Keep an eye on silver as gold pops
Head of Commodity Strategy
Summary: Gold has finally begun to react and behave according to the signals, mostly supportive, that other markets have been sending during the past month and this may ultimately provide even better potential for silver, which has been largely neglected of late.
Staying with the US Federal Reserve, we are likely to see some increased scrutiny of the speeches being held by chairman Powell Tuesday and vice chairman Clarida on Wednesday at a Chicago Fed Conference where the theme is Monetary Policy Strategy, Tools, and Communication Practices.
After breaking the April and May highs, gold is currently challenging $1,316/oz which represents the 61.8% retracement of the February to May correction. A break above will leave little in terms of resistance before the 2019 high just below $1,350/oz. In the short term some consolidation above $1,300/oz can be expected with funds having seen several failed attempts, both to the upside but also the downside wanting to take stock.
However with the FOMC moving towards a cutting mode, recession risks on the rise and a trade deal still nowhere near to being agreed, this is the time for gold to show what metal it is made of.
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Outrageous Predictions 2023: The War Economy
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Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
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Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.