After the Middle East conflict started on 28 February, with no end in sight, commodity prices are expected to continue rising, leading to inflation.
Why did precious metals not perform as expected by most retail investors? The savvy ones know their time may come later. The immediate concern is the upcoming inflation data and the possibility of Kevin Warsh becoming the next Fed Chair. He is considered hawkish, believing that "inflation is the enemy," compared to the more dovish Jerome Powell, who prefers to "let the economy breathe."
Kevin Warsh’s first key decision could come in June, and inflation numbers may not look encouraging. Market watchers expect him to hike interest rates, and this could just be the beginning if the Middle East conflict becomes prolonged.
Investors are anticipating higher interest rates, which could lead to a stronger US dollar. Gold, also known as a dollar hedge, may face pressure under this expectation. Therefore, it is not surprising to see precious metals being suppressed for the time being.
Why are they ranging for now?
Inflation was already sticky, and this situation could become a launchpad for prices to move higher with any trigger, especially events like those on 28 February. If inflation and interest rates continue to rise, the US dollar’s strength may eventually face limitations due to deficits, debt, and other structural issues.
When investors realise it may not be worth chasing a premium in the US dollar while inflation continues rising, crude oil and commodities may continue their uptrend, allowing precious metals to reclaim their crown.
For now, traders may look to benefit from the range.
Video version for this analysis:
100-Ounce Silver Futures
Ticker: SIC
Minimum fluctuation:
0.01 per troy ounce = $1.00
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
Why did precious metals not perform as expected by most retail investors? The savvy ones know their time may come later. The immediate concern is the upcoming inflation data and the possibility of Kevin Warsh becoming the next Fed Chair. He is considered hawkish, believing that "inflation is the enemy," compared to the more dovish Jerome Powell, who prefers to "let the economy breathe."
Kevin Warsh’s first key decision could come in June, and inflation numbers may not look encouraging. Market watchers expect him to hike interest rates, and this could just be the beginning if the Middle East conflict becomes prolonged.
Investors are anticipating higher interest rates, which could lead to a stronger US dollar. Gold, also known as a dollar hedge, may face pressure under this expectation. Therefore, it is not surprising to see precious metals being suppressed for the time being.
Why are they ranging for now?
Inflation was already sticky, and this situation could become a launchpad for prices to move higher with any trigger, especially events like those on 28 February. If inflation and interest rates continue to rise, the US dollar’s strength may eventually face limitations due to deficits, debt, and other structural issues.
When investors realise it may not be worth chasing a premium in the US dollar while inflation continues rising, crude oil and commodities may continue their uptrend, allowing precious metals to reclaim their crown.
For now, traders may look to benefit from the range.
Video version for this analysis:
100-Ounce Silver Futures
Ticker: SIC
Minimum fluctuation:
0.01 per troy ounce = $1.00
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
konhow@weipedia.com
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.