---

As challenging economic trends lie ahead, the Fed has pivoted from extreme dovishness to outright hawkish. Their dual mandate of price stability and maximum employment has them in the same predicament they faced in 2018 when they continued to raise rates into an economic slowdown. From the peak in October 2018, the S&P corrected 13.6%, finishing the year down 6.24%. December 2018 was their last rate hike in the cycle, and by July 2019, they began cutting rates due to deteriorating economic conditions. As equities declined in 2018, Gold bottomed, and the following year 2019, Gold returned 18.9% and Silver 15.3%. I believe that once a bottom is complete, we should see similar returns in precious metals. 

 

2018 Daily S&P Chart

 

Daily Gold Chart 

Unfortunately, right now, trying to locate a hard bottom in precious metals has proven to be a difficult task. The strong Dollar has pushed the Euro down to parity, and with Gold having a 96% inverse correlation to the Dollar, strong headwinds remain. Wednesday, U.S. consumer inflation data released was the highest since 1981, reaching 9.1%. Although it's a lagging indicator, traders are now increasing their expectations from a 75 bps rate hike on July 27 to a 100 bps possibility. Looking at the 'Fed Watch Tool," I believe those expectations are greater than 50/50. Gold will unlikely reach a bottom until the inflation data has deteriorated enough to stop higher interest rate hike expectations and begin to bring them lower. Long-term charts indicate a monthly technical base sits at 1685. To help you identify additional long-term support and resistance levels, we created a Free "5-Step Technical Analysis Guide to Gold and will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here:  5-Step Technical Analysis Guide to Gold.

 

Monthly Silver Chart

Despite Chinese copper imports increasing double digits from May to June, the challenging economic trends continue to weigh in on base metals. Economic trends often go from Boom to Bust and back to Boom. Once the recession is here and we are in the bottom innings, the current administration's only hope to save face with the American people is to launch a spending plan to revitalize the economy. They will also reevaluate the rate hike cycle and, similar to 2019, adjust by cutting rates. Copper, silver, and other base metals will likely take off again. At the same time, riding the sell-off until that time will require significant patience and possibly additional capital applied to Dollar cost average down depending on your starting point in metals. Monthly support remains in the mid $16's where silver traded from 2013-2019. If you have never traded Silver futures, we completed a new educational guide that answers your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. Additionally, you will receive a free two-week trial to our flagship report, "The Morning Express," giving you critical levels of support in resistance in the Gold and Silver. You can request yours here: Trade Metals, Transition your Experience Book. 

---

Sign up for a 14-day, no-obligation free trial of our proprietary research with actionable ideas!
Free Trial Start Trading with Blue Line Futures Subscribe to our YouTube Channel
Email info@Bluelinefutures.com or call 312-278-0500 with any questions -- our trade desk is here to help with anything on the board!

Futures trading involves substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third party application. Blue Line Futures employees use only firm authorized email addresses and phone numbers. If you are contacted by any person and want to confirm identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

Gold Silver S&P

Like this post? Share it below:

Back to Insights