Pepperstone’s head of research Chris Weston, including Federal Reserve Chairman Jerome Powell’s testimony before the US Senate, says precious metals could be a tactical game ahead of a data storm in the next two weeks. While gold investors are suffering, the gold trend is still good, according to Frank Holmes, CEO and Chief Investment Officer at US Global Investors.
Gold and silver hit the radar
It is getting harder and harder to surprise the markets with higher-than-expected inflation figures, and this reaction function is important for the gold market. Chris Weston, Pepperstone’s head of research, comments:
The fact that the EUR is not overly affected by the French and Spanish CPI data shows that it is difficult for the market to be shocked by the inflation data. The risk-reward is changing. The gold market will be watching this closely. Gold and silver have landed on the radar, and both could be a tactical game as we watch a data storm unfold over the next two weeks.
Traders should be ready for higher intraday movements
The major market drivers are the US jobs (March 10) and inflation (March 14) reports. But before all of that comes Powell’s semi-annual testimony before the US Senate’s banking committee on the Fed’s monetary policy report scheduled for March 7. “This can cause some volatility in the market, but trading a conversation is more problematic as we are fighting algos that are programmed to react quickly to words,” Weston says. Weston also adds:
This means traders should prepare for higher intraday moves ahead of the Fed’s March monetary policy meeting scheduled for March 22. The market will change its positions according to these decisive events.
This is a factor that can increase the price of gold
Market consensus forecasts estimate that nonfarm payrolls added 200,000 new positions in February, after a shocking 517,000 reported in January. The unemployment rate is expected to rise from 3.4% to 3.5%. Weston forecasts US inflation (CPI) to reach between 6% and 5.5% in February. That’s a reasonable slowdown from the 6.4% reported in January. Weston underlines the following:
Since gold is so inversely proportional to both nominal and real US bond yields, I question whether the market is considering rematching the interest rates exposed to this data. This is a factor that can increase the price of gold.
Place buy-stop orders above this level!
According to Pepperstone, after the $100 sale in February, the gold market narrowly missed a drop out of the monthly reversal. Is this a sign of better demand and sellers failing to push the price to $1,800? “Maybe, but sooner and price action needs to try to take a more momentum approach to really convince,” Weston says.
Pepperstone recommends placing buy-stops above Tuesday’s high of $1,831.15 and positioning for the price to continue to rise. Weston comments:
We may see prices refresh and retest Tuesday’s lows. As with any momentum and trend strategy we get a lot of false breakouts and the strike rate can be much lower than the average reversal for example. That’s why it’s important to cut losses early and get as much out of the trade as possible.
With the dollar strong, it may be time to hoard gold!
While bullion investors are suffering, the gold trend is still good, according to Frank Holmes, CEO and Chief Investment Officer at US Global Investors. In a recent report, Holmes highlights the inverse relationship between gold and the US dollar. “Because the precious metal is priced in dollars internationally, gold and the dollar share an inverse relationship,” Holmes said in the report. So when the dollar is strong, it may be time to hoard gold,” he writes.
cryptocoin.comAs you follow, the dollar has stopped the rally, which carried it to its highest level since the beginning of January. However, gold is approaching its strongest buy signal in four months. With the latest US jobs report coming in stronger than expected, Holmes says there could be more short-term gripes for the yellow metal. Holmes also comments:
He told investors, “Buy the bottom and hold on for life. As a Bitcoin user, deal with the volatility,” I say. Because the gold supply is not important.
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