As I stated in last week's article, "every bear market ends, and a bull market begins with a short covering rally." Coming into last week's FOMC meeting, ETF holdings in precious metals were at multi-month lows, and the commitment of traders report indicated the short position in Gold was the largest in three years. News that the Fed will closely monitor inflation and any weakness in economic data sent the shorts into a panic buying spree. Gold flipped from a bearish trend to a neutral trend and, finally, a bullish one. While the public believes that the Fed has pivoted, Friday's release of the Core PCE (the feds preferred measure of inflation) month over month increased to 0.6%, beating estimates. Personal income and spending exceed expectations, leaving me to believe that the market is pricing in a pivot way too early and that we remain in the 7th inning of this bear market. If the Fed wants to get Core PCE down to 2.0%, it will have to get more hawkish rather than dovish, wouldn't you agree?
Technical Setup - Silver (September)
While August tends to be one of the lightest volume trading months during the calendar year, this year may be different. September Silver broke out above critical resistance at $19.88 and is now targeting the monthly consolidation range of $21-23/ounce. When we trade back into that range, you will want to take a more proactive approach in risk management. Remember, no assets are long-term in this economic environment. If you have never traded Silver futures, we completed a new educational guide that answers your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. Additionally, you will receive a free two-week trial to our flagship report, "The Morning Express," giving you critical levels of support in resistance in the Gold and Silver. You can request yours here: Trade Metals, Transition your Experience Book.
Technical Setup - Gold (December)
Gold received the news it was looking for this week with a unanimous vote to raise 75 bps, and it is clear the FOMC wants to slow growth to tame inflation. The expected hikes for the remainder of the year are 50/25/25, and the bottom line is that the Fed will tighten into a slowdown. Remember, the drivers that affect Gold most are currency fluctuations, economics, geopolitics, growth, and inflation. I believe equities will continue to see earnings guidance decline for the rest of the year. Therefore, I recommend being nimble on these bare market bounces and reducing exposure until the Fed finishes tightening and reducing exposure to Gold in the monthly resistance zone. To help you identify additional long-term support and resistance levels, we created a Free "5-Step Technical Analysis Guide that will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.
