Precious metals analyst Neils Christensen wrote that last week, weak US inflation data for June pushed the gold market to a three-week high, and the price of gold stabilized above $1,950 per ounce. Although market popularity has increased again, there is still reason to be cautious at these levels.
Gold is not out of trouble. Since the Fed's monetary policy is still the main driving force in the market, gold may still be hit by bears. Yes, both the US CPI and PPI have cooled more than expected over the past week. The consumer price index (CPI) rose 3.0% year on year, the lowest annual increase since March 2021. Meanwhile, core inflation rose 4.8% year over year last month.
The good news for consumers is that inflation is moving in the right direction; however, these figures are still high, which means the Federal Reserve may not be ready to announce victory in the battle against rising consumer prices.
Although the price of gold is above 1950 US dollars,However, as investors continue to wait and see, the price of gold is still a long way from breaking through. Some analysts believe that before investors re-enter the gold market, the gold market needs the Fed to send a clear signal indicating that interest rate hikes have ended.
Meanwhile, some analysts said that silver's double negative factors are beginning to dissipate. As the Fed's interest rates approach a peak, silver is benefiting from changing monetary policy expectations.
At the same time, even in this aggressive monetary policy environment, the US economy is quite resilient, which supports the industrial use of silver. Analysts pointed out that if the Federal Reserve is able to pass the lead and achieve a soft landing, the performance of silver should be superior to that of gold.
Nicky Shields, MKS PAMP metals strategist, said in her mid-year precious metals outlook: “There is still an asymmetric upward risk of silver, depending on investors' repurchases, repurchases, and inventory replenishment, and once the Fed suspends interest rate hikes, market expectations shift to continuous interest rate cuts.
Despite promising prospects for silver, the negative factors surrounding the Federal Reserve have not completely disappeared. Commodities analysts at TD Securities warned investors that there are at least three months until silver breaks through into a sustainable bull market.
Daily chart of spot gold
At 10:45 on July 17, Beijing time, spot gold reported 1951.80 US dollars/ounce