Gold and silver rose after the US government reported weaker-than-expected inflation data. However, silver did what it does best, outperforming gold. So what’s next for gold and silver?
AThe gold price may hold firm in a higher range!
cryptocoin.comAs you follow, gold shone again with the weakening of the CPI in the USA. Here’s how TD Securities economists analyze the yellow metal’s outlook:
Low inflation is likely to encourage traders to sell some shorts and eventually give the yellow metal much-needed boost. However, the buildup of stronger-than-expected activity over the past few weeks and the Fed’s clear propensity to raise rates again suggests a final 25 basis point hike in Fed funds for the July FOMC meeting is still on the cards.
However, economists say fears are mounting that the Fed’s bark will be as bad as its bite. However, they see it as likely that weakening inflation will ease these concerns. Also, they expect the yellow metal to consolidate in a higher range as markets look to easing Fed policy.
Critical levels for golda new record is possible!
Credit Suisse analysts follow the decline to the target of $1,900/1,890, expecting a retest of record levels of $2,063/2,075. In the midst of these expectations, it is preparing to find a golden base. Analysts point out the following levels:
Gold is showing signs of stabilization as seen at $1,900/1,890, on our price support target and 38.2% retracement of the 2022/2023 uptrend. With the rising 200-DMA seen far below $1,868 and the USD starting to weaken again, our prediction is for a big bottom to be found here.
Analysts are expecting a resistance test initially at the 55-DMA at $1,962. In case of a close above this, they point to the following levels:
This could add weight to our outlook for a retest of the key resistance at the record highs of $2,063 / $2,075. We are still prone to a final breakout to new record highs later in the year. This will open the door to a move above $2,300.
However, analysts expect a drop if the weekly close is below $1,868. In this case, the long-term horizontal range will strengthen, according to analysts. Thus, there will be a decline towards the next support at $1,810/05.
Silver prices rose 4%; Is this the start of the rally?
Bart Melek, head of commodities strategy at TD Securities, warns that for the silver market to recover from the near-$23 pull in the near term, it must see a significant shift in investor demand and renewed industrial interest. Melek, however, adds that she sees a strong potential for silver until the end of the year as the recession conditions begin to take effect and the Federal Reserve begins to lower interest rates. In this context, Melek makes the following statement:
We expect the white metal to set its sights on $26 in the final days of 2023 as it becomes clear that the Fed and other central banks will begin to return to a more dovish monetary policy stance in the first months of 2024 and raise prospects for an economic recovery on the horizon.
Cold inflation data on Wednesday provided solid support for silver, but did not affect interest rate expectations. Markets have priced in a 25 basis point rate hike in two weeks. But growing optimism that this will be the last rate hike is a major catalyst behind the latest rally.
Analyst maintains long-term bullish trend in silver
Bart Melek states that despite the short-term challenges, the long-term potential of silver maintains its upward trend. Melek adds that there is not enough mineral supply for silver to meet long-term demand trends. Based on this, he comments:
As demand for the electrification of the global economy to combat climate change increases, the world seems likely to face a permanent primary silver deficit in the long run… If deficits continue for as long as expected, aboveground stocks will fall to levels too low to provide a sustained buffer against deficits. This means very high prices as the silver sector will operate above the traditional supply curve.
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