This article was first published on Orbex Forex Trading Blog.
The yellow metal rose slightly this week, taking its cues from a weakened US Dollar which fell in response to the June FOMC meeting. The sell-off came despite the Fed raising rates as expected and upgrading its rate hike forecast for the rest of the year from one hike previously to two hikes. The weakness is reportedly due to President Trump preparing to apply tariffs to billions of dollars of Chinese goods as early as Friday, raising concerns about the potential impact on the US economy. The concerns have raised safe haven demand for gold which is often used by investors to protect capital during times of economic uncertainty.
Gold prices are still sitting on the 1296.65 level support which has been an important level in the market over the last year. If this level holds, focus will be on a further rotation higher with the 2016 high of 1376.20 the main objective. A break of the support however will open the way for a deeper move lower.
Silver prices tracked the moves seen in gold this week, actually rising at a faster pace in response to the weakened US Dollar. Silver is also being supported by global supply concerns as well as lower LME inventories which have combined to fuel the positive moves this week.
After spending most of the last two years in a large contracting triangle pattern, silver prices have since moved into an even smaller structure, highlighting the lack of momentum and volatility in the market. For now the 17.45 – 15.80s range continues to play out and until either side is broken, the stagnation continues.
Despite the positive moves seen elsewhere in the commodities complex, ...
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