Gold pushed higher as a softer U.S. Producer Prices report dragged Treasury yields and the dollar lower. Silver retreated as the gold/silver ratio climbed above 70, while platinum tested the $1650 level on falling oil prices.
Gold gained ground as traders reacted to a pullback in the U.S. dollar and falling Treasury yields. Because gold pays no interest, falling yields are bullish for the metal.
Soft PPI pressures yields
Bond traders focused on the latest Producer Prices report, which showed PPI fell -0.3% month-over-month in June against an analyst forecast of 0%. Core PPI rose +0.2%, below expectations. The soft print pushed yields down as traders trimmed bets on a hawkish Fed, a shift that fed through to a weaker dollar against a broad basket of currencies.
Oil prices also moved lower, reducing demand for safe-haven assets and adding pressure on the dollar. That combination gave gold further support. According to the FedWatch Tool, there is an 89.8% probability the Fed holds rates unchanged at its late-July meeting, with a 43.9% chance of a September rate hike. Rate-hike odds declined after the CPI and PPI reports, which was bullish for gold.
Gold failed to settle below support at $4020 – $4040 and is moving toward $4100. A climb above $4100 would open the way to resistance at $4180 – $4200.
Silver slips as the ratio tops 70
Silver pulled back as the gold/silver ratio climbed above 70.00. If the ratio holds above that mark, it points toward 71.30, a bearish signal for silver.
The metal recently tried to break below support at $56.00 – $57.00 but rebounded toward $58.00. A drop below $56.00 would push it toward the next support at $51.00 – $52.00, while a move above $58.00 targets the $60.00 level. Traders watching this range can review how to trade silver before positioning.
Platinum tests $1650 on weaker oil
Platinum moved higher as traders reacted to the oil pullback, which is bullish for the industrially dependent metal. It settled above resistance at $1600 – $1620 and is trying to hold above $1650. A successful move would target $1680 – $1700, with the 50-day moving average sitting at 1785.
Source: FXEmpire
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