Precious metals resumed trading yesterday while still digesting Friday’s very strong U.S. employment data as discussion and speculation about the timing of a rate hike overshadows our market. On Friday morning, N.Y. Fed President Dudley said that labor market improvement, higher wage compensation and rising inflation must continue in order for him to support a rate increase. While it appears the FOMC is determined to raise rates this year, I continue to think there is enough uncertainty in our economy, and certainly the global economy, that a rate increase this year will be a single event, likely to be in September and perhaps most importantly likely already built into the market.
Overnight, China released data that shows their economy will continue to need further stimulation as their exports declined for a third straight month while their imports declined for a seventh straight month. The import data could weigh on base metals which could bring additional pressure to precious metals. The most recent Commitment of Traders report showed speculative long positions on the exchange continued to decline while speculative short positions continued to increase. This may indicate the trading range of recent months is likely to continue as shorts may be poised to cover their positions and take profits in the support range from $1,155.00 through $1,140.00.