Gold prices rose, while spot silver prices outperformed in the first trading session of the week, as the USD weakened, bond yield expectations fell and crude oil prices plummeted, supporting the precious metals market.
According to Kitco - the US stock and bond markets closed for Memorial Day holiday, while the US economic calendar had no notable data released.
The next focus of the market will be the S&P/Case-Shiller house price index for March released at 9:00 AM US Eastern time and the consumer confidence index for May at 10:00 AM on Tuesday.
This weekend, investors will continue to monitor Fed Richmond production data, personal income and spending, durable goods orders, Q1 GDP estimated for the second time, new home sales, wholesale inventory and the Chicago PMI index.
The Strait of Hormuz continues to be an important geopolitical link affecting energy, inflation expectations and the precious metals market. However, on Monday, the market reflected the possibility of cooling down tensions instead of a new disruption risk.
Last night oil prices fell to their lowest level in two weeks as investors optimistically believed that the US and Iran were approaching a peace agreement that could help reopen the Strait of Hormuz. Brent oil prices fell below $100/barrel, while US crude oil retreated to the low of the $90/barrel mark.
This development supports gold and silver by reducing the risk of inflation from energy, pulling down the USD and reducing pressure to raise interest rates. Although a successful deal may reduce safe-haven demand, the remaining factors are still creating support for the precious metal.
On other markets, the clearest impacts are falling oil prices, global stocks increasing, the weakening USD and cash flow returning to interest-sensitive assets.
Global stocks simultaneously recovered amid the US cash market holiday. Japan's Nikkei 225 index rose nearly 3%, Europe's Stoxx 600 index rose about 1%, while US stock futures also went up as traders assessed that the inflation risk from oil has cooled down. The USD depreciated against other major currencies.
In outside markets, Nymex WTI crude oil prices fell sharply to around 91 USD/barrel, while Brent oil traded nearly 97.4 USD/barrel. The USD Index weakened. 10-year US Treasury bond yields were not traded in cash due to the US bond market's Memorial Day holiday.
Technically, the next price increase target of gold buyers is to bring prices back to the resistance zone of 4,580.8-4,660 USD/ounce. If the upward momentum is maintained, gold prices may head towards the 4,678 USD/ounce mark and then 4,800 USD/ounce.
In the opposite direction, the short-term price reduction target of the selling side is to pull the price down below 4,533.9 USD/ounce. If this threshold is broken, gold prices may fall deeply to 4,500 USD/ounce and then 4,380 USD/ounce. The first resistance level is at 4,580.8 USD/ounce, followed by 4,660 USD/ounce. Meanwhile, the nearest support is at 4,533.9 USD/ounce and then 4,500 USD/ounce.
For silver, the next price increase target of buyers is to bring prices beyond the 78.95-89 USD/ounce zone. If successfully breaking through this zone, silver prices may head towards the 90 USD/ounce and even 100 USD/ounce marks.
Meanwhile, the price reduction target of the selling side is to pull the price down below 76.4 USD/ounce. If this mark is lost, silver prices may fall deeply to 72 USD/ounce and then 70 USD/ounce. The nearest resistance is at 78.95 USD/ounce and then 89 USD/ounce. The next support levels are at 76.4 USD/ounce and 72 USD/ounce respectively.
