Gold & Silver Trade In A Tight Trading Range Building A Base

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In ten trading days from July 21st, when Gold reached a new 2022 low of $1,678 per ounce, Gold rallied over $100. Gold quickly rallied above the key $1,750 support/resistance level and kept on going, reaching a high last Thursday of $1,790 before seeing some light weekend selling on Friday.

Last Friday it was announced that Nonfarm payrolls had increased 528,000 jobs in July, while the unemployment rate dropped to 3.5%, much higher than the Dow Jones estimate of 258,000 jobs. This news caused the Gold price to drop to $1,764 before rallying back $10, closing at $1,774 per ounce, up $12 for the week. Last week, Gold mostly traded between $1,750 and $1,800, building a firm base for the next leg higher, above $1,800 per ounce this coming week.

On Sunday afternoon, the U.S. senate passed the $750 billion health care, tax and climate bill, called the “Inflation Reduction Act". There is very little in this legislation that reduces our current high inflation rate, but for political reasons, the name is effective. This legislation goes directly to the House this week and passage is almost guaranteed.

Today: A combination of a weaker U.S. Dollar and analysts' concerns over recent government spending legislations has driven Gold higher today. Gold reached a high this morning of $1,791 before seeing some light profit taking.

Last week, Silver traded above and below the $20 level all week. Silver reached a high of $20.47 and a low of $19.47, a one dollar high/low range. Clearly, after rallying $1.58 the week before last, Silver needed to consolidate the sharp increase. Breaking back above the key $20 level is important for this Silver rally. Silver closed last Friday at $19.80 per ounce, down $0.40 for the week. The Silver-to-Gold ratio increased to 90-to-1 in just a week.

Today: The Silver price led the precious metal group higher this morning. Silver opened higher and kept on going, reaching a high of $20.85 before seeing a short-term profit taking.