Gold and Silver Prices Rally to 12-Month Highs in Response To Weak U.S. Economic Data

The precious metals market has shown impressive performance rates over the last few weeks as every other market sector seems to fail over and over again. Gold and silver prices continue rallying as we enter April with inflation rates still soaring and traders still uneasy over whether or not to trust banking institutions. The latest economic job data release from The Labor Department only reaffirms this trend: the economy’s spiraling and the only stable assets we can grasp to for security are shiny, precious metals.

Poor U.S. data releases pushes the U.S. dollar and treasury yields down, allowing gold and silver to rise. Let’s explore what this data release included.

To start, the report showed the lowest levels of job openings in February than in the last two years, displaying a lower demand for workers which is relatively new. March’s U.S. factory orders also dropped by 0.7%. The non-farm payrolls number came in at 238,000, a significant drop from February’s report showing 311,000.

Following this release, global stock markets and U.S. stock indexes remained on the mixed and weak side. In general, the report displayed much weaker numbers than expected, which in turn, resulted in weak market responses.

The U.S. dollar index hit a two-month low after the release of this information. Nymex crude oil prices also remained down, trading at lower-than-typical prices given the recent announcement from OPEC+.

OPEC+, a global organization consisting of the primary 23 nations that export crude oil around the globe, recently announced that it will be cutting oil exports in May by over 1 million barrels per day. The intergovernmental group single-handedly controls how much oil the entire globe receives, so a decision like this affects prices of not just oil, but many commodities worldwide. This report sent shockwaves throughout the market just days ago, also boosting gold and silver prices as many flock toward the safe assets with yet another reason to protect their wealth.

April gold futures hit a 12-month high following the release of the U.S. economic data with a strong advantage to continue on the uptrend. Daily charts show gold moving up at a consistent rate since the beginning of March with the fall of SVB Financial and February’s payroll release. The next objective will be to push resistance lines above March 2022’s high of $2,078.80 per ounce, which we’re not far off from.

Current resistance figures immediately following the report release show $2,035 per ounce, then $2,070 per ounce. The low is above the objective line and current support is at $2,000 per ounce.

May silver futures also hit a 12-month high right after the report release. Prices show a similar steep upward trend as gold, with daily levels continuing to move upward.

“Inflation fears have started to rise after OPEC decided to cut production. There are buyers on dips. A weaker U.S. dollar today and the rise from the day’s low added to the price rise,” Chintan Karnani, Insignia Consultants’ director of research, explains.

“A daily close over $2,000 today and tomorrow will cause a short covering rally and a move to $2,120. Momentum and sentiment is very bullish. Only a very strong March jobs numbers will cause a sell off in gold. Incoming news will be the key before the Easter Vacation,” Karnani continues.

Karnani’s predictions played out quite well for gold given the poor job numbers and favored gold prices. “Demand for safe havens appears to be elevated and that should be good news for gold,” Edward Moya, a senior market analyst at OANDA, explains.

As of April 13, gold finished the day at $2,046 per ounce, $232 higher than just five weeks prior. Silver finished the day at $25.52 per ounce, showing a $5 rise or 20% increase in the last five weeks.

Both precious metals have shown unstoppable performance rates throughout March and into April. The more poor news the government continues releasing, the better prices we can expect to see from both.

While some analysts expect the current price spike rates to slow soon if inflation calms or if the economy settles, many believe the prices will still remain steady given the strong demand from numerous sectors. Gold and silver both maintain steady levels of demand from many groups beyond investors, allowing them to carry secure price rates. Because of the current economic landscape, gold and silver are offering both short and long-term investment opportunities, which does not happen often.

As always, investors should consult their financial advisors before making any portfolio decisions.

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