Gold Futures and Silver Futures: Market Outlook and Analysis

Gold Futures

Gold futures have been making new highs, with the June contract breaking through the $2,200 per ounce mark and reaching an astonishing $2,233 per ounce on Thursday. Currently, there's a 62% chance of the first interest rate cut happening in June. If the pivot is postponed to the third quarter or the number of cuts is reduced to two or one instead of the expected three, it will trigger a correction in both gold and silver prices. Gold is vulnerable to a pullback toward key support levels after its steady rise. Next up, the market will shift its focus to upcoming macroeconomic data. Today, we await the release of growth figures from the US. If these figures confirm the initial estimates, we can expect a significant decline compared to recent quarters. On Friday, the most important reading will be the Fed's preferred measure, inflation. The current market consensus confirms disinflation slowing at 2.8% y/y, which corresponds with the stagnation of the headline consumer inflation index. If PCE inflation and GDP data show an increase, sellers might gain temporary control. Gold prices, despite two minor corrections, continue to rise and are on track toward historical highs. However, the direction may change depending on upcoming US data. If this happens, sellers will likely target the support level around $2150 per ounce, which has been tested before. In the longer term, deeper corrections to around $2100 per ounce could offer good buying opportunities at lower prices.

Silver Futures

Silver prices are holding steady near a key resistance level. The bears' target range is approximately $22 per ounce, and if this level is breached, the $20 mark is seen as a robust support area. Conversely, in a scenario where there is significantly weaker data from the US economy, buyers will aim for the $28 per ounce region. Silver remains in a consolidation phase, with the expected scenario being for the price to consolidate while the continues to rise.

U.S. Equity Markets

U.S. equity markets are slightly lower today as the trading week gets ready to wrap early for Good Friday. Hawkish commentary from Federal Reserve Gov. Christopher Waller helped push yields higher, although revisions to the 4Q '23 U.S. gross domestic product (GDP) report helped spark a rebound by bonds. Gold has continued its march higher, while crude oil has quickly ascended toward its yearly highs. The U.S. Dollar remains in positive territory on the session, though overnight gains have been fading. The Nasdaq 100 (/NQM4) is nearly unchanged as traders position their portfolios for the end of the quarter. Tomorrow will see major event risk with the personal consumption expenditures index (PCE) and comments from Fed Chair Jerome Powell, but the market will be closed for a U.S. holiday. Treasuries are falling across the curve after Fed Gov. Christopher Waller tempered expectations for three rate cuts this year, saying that he is in no rush and that the recent inflation data has been disappointing. Strong economic data on GDP and consumer spending also helped to pressure yields higher. 30-year T-Bond futures (/ZBM4) fell 0.16% this morning, propping up the long end of the curve. four- and eight-week bills are scheduled for Treasury auctions today. Gold futures (/GCM4) appear to be attracting some defensive flows amid quarter-end rebalancing. Precious metals traders are brushing aside higher Treasury yields and a stronger dollar ahead of heightened event risk, which will occur when U.S. markets are closed. A stronger-than-expected GDP report was also encouraging for the metal as it broke into fresh all-time highs. Speculators remain overall net long on gold but next week will be busy in terms of event risk. Crude oil prices (/CLK4) found support above the 82 handle despite yesterday’s report from the Energy Information Administration (EIA) that showed a build in stockpiles, both in crude oil and gasoline. However, refinery utilization rates rose, suggesting we may see stocks start to draw down in the coming weeks. Increasing brent prices overseas will also likely support U.S. export demand as global supplies remain tight amid OPEC’s ongoing production cuts. Risk-sensitive Australian dollar futures (/6AM4) fell this morning after comments from Federal Reserve members underpinned dollar strength. Australia also saw weaker-than-expected economic data in retail sales cross the wires overnight, but the driving force is likely traders de-risking ahead of tomorrow’s U.S. inflation report, which could charge the dollar if it comes in over expectations.