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Gold & Silver Poised to Rally


Clearly, gold, and silver prices lost upside momentum in the wake of a very active US economic report slate this week has presented a mixed outlook for the US economy and surprisingly that failed to markedly increase expectations for a US June rate cut. Certainly, the markets have been disappointed by US Fed dialogue seemingly playing down and or pushing back the prospect of rate cuts. However, the gold and silver trade will likely remain sensitive and perhaps poised to rally if today’s key nonfarm payroll reading is softer and the Takeaway from US data shifts sentiment toward economic risk. Fortunately for the bull camp, and silver ETF holdings have posted two straight days of inflows with silver inflows showing relatively larger inflows. Unfortunately for the bull camp, precious metal markets have failed to benefit from a serious escalation in Middle East tensions this week following Israeli attacks of Iranian outposts in Syria and from rumors that Iran intends to retaliate against Israel quickly. In a very minimal negative, Perth Mint gold sales fell by two thirds in March in a sign that some demand destruction is taking place from record pricing. In today’s action, short-term macroeconomic influences are likely to drive the dollar, interest rates and ultimately gold prices.

Gold and Silver bars


From a short-term trading perspective, this week’s extension of last week’s rally saw upside momentum accelerate, open interest continue to rise, and trading volume pick up. Therefore, expectations of improvement in the Chinese economy have been embraced by the trade and it is possible the Chinese attempt to reduce excess smelter capacity is cleaning up supply of refined products which could result in improved treatment charges. Because of a Chinese holiday, Shanghai copper warehouse stocks are not available today with the last update showing an increase of 1621 tons. In another modestly bearish internal development daily LME copper warehouse stocks increased by 3000 tons this morning.


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