Rising US Rates to Help USD; Might Hurt Precious Metals

February 2, 2018 8:48AM CST

Global equity markets were largely under pressure last night.  Shanghai and Australian markets managed modest gains, while the Asian session was fairly quiet data wise.  The European session features the January UK construction PMI, January Italian CPI and December Euro Zone PPI.  United Kingdom construction PMI readings came in weak and down from last month. 

While March Silver has spent the morning trade in the upper end of the range, building strength in the USD into nonfarm payroll reading could serve to knock silver back into negative territory.  However, the USD remains stuck within the last two weeks trading range and that could cancel out the negative impact of early USD gains on silver to start the morning.  We expect silver and other physical commodities to benefit from the recent Goldman comments talking about commodities being on the rise this year.  They expressed long-term bullishness due to the likelihood of reflation.  The recent weakness is equities should also provide some support to the metals because they will be seen as a safe haven.  Support comes in today at 1710-1700 with resistance at 1735-1745.  We would like to see a pop over 1755 to rekindle bullish forces.

Silver Mar '18 Daily Chart


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.