Commodity Prices Hold Ground on Memorial Day

Precious metals held their territory on Memorial Day, as a weaker dollar continued to provide an upward catalyst for gold and silver. Meanwhile, US crude futures consolidated near $50 a barrel after a sharp rebound on Friday.

Gold prices were last seen trading near $1,270.00 a troy ounce, their highest in over a month. Silver futures were also trading at one-month highs amid renewed demand for haven assets.

US oil prices are flirting with $50 a barrel after a volatile end to last week. Prices plunged to multi-week lows after the Organization of the Petroleum Exporting Countries (OPEC) agreed to extend its output cuts. Investors were expecting deeper cuts to be announced.

The US dollar index, a broad performance measure of the greenback against a basket of six peers, hovered between 97.33 and 97.52 at the start of the week. The dollar finished higher in the second half of last week, rising above seven-and-a-half month lows. The world’s most actively traded currency is expected to see significant price action later this week on a deluge of economic data, culminating in Friday’s nonfarm payrolls report.

Trading volume is light in North America as US investors pause for Memorial Day. Action returns to normal on Tuesday.

There were no major economic data releases scheduled at the start of the week. Spanish retail sales rose 1.8% in the 12 months through April, government data showed. Meanwhile, Switzerland’s employment picture deteriorated in the first quarter.

Gold

The outlook on gold remains tilted to the upside as the bulls have regained control of the market. The yellow metal is looking to re-test the April swing high north of $1,300 a troy ounce after crossing the 61.8% Fibonacci level on Friday. However, traders should be careful to monitor the Relative Strength Index (RSI) for signs of overbought resistance in the days ahead. A stronger US dollar could also provide downward pressure. The data-sensitive greenback will have plenty of catalysts throughout the week.

Silver

Like gold, silver prices are in a steady uptrend, as the metal full recovers from the 9 May swing low around $16.00 a troy ounce. However, long-term, silver is likely to maintain its volatile range-bound nature. This suggests further gains are in store before prices recalibrate.

WTI Oil

The outlook on crude has blossomed in the wake of a Saudi-Russian agreement to extend output cuts for nine months. The Saudis ratified that deal on Thursday through OPEC. This triggered an immediate selloff, as traders bought the rumour and sold the fact. The outlook on oil remains generally favourable, although this will depend in large part on US shale production. Weekly rig-count data from Baker Hughes Inc., which is presented every Friday, should be on every oil trader’s radar.