Gold, Silver Watching Seasonal CPI Adjustments on Friday

Gold Settles into Narrowing Pattern as Yields, USD Edge Higher

Gold entered into a narrowing pattern at the end of last year (with hindsight), seeing gold price rallies and selloffs relatively more contained. Prices rose at the end of 2023 but since then, have entered into more of a consolidatory phase, with prices broadly being contained between $2050 and $2010.

Intra-day price ranges reveal the market is active but closing prices over the last two sessions, and potentially today, witness flat closing prices. Yesterday’s test and rejection of trendline support sees gold stabilizing around opening levels, as the yellow metal is on track to end the week flat or little changed.

The safe haven demand for gold has waned as markets appear to have become desensitised to geopolitical tensions and conflicts currently ongoing. Gold has therefore, taken its cue from dollar and treasury markets. The blue line depicts the US 2-year Treasury yield which exhibits an inverse relationship with gold prices and the recent lift in yields may see a marginally lower close this week.

Gold (XAU/USD) Daily Chart


Something to keep an eye on at 13:30 GMT today is the Bureau of Labor Statistics’ annual update of seasonal adjustment factors for past CPI prints. This affects the month-on-month (MoM) rise/fall in inflation and leaves year-on-year (YoY) measures unchanged. Higher MoM CPI revisions may see the dollar strengthen as rate cut bets continue to be pared back, while lower revisions could weigh on yields and the dollar as the disinflation trend would appear to be moving in the right direction.

Silver Prices on Track for a Flat Week

Silver sees a move higher into the end of the week, reclaiming lost ground off the back of last Friday’s NFP blowout. The move does appear unconvincing unless we see a close above $22.70 – the prior low right at the start of the year.

In addition, silver prices have shown little regard for the significant level of $22.35 which previously kept bears at bay, supporting prices and providing a pivot point on more than one occasion. The level pertains to the 38.2% Fibonacci retracement of the major 2021 to 2022 decline. The Fib level does present us with a potential support level in the short-term, with the swing low at $21.33 thereafter.

Silver (XAG/USD) Daily Chart


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