Bearish Pressure on Precious Metals as Safe Havens Falter

By Tomasz Wisniewski|

Published: July 31 2023, 06:29 GMT+0

Bearish Pressure on Precious Metals as Safe Havens Falter

Welcome to Monday, the final day of trading in July. As we step into a fresh week, there are several interesting market moves to observe.

Starting with our macroeconomic calendar, we’ve already seen the release of one significant figure: the Manufacturing PMIs from China, which exceeded expectations. The PMIs clocked in at 49.3, comfortably above the anticipated 48.9, and marking an increase from the previously reported 49. For the rest of the day, the most noteworthy data point scheduled is the inflation CPI flash estimate from the Eurozone. Here, inflation is projected to dip from 5.5% to 5.3%.

Shifting our gaze to the markets, starting with currencies, the strongest performers currently are the New Zealand dollar and the Australian dollar, followed by the British pound. On the other hand, safe havens such as the Japanese yen and Swiss franc are taking a backseat, with the yen in particular ending Friday on a pronounced downswing.

In terms of technical moves, we’re seeing a significant reversal on the USDJPY pair, which has successfully defended the 138 support level. Another currency pair to watch is the NZDUSD, where the price is carving out a bullish engulfing pattern on the daily chart, following a bounce off long-term horizontal support.

Moving to indices, they’re kicking off the week on a high note, with values gravitating near local tops. The DAX, for instance, is making strides at long-term highs, indicating an optimistic start to this week’s trading.

A quick look at commodities reveals that precious metals are feeling the pinch of bearish pressure. Gold is exhibiting a minor head and shoulders pattern, with the price slipping below the neckline. Silver, meanwhile, is trading below the $24.4 per ounce horizontal resistance, reinforcing a bearish sentiment. Contrary to these, oil appears to be bucking the trend, commencing the new week perched on local tops.