Gold rallied last week, reaching a new high of 2440 today. Traders are eyeing potential consolidation or correction, with an impulse trade likely during high volume periods.
The U.S. dollar weakened by 0.7% last week, hitting its lowest point in over a month. This decline came as traders adjusted their expectations for a possible Federal Reserve interest rate cut as soon as September, following April's inflation data which showed a larger-than-expected easing.
Silver and other metals experienced significant price increases. Silver jumped over 6% on Friday, having surged more than 25% this year. This performance has outpaced gold, making silver one of the top-performing major commodities of the year.
The Bloomberg Commodity Index is on track for its third consecutive monthly increase, a streak not seen since 2022 when core inflation rates were above 8%. The index has risen nearly 4% in May, marking its strongest performance since July, and it is currently trending above its 200-day moving average.
Optimism in China's stock market has provided a boost to the broader Asian region, with the MSCI Asia Pacific Index enjoying a six-day winning streak. In the U.S., the VIX index fell to its lowest level since November 2019, indicating reduced market volatility and anticipation of potential rate cuts by the Federal Reserve.
In summary, gold's bullish momentum is supported by a weaker dollar, significant gains in silver, and positive commodity index trends. Market optimism in Asia and reduced volatility in the U.S. further enhance the outlook, making high-volume trading periods particularly important for potential breakout opportunities.