has formed.

If the assumption is correct, the pair will grow to the levels of 2070 - 2200. In this scenario, critical stop loss level is 1785.69.

View attachment 2376
Gold at 2200 is a nice idea... but metals market pricing is so manipulated, it's anyone's guess. I'm a long-term investor in gold and silver but I find trading them far too unpredictable and stressful.
 

Solid ECN

Well-known member
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On the daily chart, a downward correction of the higher level develops as the second wave (2), within which the wave C of (2) forms. Now, the fourth wave of the lower level iv of C has formed, and the development of the fifth wave v of C has started, within which a local correction of the lower level is forming as the wave (iv) of v.

If the assumption is correct, after the end of the correction, the price will fall to the levels of 18.40–15.60. In this scenario, critical stop loss level is 23.20.

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Solid ECN

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Gold prices show a slight increase during the morning session, developing a fairly strong "bullish" momentum formed in the middle of last week and trading at 1855.9. The main driver of the instrument's recovery was the weakening USD Index, which sharply corrected from multi-year highs around 105, losing more than 2.5%, to a low of 102, despite the "hawkish" rhetoric of the US Fed members.

Demand for XAU/USD is holding up as global tensions escalate as fundamentals change little. Many economies are facing record inflation amid soaring prices for energy and other resources, forcing investors to look for safer alternatives to risky assets. In turn, rising inflation prompts the world's central banks to sharply tighten monetary policy, making gold ownership less attractive, since it does not generate interest income. Meanwhile, a special military operation in Ukraine continues, and the negotiation process is actually stopped, so the conflict is becoming more and more protracted.

Today, investors are waiting for the publication in the US of May statistics on business activity, as well as April data on the dynamics of New Home Sales. During the day, the Chair of the US Federal Reserve, Jerome Powell, is also scheduled to speak.

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Bollinger Bands in D1 chart demonstrate active decrease. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic approached the level of "100" and reversed into a horizontal plane, indicating a strongly overbought instrument in the ultra-short term and signaling in favor of the development of a corrective decline.

Resistance levels: 1877.83, 1900, 1930, 1952.53 | Support levels: 1850.2, 1823.09, 1800, 1775

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Solid ECN

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The escalation of the conflict in Ukraine, high rates of global inflation, and lower forecasts for the recovery of the economies of developed countries create obstacles for further upward dynamics in the XAGUSD pair. However, analysts predict a 5% increase in silver demand in 2022 due to further structural progress in industrial production, which is expected to reach another record level this year, and jewelry sales growth after the coronavirus pandemic. On the supply side, higher mine productivity is expected due to increased production capacity and increased production at existing mines, leading to a 3% increase in global supply in 2022.

Thus, it can be assumed that the fall in metal prices will be stopped when geopolitical tensions decrease and the US Federal Reserve rate stabilizes in a specific target range. Up to this point, the growth of XAGUSD quotes should be taken as a correction.

From the technical analysis position, silver is trading in a long-term downtrend, in which market participants reached the support level of 20.57. Then the RSI technical indicator signaled that the instrument was in the oversold zone, which led to the development of a correction, in which market participants tested the resistance level of 22.2. As long as this level is held by the "bears," further sales of the precious metal will be a priority. The target for short positions will be the May low. If 22.2 is broken upwards and the consolidation above, we should expect the quotes to rise to the next resistance level of 24.25.

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As part of the medium-term downtrend, market participants reached the target zone 3 (21.24–21.05) but failed to consolidate below it, after which a correction began, in which market participants tested the key resistance of the trend at 22.32–22.15. Currently, the zone is holding, which signals the possibility of new sales with the target at the May low of around 20.50.

Resistance levels: 22.20, 24.25 | Support levels: 20.57, 19.61​
 

Solid ECN

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Quotes of the precious metal are being corrected in a sideways trend, being at around 1845.0.

XAUUSD is holding above the mid-year level at 1800 and, despite the downtrend of the last two months, investments in gold continue to bring income to investors. This can be clearly seen if we compare the dynamics with the main stock markets of the world. The yield of the Dow Jones index over 4 months of this year decreased by 9.63%, the German DAX 30 declined by 12.99%, and the French CAC 40 decreased by 10.97%, while gold over this period increased by 3.75%, which demonstrates that the precious metal performs the function of protecting against fluctuations in financial markets during a period of uncertainty.

According to a report by the US Commodity Futures Trading Commission (CFTC), over the past week, short positions of swap dealers in gold were reduced by 18349 contracts, and this is the largest volume of fixing positions over the past year. In the same period, the number of buy positions increased by 25 thousand, which fully reflects the mood of investors who consider the prospects for strengthening the asset's rate to be very high.

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On the daily chart of the asset, the price is trading within the global ascending channel, starting to form a reversal after reaching the global support line. Technical indicators continue holding a sell signal, which is starting to weaken actively: fast EMAs on the Alligator indicator are approaching the signal line, and the AO oscillator histogram is forming upward bars being in the sale zone.

Support levels: 1810, 1770 | Resistance levels: 1866, 1917​
 

Solid ECN

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Gold prices show quite active growth during the Asian session, recovering to the previous local highs, updated last week. The instrument is testing 1860 for a breakout, receiving support from a rather weak dollar. However, the USD Index is up 0.05% intraday at 101.68, rebounding from Friday's monthly low of 101.43, as markets weigh Friday's US data to predict the next move by the US Fed. Demand for gold remains stably high, given that the fundamental picture in the markets is changing slightly. Investors are still watching the development of the Russian-Ukrainian conflict, which has generated many additional risks and does not yet give any hope for a quick improvement in the situation.

The pressure on the US currency increased last week amid the incident in the Persian Gulf. Earlier, the Greek authorities seized a tanker with Iranian oil, after which they handed it over to the United States. Iran responded to this by detaining two Greek tankers, which could lead to a new escalation of tension in the Middle East. At the same time, as monetary policy tightens in various regions, the demand for risk is gradually recovering, putting pressure on "safe" gold.

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Bollinger Bands in D1 chart demonstrate flat dynamics. The price range expands from above, freeing a path to new local highs for the "bulls". MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, on the contrary, maintains a confident downward direction and at the moment practically does not react to the resumption of growth.

Resistance levels: 1869.49, 1885, 1900, 1930 | Support levels: 1850.2, 1840.26, 1823.09, 1800

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Solid ECN

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On the daily chart, a downward correction of the higher level develops as the second wave (2), within which the wave C of (2) forms. Now, the fourth wave of the lower level iv of C has formed, and the fifth wave v of C is developing, within which a local correction of the lower level is ending to form as the wave (iv) of v.

If the assumption is correct, after the end of the correction, the price will fall to the levels of 18.4 –15.6. In this scenario, critical stop loss level is 23.2.

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Solid ECN

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Silver prices show a slight decrease during trading in Asia, developing a corrective momentum formed at the beginning of the current trading week. XAGUSD is testing 21.45 for a breakdown. Risk-driven market sentiment continues to shift to equities as yields rise on US government bonds, which investors currently prefer as alternative sources of additional funds, putting pressure on safe-haven assets such as silver. Since the dynamics of asset quotes of the metal group is inversely proportional to the movement of the US currency, XAGUSD is actively losing value.

Optimistic macroeconomic statistics from the USA provided moderate support to USD on Tuesday. The S&P/Case-Shiller Home Price Indices accelerated from 20.3% to 21.2% in March, ahead of market forecasts of a decline to 20%, and the Chicago PMI strengthened from 56.4 to 60.3 points in May, while the market expected a slight decline to 55 points. At the same time, Dallas Fed Manufacturing Business Index fell from 1.1 to -7.3 points in May, contrary to the forecast of growth to 4.9 points.

Silver, in turn, reacts positively to the long-awaited reopening of manufacturing facilities in Shanghai from June 1. Only 67 new cases of COVID-19 infection were detected in the country's largest financial center last Sunday, according to the Ministry of Health of the People's Republic of China. The authorities also eased some quarantine restrictions in Beijing. In general, the pace of industrial production in China is recovering, which increases the demand for silver as an industrial raw material.

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Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD is declining, forming a new sell signal (trying to consolidate below the signal line). Stochastic keeps a steady downward direction but is rapidly approaching its lows, which indicates the risks of oversold silver in the ultra-short term.

Resistance levels: 21.69, 22, 22.40, 22.7 | Support levels: 21.39, 21.12, 20.81, 20.39

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Solid ECN

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The XAUUSD pair holds above the key level of the previous 1800 and are currently being corrected after a slight increase.

Despite significant fluctuations in world markets, precious metals remain one of the most reliable investments. If traders preferred contracts for gold a year ago, today, buyers are showing particular interest in bullion and coins. According to the US Mint, sales of the most popular American Golden Eagle series in May of this year significantly exceeded previous periods: 200.5K coins or 147K ounces of gold equivalent were sold, significantly higher than 122.5K or 88K ounces sold in April. Also, if we consider the dynamics of sales in May 2021 with a figure of only 20.5K ounces, then the positive trend becomes more and more obvious.

According to the latest report from the US Commodity Futures Trading Commission (CFTC), over the past week, the global downtrend for the precious metal has been reversed, and after six weeks of constant decline, an increase in the number of gold contracts was recorded to 183.8K from 175.4K, which is quite expected, given the sharp outflow of short swap dealers, which was reported a week earlier.

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On the daily chart, the price is moving within the global ascending channel, forming a reversal near the global support line. Technical indicators maintain a weakening sell signal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO oscillator histogram forms upward bars in the sell zone.

Resistance levels: 1866, 1917 | Support levels: 1810, 1770


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