Keep an eye on silver as gold pops
Head of Commodity Strategy, Saxo Bank Group
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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