Gold Technical Report: Gold Markets initially rallied on Wednesday but continue to struggle with the 50 DMA at around $1790. By doing so, the market looks very likely to continue to see a bit of hesitation, especially as the candlestick during the trading session on Tuesday was such a negative sign as well. Looking at this candlestick, it looks as if we may be trying to form a bit of a shooting star also.
Pay close attention to the bond market because interest rates in America continue to rise, which will work against gold quite drastically. Furthermore, a strengthening US dollar also has the same effect, so it’s worth paying attention to that as well. Over the longer term, I think this is a market that will continue to favor dropping back down to the $1750 level, as it was crucial resistant very previously, so I think it certainly makes quite a bit of sense that we would have to retest that area.
If we break back down below the $1750 level, then it’s likely that the gold market continues to drop, perhaps testing the $1680 level, where we had bells from previously. That is an area that’s crucial on longer-term charts, so we would have to pay special attention to that move.
Alternately, if we were to break above the $1800 level, then it’s likely the gold will grind its way higher, eventually changing the overall trend. We would need to see yields in America drop quite significantly, as well as perhaps the value of the US dollar.
Silver Technical Report:
Silver market have gapped lower to kick off the trading session on Wednesday as we continue to see a lot of noise around the $20.00 level. Furthermore, we have the 50 Day EMA in the same general vicinity, so therefore I think it makes a certain amount of sense that we have run into trouble. Beyond all of that, we also had previously seen support in this region, so I think all of this put together lines up for an area where you would anticipate a bit of trouble.
If we were to break above the $20.50 level, then it’s possible that we could see this market go much higher. At that point, the market is likely to continue looking to reach the 200 Day EMA, which is around $22.80 level. In general, that will have to have a bit of help from the interest rate markets, seeing them drop. Ultimately, this is a market that I think given enough time will have to make a bigger decision, but in the short term, it looks like we are going to continue to see hesitation.
Looking at this chart, I think the only thing you can count on is a lot of volatility. It will also be the case as we head into the jobs number on Friday. It looks like we are favoring the downside, but that doesn’t necessarily mean that it’s going to be an easy move.
Fundamental Report: Gold prices are moving rangebound on Wednesday after hitting their highest level since July 5 earlier in the session. After a shift in the chances of an aggressive rate hike by the Federal Reserve drove some of the weaker longs to book profits after a week-long rally. The shift also ignited a massive intraday rise in Treasury yields and a dramatic reversal to the upside in the U.S. Dollar on Tuesday. Dollar-denominated gold tends to weaken when the greenback rises. Furthermore, higher yields tend to weight on non-yielding bullion. At 09:33 GMT, gold is trading $1770, up $3.50 or 0.26%. The SPDR Gold Shares ETF (GLD) settled at $164.07, down $0.96 or -0.58%.
Gold could be under pressure if the situation in Taiwan escalates. Safe-haven buyers would likely buy Treasury bonds and the U.S. Dollar for protection. If tensions ease and the dollar pulls back then look for gold to edge higher. Looking ahead to this week, trader’s attention has now shifted to the Bank of England’s monetary policy meeting, scheduled for Thursday. As one of the closely watched “Big 4 Central Banks”, this event is anticipated to be a major market mover and shaker – especially as the BoE is expected to follow in the Federal Reserve’s footsteps by unleashing its first “super-sized” interest-rate hike since 1995. Expectations are running high, that the Bank of England will push through its biggest rate hike in 27 years by raising its key interest rate by 50 basis points to 1.75% – as it desperately grapples to fight record-high inflation that skyrocketed to a fresh 40-year high of 9.4% in June. That’s way above the U.K government’s inflation target of 2%, and there are fears inflation could exceed 12% by October as Food, Fuel, Housing, Clothing and Energy prices continue to surge at record pace, deepening the country’s historic cost-of-living crisis. The UK central bank also is concerned about falling behind peers, especially the U.S Federal Reserve, which has raised interest rates by a total of 200 basis points in the last 60 days – with Fed Chairman Jerome Powell signalled that yet another “super-sized” hike could be on the cards for September. Traders feel that the trend is here to stay and set to continue throughout the second half of 2022 as Rapidly Surging Inflation, Rate Hikes and Recession Risk take front and centre stage. If history has taught us anything, then the one thing that we do know for certain is both scenarios, whether that’s persistent Inflation or a recession, ultimately present an extremely lucrative backdrop for precious metal prices.