Weekly Commodity Update: “Dovish” Tone Pushes Commodity Prices Higher.
GOLD
Gold opened the week at $1802.05 this week and moved higher over the week but continued to trade inside the month-long trading range. On Wednesday and Thursday, the price of Gold moved up to the top of the range at $1830 from the Federal Open Market Committee meeting announcement that the mood at the FED has shifted from more of a hawkish tightening stance to more or a “dovish” one. This change hurt the value of the U.S. dollar and therefore pushed the price of Gold up. But even with this shift in focus gold prices did not break-out of the current trading range and on Friday, prices moderated, moving back toward the middle of the range. On Friday’ late session trading Gold was trading at about $1818 for an overall gain on the week, but with no range break-out in sight. With all the uncertainty surrounding the possibility of new pandemic restrictions along with some moderate growth in economic activity have investors undecided and Gold continues to trade in the current ranges until more is known. If the pandemic does resurge, the uncertainty of that possibility should strengthen gold prices and the FED continues to prop up the economy with easy monetary policies.
SILVER
Silver opened the week at $25.14, moved down initially to test support at $24.50 on Tuesday, but came to life and moved higher on FED announcement of “softening” the hawkish tone of the last meeting due to new pandemic fears. With the U.S dollars moving lower on the news, precious metals prices reacted by moving higher and hit a weekly peak on Thursday at 425.80. Friday saw some moderating forces and the price of silver on Friday was very stable right around $25.50. So, while the price of silver moved higher over the week, the overall price tested both sides of the last few weeks’ trading range. With the FED pushing off any attempt to tighten the money supply in the near term, Prices should remain stable to bullish with the next resistance test up at $26.50 about $1.00 higher than the current price at the end of this week. Support remains solid at about $24.50.
OIL
While Gold and Silver trading within the current ranges, U.S crude oil broke higher this week. Opening at $72.06 and pushing up to a weekly high of $74.08 on Friday on news of tightening supplies in the U.S this week and good summer demand for energy. The potential for a new pandemic crisis could put pressure on demand and maybe a big factor in holding resistance right around $74 per barrel. While the price of crude did move higher this week, the prices over the next several weeks will depend greatly on the new supplies increase out of OPEC countries and the new pandemic fears due to the Delta Variant.
Bill Poulos is a financial educator, former General Motors executive and published author. When he retired in 2001, Poulos and his son Greg founded a financial publishing company, Profits Run, Inc . Profits Run shows beginners how to invest wisely with minimal risk. The company educates investors through various wealth management publications. Automatic Income Engine, Rapid Income Engine, and Premium Income Alert are some of the products implemented by Profits Run to help investors trade smarter with minimal risk. Poulos contributes to a variety of online news sources, providing information on the stock market. Bill married his high school sweetheart, Karen, in 1969. They live in Michigan, where Profits Run is located.