Precious Metals Kick Off “Summer” on Defensive

Precious metals are beginning the unofficial start of the summer season on the defensive following a Friday afternoon speech by Chair Yellen and comments by her colleagues over the weekend. While the FOMC claims their decisions on a rate hike will be data driven, the comments from most voting members are certainly “hawkish” as their intent is to raise interest rates this year with a growing focus on September being the target date. This has brought us a stronger USD and driven gold and company below recent support levels as long positions are likely being liquidated while new short positions are being initiated.

This morning’s economic data has been mixed but the ley reading may be contained within the Durable Goods report as the closely watched business investment component rose sharply which indicates industry is investing in capital equipment as they gear up for an improving economy. All in all, the chatter this week will focus on the strength of the USD, its impact on all markets and any further indications on the course of the FOMC. Look for gold and silver to find support in the low to mid-$1,180.00s and $16.60s. If these levels hold, we could be in for a long week as the market drifts up towards $1,200.00 and $17.00. A dip below these levels could bring a test of $1,150 and $16.25.