Volatility cooled on Friday for both gold and silver as both traded sideways with spot contracts holding support levels into the weekend. Still, both metals contracts lost three percent for the week. It was a wild ride as both gold and silver traded significantly higher on Monday and Tuesday amid geo-political uncertainty and economic uneasiness. The gains quickly evaporated with both markets experiencing mid-week reversals that caught the bulls by surprise. Wednesday’s quarter point rate hike by the FOMC was expected but the hawkish overtones from Fed Chair Yellen caught gold and silver bulls by surprise as the Dollar rebounded while equities traded sideways. Prior to the Fed policy meeting, August gold traded up to a weekly high of 1284.2 while July silver traded all the way up to 1736.5. August gold finished the week losing $14.90 to close at 1256.5, while July silver lost .56 cents to close at 16.66. Janet Yellen in the post FOMC rate decision press conference kicked the can on inflation expectations not meeting the Fed’s inflation target of two percent, but rather focused on perceived future economic data points like employment and GDP that in Yellen’s view warranted future interest rate hikes and a potential end to an accommodative low rate policy. The Fed Chair also announced the beginnings of an unwind of the Feds massive 4.5 trillion bond balance sheet as economic conditions now allow for such measures to begin. The near term winner here so far has been the U. S. Dollar as it seems its free fall has stopped and the path of least resistance looks higher in the near term. In review, a higher Dollar, weak energy market, and steady equities do not result for a rally in precious metals and in my view the reason why both gold and silver futures contracts both lost three percent for the week. Still though, August gold futures held key moving average support with the 100 day at 1250.6 and the 200 day at 1250.3. These levels need to hold or August futures would most likely test the early May 2017 lows down at 1221.0. With the President under investigation by special consul Robert Mueller along with other geo-political worries, those two issues were probably enough to stem this latest slide in precious metal prices on Friday and halt the sell-off into the weekend.
Technical swing numbers for next week come in as follows for both August gold and July silver. For August gold, support is down first at 1244.6 and with a close under 1232.9 is next. Resistance is up at 1276.1 and with a close over 1295.9. For July Silver, support is down at 1639.7 and with a close under 1615.6 is next. Resistance is up at 1714.2 and then up at 1760.6.
For those interested I hold a weekly grain webinar each Thursday at 3pm. It is free for anyone who wants to sign up and link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.