It was a tough week for Precious Metals after softening U.K. CPI data on Wednesday marked a near-term top in the Euro and Pound. The ripple effect drove the U.S. Dollar up five out of the past six days as calls for its imminent demise will have to be on hold for another time. For Gold traders, initial claims are the most critical data point to watch. On Thursday, we saw another downtick in claims, further supporting the theory that the probability of a U.S. recession is fading. The economy is neither "too hot nor too cold," leaving the Federal Reserve in a more offensive position rather than concerned about a slowdown. We will want to monitor data points such as GDP and Consumer Confidence to look for signs of a faltering economy.
Moving across the Pacific, the lack of Chinese stimulus continues to weigh on industrial metals, where China consumes 52% of the global refined Copper and 14.5% of Silver. Most Silver applications come from solar and industrial, making up 54% of its total uses. Next week will be action-packed with volatility-driven events with "Flash PMIs" on Monday, Consumer Confidence on Tuesday, FOMC results Wednesday, an ECB meeting, and Initial Claims on Thursday, followed by a Bank of Japan meeting Friday. If you don't own a five-point racing harness and helmet, now is the time to buy them.
Daily Silver Chart
After an explosive two weeks and a $2 rally, futures take a break and look to consolidate near the $25 level. Next week you should get an opportunity to add at lower levels and use pocket support from $24.25-$23.90 as an area to add to positions. Critical support remains at $23.31 (200-day moving average), and any weakness from there should be well supported. To reiterate, 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 below $22. If you have taken profits on the most recent surge, you will want to use a sell-off for re-entry. 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 and $50/oz.
As of this week, we updated our "5-Step Technical Analysis Guide" and also integrated our "Top 5 trade ideas for Q3." Please download and review our Copper, Gold, and Silver strategies. The guide 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: New 5-Step Technical Analysis Guide.
Daily Gold Chart
This week, the U.S. Dollar's rally was the main driver of the failed attempt to recapture $2000/oz. Traders in the front-month August contract will want to use any attempt next week to rotate out of August and into longer-duration December contracts. We will likely skip October, leaving us with multiple months of options to use for risk management purposes. The critical level of support we will watch next week will be $1950 and $1935. Gold futures must break through $1985 to recapture momentum up to $2000. 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 EuroZone and China pressure the U.S. Dollar and Interest Rates.
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.
