Gold/Silver: Three scenarios to be aware of

Published by Forever Wealthier on June 12, 2022June 12, 2022

The week was exciting for US equities, with inflation statistics reaching 40-year highs and consumer sentiment at an all-time low. On Monday, Silver received a tiny bid after the Biden administration announced tariff suspensions on solar panel components from four countries.

More crucially, we observed evidence of “safe-haven” investment demand returning to precious metals as the week progressed. Remember, silver is essential in the production of solar cells and might be the catalyst for the next bull movement. It will most likely take a one-two punch for Silver to take off, where the solar catalyst leads to increased demand/shrinking supply, and then investment demand goes back into high gear as traders begin to re-enter the market.

Looking ahead to the week, we anticipate the Fed raising rates by 50 basis points on Wednesday and remaining hawkish for the rest of the year. Following the rate hike, we anticipate one of three possible outcomes in US markets.

Bear Case – The Fed continues to tighten while the economy deteriorates, resulting in a year-long sell-off in US equities.

Soft Landing – The Fed raises interest rates several times as inflation begins to fall. Consumers see their real incomes rise as inflation falls, and they begin to spend again. The Fed will believe they have completed its mandate and will refrain from raising interest rates further. Equities should level off and begin a new upswing.

Despite a stronger US dollar and higher Treasury yields, gold finished the week at new one-month highs. With Friday’s low as your stop-out mark, the rise provides new Gold investors with defined risk parameters.

We’ve witnessed a string of higher lows with critical supports immediately below each one, all while knocking on overhead resistance. I went back through 20 years of my trading tactics to build a Free New “5-Step Technical Analysis Guide to Gold but can easily apply to Silver” to aid you with technical analysis. The tutorial will walk you through all of the technical analysis procedures needed to establish an actionable plan for entering and exiting the market.