Metals lose momentum amid worries of Fed’s hawkish shift
12:42, 22 November 2021
Momentum on metals weakened further in London midday trading amid growing expectations that the Federal Reserve may turn more hawkish in December, accelerating the pace of monetary policy normalisation.
Spot gold retraced 0.5% on the day to $1843/oz, while spot silver is unchanged at $24.78/oz.
Palladium was the worst performer among metals, down 1.4% to $2044/oz, while platinum was up 0.1%.
Copper was 0.6% lower to $4.38 per pound as a top official from the People’s Bank of China (PBoC) warned on Sunday about risk of a period of “quasi-stagflation” for the Chinese economy.
Meanwhile, Treasury yields inched higher, with the 10-year yield up 3 basis points to 1.58%. The US dollar (DXY) traded at 96.05 level, close to its year-to-date highs (96.18).
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Metal Commodities Performance Heatmap – 22 November 2021
Metals performance as of 22 November 2021 (12:00 UTC) – Credit: Capital.comGold
As of writing, spot gold was last at $1,843 per ounce, down 0.5% from a day before.
The gold rally, which began after the surprise of the October inflation data in the US, now seems to have lost some momentum, struggling to break the key resistance level at $1,870.
The uncertainty on the precious metal stems essentially from increased market expectations of a shift in the Fed’s monetary policy towards a more hawkish stance.
Fed’s Christopher Waller said last Friday that he is now favouring a more rapid removal of accommodation in 2022, while vice chair Richard Clarida indicated that a policy debate on a faster pace of tapering could be possible in December.
Gold prices retraced 1.2% from a week ago, while the performance of the precious metal is still positive compared to a month ago (+4.1%).
Spot gold is now trading 3% above its 50-day simple moving average (SMA), and 10% above its 12-month lows.
Gold technical levels:
- 52-week high: $1,959
- 52-week low: $1,678
- 50-day moving average: $1,790
- 200-day moving average: $1,792
- 14-day relative strength index (RSI): 57.48
Silver
Spot silver traded at $24.77 per troy ounce, broadly unchanged from the previous day.
On Friday, silver extended its weekly negative performance (-2.3%), while the precious metal is still up 4.4% from a month ago.
Spot silver is now trading 5.2% above the 50-day SMA, but is still 15.5% below its 52-week highs ($29.89).
Silver technical levels:
- 52-week high: $29.89
- 52-week low: $21.44
- 50-day moving average: $23.55
- 200-day moving average: $25.32
- 14-day RSI: 56.68
Chart of the day: Bullish short-term momentum on precious metals is now weakening
The relative strength index (RSI) is a popular technical momentum indicator that is used to determine the magnitude of recent price moves. The figure below illustrates the RSI for gold and silver over the last five months. On 12 November, the RSI indicator for both metals reached the ‘overbought’ mark and then began to decline, signalling a weakening in the bullish momentum.
14-day RSI on XAU/USD and XAG/USD – Credit: KoyfinCopper
Copper was last at $4.37 per pound, down 0.9% on the day.
On Sunday, a top official from PBoC raised the stagflation risk for the Chinese economy, which could worsen the outlook for the commodity. Today, the PBoC left its key benchmark rate unchanged, but some major banks recognised easing signals from the central bank statement.
Spot copper is still 3.3% down from a week ago, but it remains the best performer among metal commodities year-to-date (+24%).
Copper technical levels:
- 52-week high: $4.90
- 52-week low: $3.22
- 50-day moving average: $4.37
- 200-day moving average: $4.32
- 14-day RSI: 49.1
Platinum
Platinum was last at $1,038 an ounce, up 0.14% from yesterday’s levels.
Platinum performance turned negative (-0.9%) from a month ago, while it is still positive (3.5%) over the past three months.
Platinum is trading 22.4% below its 12-month highs.
Platinum technical levels:
- 52-week high: $1,337
- 52-week low: $901
- 50-day moving average: $1,047
- 200-day moving average: $1,024
- 14-day RSI: 35.48
Palladium
Palladium is down 1.4% to $2,038 an ounce in London midday trading.
Palladium recorded the worst weekly performance among metals (-5.8%) and prices are still down 17% year-to-date.
Palladium is trading 32% below its 12-month high and 18% below the 200-day SMA.
Palladium technical levels:
- 52-week high: $3,017
- 52-week low: $1,842
- 50-day moving average: $2,018
- 200-day moving average: $2,483
- 14-day RSI: 45.99