Precious metals rose sharply in the afternoon amid weaker US dollar even as producer price inflation rose more than expected in November, adding to market uncertainty over the Fed next steps. Gold managed to jump above $1800 level, while silver jumped to a level not seen since end of April 2022 as cut in the reserve ratio by the PBoC sparked hopes regarding higher demand for industrial silver usage as electricity conductors. Also supply concerns also provided fuel for the bulls. Silver stockpiles at New York’s COMEX inventories plunged 70% in the last 18 months to just over 1 million tonnes. Meanwhile inventories at London Bullion Market Association decreased for the 10th month in a row to a record-low 27.1 thousand tonnes in November.
The next big catalyst for precious metals will be the US CPI report on Tuesday while the Fed, the ECB and the BoE will also decide on monetary policy during next week. The three major central banks are expected to deliver smaller rate hikes but attention will turn to terminal rates and any signs on whether policymakers are getting ready to pause or continue tightening.
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GOLD bounced off strong support at $1792.00 per ounce which coincides with 200 SMA (red line) and broke above psychological resistance at $1800. If buyers will manage to uphold current momentum and push price above recent highs at $1805 per ounce, then upward move may accelerate towards next major resistance at $1830 per ounce, which coincides with 38.2% Fibonacci retracement of the upward wave launched in March 2020. Source: xStation5
SILVER jumped above key resistance at $23.00 and if current sentiment prevails upward move may accelerate towards resistance at $24.00, which is marked with previous price reactions, upper limit of the local 1:1 structure and long-term downward trendline. Source: xStation5
USDIDX - Dollar index failed to break above key resistance at 105.30 which is marked with previous price reactions, 200 SMA (red line) and 38.2% Fibonacci retracement of the upward wave launched in May 2021. Nearest local support to watch lies at 103.40. Source: xStation5
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