Weekly Commodity Update: Consolidation with Inflation vs Higher Yields War
Gold and silver markets are consolidating with Bulls and Bears fighting between inflation and higher yields.
GOLD
Gold is heading towards a gain this week. Although the trading has been muted, it consolidated around the $1800 per oz level. Gold opened at $1791 Monday and moved to a high of $1814 Friday, before settling back toward $1800 as the week comes to a close. The consolidation around the $1800 level is mainly due to the balance of the inflation risks vs. the push for higher U.S yields. These risks counter each other, and are creating a fairly tight trading range which is also right at the 50 and 200 moving averages. This is a classic stalling point until one of the risks overshadows the other. Investors are watching both the inflation numbers and the Federal Reserve’s tighter monetary policies to help curb the inflation. The current range is generally
trading between $1780 and $1820 per oz. and is likely to continue until more information is available.
SILVER
After a fairly quiet week in the silver market, the price basically flat. Silver opened Monday at $22.46, and in late trading on Friday’s session the price was about $22.47, making for a fairly tight trading range between $22 and $23 per oz for the week. This happens when the bulls and bears are in a close tug of war with the risks of inflation offsetting the Federal Reserve’s attempt
to curb inflation with a tighter monetary policy over the coming months. The price as it stands currently at around $22.50 is a pretty strong support level. Until more information comes out about the battle between inflation risks and tighter monetary policy, we will probably continue to see rangy trading in the silver market.
OIL
U.S crude oil opened this week at $87.24 per barrel and continued to move higher than the previous 7 year highs. Also, this is the first week crude oil closed higher than $90 per barrel since 2013. While trading driven by OPEC+ production quotas creating limited supplies pushed the price above $90 later in the week. The uncertainty of possible conflict between Russia and Ukraine, as well as the harsh winter storms in Texas and Louisiana could make for potential hampering of domestic refining. These things are all combining into a “perfect storm” of events pushing prices to significant recent highs above resistance of $84 per barrel, which is set to become the new strong support in the near term.
-Bill Poulos