Metals Well-Bid On Monday But FOMC Looms
The metals complex has started the week with a positive tone as both gold and silver see decent demand across the European open on Monday. With USD continuing to hold within the narrow block of consolidation which has formed recently, and with equities markets tanking, gold prices look likely to derive near term support. However, the main issue for metals traders this week will be the FOMC on Wednesday.
The US Dollar has been far quieter this year with the greenback yet to see a resumption of the strong upward trend we saw across early Q4. With Fed tightening expectations so well developed and with USD upside positioning at elevated levels, we’ve seen some give back in USD over recent weeks as the market awaits a fresh hawkish catalyst.
With that in mind, this week’s FOMC meeting will either transpire to stoke a fresh round of USD buying, on a more hawkish outlook from the Fed (or any surprise policy announcements), or might see USD weaker if the Fed refrains from offering any fresh information at this stage. For metals then, the better scenario would be latter, in which USD is likely to weaken, allowing room for gold and silver to climb across the week.
Traders also need to keep an eye on geopolitical factors this week. Reports over the weekend that the US are considering sending troops to Ukraine have further heightened uncertainty around tensions with Russia. With equities markets likely to remain under pressure, gold prices should see further safe-haven inflow in the near term.
Technical Views
Gold
Gold prices continue to trade higher here within the broad bullish channel which has framed the recovery off the 2021 lows. With MACD and RSI both firmly bullish here, while price holds above the recently broken 1826.71 level, the focus is on a continuation higher towards the 1871.04 level next. To the downside, any slip below the 1826.71 level will turn focus to a test of the bull channel low.
Silver
The recent rally in silver prices has seen the market bounding firmly off the 22.3205 level, with the market now attempting to break out above the bear channel top and the 24.0073 level. With both MACD and RSI turned higher here, while price holds above the channel top, the focus is on a test of the 25.5384 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.