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| Gold and Silver Prices Consolidate Ahead of High-Stakes Trading Days |
Precious metals have seen significant gains since the beginning of March, with Gold and Silver prices consolidating this week. Gold price is currently trading above $1,950 after peaking around the $2,000 round resistance, while Silver price has seen a constant uptrend and is trading above $23. The market is now looking ahead to the next Federal Reserve meeting in early May, and will spend April trying to figure out the likelihood of more interest rate hikes to combat inflation before the inevitable easing of monetary policy by the US central bank begins.
The US Personal Consumption Expenditures (PCE) Price Index release on Friday, which is the Fed's preferred measure of inflation, will be a high-stakes trading day. Giles Coghlan, Chief Market Analyst at HYCM, explains that any beat above 4.9% in the US Core PCE YoY measure could be negative for Gold in the short term, but provide buying opportunities for bright metal bulls. The market is closely watching the Chinese Purchasing Managers Index releases, as China is the biggest Gold market in the world.
Silver, the second most precious metal, is highly correlated with Gold, and has not seen as much of a retracement this week. XAG/USD has already rallied past the 61.8% Fibonacci retracement level from the January 16-March 8 downtrend, and with its main Simple Moving Averages nearing a bullish cross, it could soon find a platform for another rally back to year-to-date highs. The main target and resistance for Silver bulls is around $24.50, which coincides with a long-term bearish trendline that has contained price action since May 2021. The fact that Silver price has managed to stay outside overbought territory helps the continuation of a slow but solid uptrend to these levels if fundamentals remain in favor of precious metals.
In conclusion, Gold and Silver prices are stable ahead of high-stakes end of month events, including the US PCE inflation data and the Chinese PMI releases. Traders are closely watching the Federal Reserve meeting in May and trying to figure out the likelihood of more interest rate hikes to combat inflation. Silver is on a solid uptrend and could soon find a platform for another rally back to year-to-date highs. However, the market remains cautious and is looking for buy-the-dip opportunities.
