Metals: Gold Confirms 1,281 as a Support, but Bears Want More

Precious metals including Silver, Gold, and Copper are waiting for a catalyst like the NonFarm payrolls data and the ECB rate decision.
Mauricio Carrillo
Precious metals: Gold Silver Copper Platinum

Precious metals are trading down on Wednesday after a pullback was experienced the previous day. Gold and Silver are waiting for a catalyst from the market with the US employment report and ECB as main characters.

Risk Appetite remains on the table, but traders want to wait

All investing markets are trading with caution this week as investors are waiting for the US employment report and the ECB interest rate decision.

Both economic events matter to precious metals and commodities as data and talks can push prices up.

An upbeat labor market report in the US will add inflationary pressures to the economy, with the Feb forced to hike interest rates. Also, a bearish Euro will push the Dollar up.

In this framework, gold, silver, and Copper will trade higher.

Analysts at Lloyds Bank also highlight that the OECD will publish an update of its global economic forecast. Another revision to the downside will spark risk aversion on the market, with commodities going up.

The OECD “has already revised down its projections significantly over the past year. Last November, it predicted global GDP growth slowing from 3.7% in 2018 to 3.5% for both 2019 and 2020, citing the impact of trade conflicts and political uncertainty,” said Lloyds Bank.

Gold seems trapped between 1,280 and 1,290

XAUUSD gold prices chart daily March 6

Gold is trading negative on Wednesday as its recovery from 1,280 on Tuesday was capped at 1,290 today. XAU/USD is now pricing at 1,285, 0.16% negative on the day.

XAU/USD seems trapped between 1,280 and 1,290 as the USD bullish sentiment is keeping gold from any significant gain. However, the advance in the Dollar index is not significant, because traders are waiting for NFP and ECB.

Technically, Gold is bearish with studies showing oversold conditions. The XAU/USD needs to recover the 1,300 area before giving hope to bulls.

FX Empire Analyst James Hyerczyk affirms in a recent article, “today’s price action also suggests investors may have found a temporary value zone after a week-long plunge.”

“However,” Hyerczyk continues, “the muted reaction to finding support also suggests investors may be waiting for a new catalyst to trigger the next rally.”

In any case, Hyerczyk states that market “may not see another prolonged rally in gold unless the trade deal blows up and both parties walk away from the negotiation table.”

Silver trades sideways, risk for more declines

XAGUSD silver daily chart March 6

Silver is at the edge of a big break in the short term as the XAG/USD is testing 15.05, that would open the 15.00 level and more.

XAU/USD is currently trading at 15.09, 0.20% negative on Wednesday. The pair is testing the 15.05 level, March 5 low, as it was unable to break above the 200-day moving average at 15.17.

With the pair trading sideways between 15.05 and 15.17, Silver is at the edge of a critical technical event that would push the XAG/USD below the 15.00 for the first time in 2019.

A break below the 15.00 would open the door to the 14.80 and to the possibility to get caught in a new range between 14.60 and 14.80.

Copper fights to extending recovery

Copper is trading slightly negative on Wednesday as the pair is 0.05% down on the day at 2.9250. XCU/USD seems positive on the big chart and a new attempt to test the 3.0000 in the next days is possible.

Previously, XCU/USD tested highs since June 2018 at 2.9700 on February 25, but the pair got a rejection that sent it back to 2.8860 on March 4. Now, it seems ready to resume its uptrend.

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