Gold Technical Report: The gold prices came down on selling pressure yesterday. The medium term trend looks further bearish as prices continue to trade below 50 DMA which itself is trading below 200 DMA. Any slippage down the nearest main bottom at $1680 will turn the Main trend negative. On the upside, the major resistance will be at 50 DMA @ 1757 . The Short term Stochastics Oscillator is at 5 and RSI momentum is near 32.
Silver Technical Report: Silver witnessed continued selling pressure after the attempted pullback last week. It still looks further bearish as 20 DMA is about to cross below 200 DMA on weekly charts. The next major resistence will be faced around 50 DMA around 19.50. The Short term Stochastics Oscillator is at 5 and RSI momentum near 28.
Fundamental Report: Gold prices closed lower for a fourth straight session as prices continue to edge closer to the psychological support level at $1700.00. And if that wasn’t bad enough, bullion is also on-track to post its fifth consecutive month of declines. This would match its longest streak of monthly losses since 2018. The catalysts behind the selling pressure are expectations of more aggressive rate hikes than previously anticipated by a collection of central banks to combat red-hot inflation. At 11:26 GST, gold was trading $1706.50, whereas the SPDR Gold Shares ETF (GLD) settled at $160.53, up $0.02 or +0.01%. Although gold has been pressured for months, this particular leg down is being fueled by Federal Reserve Chairman Jerome Powell’s hawkish tone last Friday that highlighted his determination to bring down inflation through tighter monetary policy. His policy is expected to result in higher U.S. real rates and a stronger U.S. Dollar. Powell also warned that businesses and consumers are going to have endure “pain” during the process that could result in an economic slowdown or recession. In essence, the primary message that Chairman Powell delivered on Friday was that the Federal Reserve will continue to raise rates to reduce inflation “until the job is done”. This idea still lingers in the forefront of market participants’ minds. Yesterday gold futures traded to a low of $1731.80 but quickly recovered as market participants bought the dip. According to the CME’s FedWatch tool, there is a 68.5% probability that the Federal Reserve will raise rates by 75 basis points during the September FOMC meeting. Although it is a slight decline from yesterday’s probability assessment which predicted a 75% probability of a 75-basis point rate hike in September, one week ago the FedWatch tool was predicting a 47.4% probability. In economic news, today’s ADP Private Sector Employment report showed an increase of 132,000 jobs in August and annual pay at 7.6%. This may have missed the forecast, but gold fell to a new low for the session on the news.