It was another challenging week for Precious Metals, with Gold futures trading back near one-month lows. At the same time, it is hard to believe that with a downtick in headline inflation data and an uptick in initial claims, Gold cannot sustain a rally. Realistically Thursday's data print should have marked the "bottom," and August's three-week seasonal bull market should be well underway. Looking to the Far East, headlines out of China show a deteriorating economic outlook and increased pressure on policymakers to boost monetary and fiscal support. Last Tuesday's Chinese CPI headlines delivered a deflationary -0.3% that will become the wake call for additional stimulus. Remember, China is the world's second-largest economy and one of the largest consumers of commodities and natural resources. Once the stimulus happens, Copper should bottom, and Silver should reverse higher.
Like Silver, Gold futures have struggled, slipping another 1.4% on the week, and have repeatedly been a victim of a stronger U.S. Dollar and rising Treasury Yields. Seasonally Gold futures tend to make a near-term bottom in the second week of August and generally rally until the last. This tendency has occurred in 12 out of the past 15 years. Ultimately it will take some concrete evidence that inflation is behind us and a "Fed Pivot" is here to assault a fresh attack on $2000. The market then must punch through resistance levels at $2025 to make a run for all-time highs. We will likely need a substantial breakdown in economic data for that to happen.
Like Silver, Gold futures have struggled, slipping another 1.4% on the week, and have repeatedly been a victim of a stronger U.S. Dollar and rising Treasury Yields. Seasonally Gold futures tend to make a near-term bottom in the second week of August and generally rally until the last. This tendency has occurred in 12 out of the past 15 years. Ultimately it will take some concrete evidence that inflation is behind us and a "Fed Pivot" is here to assault a fresh attack on $2000. The market then must punch through resistance levels at $2025 to make a run for all-time highs. We will likely need a substantial breakdown in economic data for that to happen.