Gold price cratered lower this week as the US Dollar enjoyed another week of gains as US Treasury Yield’s rose. The rally in USD came in response to the latest data showing that US retails sales rose for the second consecutive month over April adding further weight to the strength of the economic recovery in the US. Alongside the strong retail sales data, better Empire State figures also boosted the US Dollar as traders have increased their expectations for further Fed tightening, weighing on gold.
A more constructive risk environment has also seen demand slipping away from gold as traders move their cash back into riskier assets to take advantage of calmer trading, following a dialling down in rhetoric by the US and China over trade tariffs and the historic summit between North and South Korean leaders last month.
As the mighty US dollar weighs on metals a gold sell-off this week has seen price break down below the local 1296.65 level support which has underpinned price action over the year so far. With this break, the path is now open for a run down to deeper support at the 1196.52 level.
Silver prices were similarly lower this week, tracking the moves in gold, as the mighty US dollar weighs on metals across the board. Silver prices have been extremely stagnant over the last few months creating a difficult trading environment for many. With prices refusing to make a meaningful break lower despite the strength in USD over the last two months, many in the market are questioning whether silver could be on the verge of a rally.
Silver prices remain broadly unchanged from where the opened the year, sitting in the middle of the broad 17.4575- 15.80s range which ash framed price action over the year so far. Until either of these boundaries is breached, the stagnation continues with little opportunity outside of intraday scalping at this point.
Copper prices traded lower over the week as the stronger mighty US dollar weighs on metals. Adding further bearish pressure to copper has been concerns regarding weaker China demand given softer manufacturing data recently. The threat of a trade war between the US and China is also having a negative effect on copper as traders anticipate lower manufacturing output in China consequently.
Copper prices continue to battle it out in the tightly congested range that built up between the 2.966 level (broken 2015 high) support and resistance at the retest of the broken bullish trend line from last years lows. While the price action of the last nine months looks fairly choppy, a break of the 2.966 level will be needed to confirm downside.
Iron ore prices tracked the moves seen across the broader commodity complex this week, moving lower as the US Dollar traded higher on increased US rate hike expectations. On the back of weaker than expected China data for April, Iron ore posted its biggest decline in months, despite better steel prices.
Despite two attempts over the last few weeks, Iron ore has been unable to make it back above the $69 level mark resistance which is now proving to be the line in the sand for local price action. While below this level we are likely to see further downside transpire with the current short term bullish channel looking like a bear flag on the back of the decline seen March highs.