Gold Technical Report: The gold prices cross 50 DMA at 1789 and continue the strong rally after coming out of bearish grip from last 2 weeks, after 5 weeks of underperformance, prior to that.We may witness it marching towards 1800 mark and can expect some profit booking there.However, since the 50 DMA still trading below 200 DMA on daily charts keeps medium term still bearish. Any slippage down the nearest main bottom at $1676 will turn the Main trend negative. On the upside, the immediate resistance for main trend is the Psychological mark of 1800 and then 200 DMA of 1842. The Short term Stochastics Oscillator is at 76 and RSI momentum is near 60.
Silver Technical Report: Silver prices look little tired after a week’s rally taking a rest near 50 DMA at 20.35. We may expect fresh buying support emerging against profit booking here, heralding volatility in prices, if they cross 50 DMA. Next major resistence will be faced only around 21.00, the levels not seen after June. The Short term Stochastics Oscillator is at 63 and RSI momentum near 57.
Fundamental Report: Gold prices are edging higher on Thursday amid rising Treasury bonds and a slightly weaker U.S. Dollar. The limited price action suggests investors are positioning themselves ahead of the Friday’s U.S. Non-Farm Payrolls report, which could offer more cues on the Federal Reserve’s rate-hike stance. At 07:28 GMT, gold is trading $1790.40, up $14.00 or +0.79%. The SPDR Gold Shares ETF (GLD) settled at $164.47, up $0.42 or +0.26%. Gold prices could be subject to bouts of volatility over the near-term since the Federal Reserve doesn’t meet until September 21. In the meantime, traders are going to take their direction from economic reports and Fed member comments. Some analysts are pointing to geopolitical tensions between China and the United States as another source of concern for gold traders. Although some will say that gold’s safe-haven appeal will make it an attractive asset should the situation escalate, most think that the U.S. Dollar will be the go to safe-haven, which should put pressure on dollar-denominated bullion.
The recent rally in gold was ignited by dovishly construed comments from Fed Chair Jerome Powell, but all he really implied was that the Fed could start to be flexible with the size of its future rate hikes. He didn’t say the Fed was going to stop raising rates, which the market interpreted to mean the next rate hike would be 50 basis points instead of 75 basis points. That notion was supported last Thursday with the release of a negative GDP report and on Monday when manufacturing PMI came in below expectations. The odds of a 50bp rate hike rose and the chances of a 75bp rate hike fell, sending gold prices sharply higher. The narrative started to change on Tuesday when three Fed officials said policymakers should keep raising rates until inflation drops down to the 2% mandate. They also warned that this could be painful to the jobs markets, but no one mentioned it would cause a recession. On Wednesday, the idea for more rate hikes was supported by a stronger-than-expected non-manufacturing PMI report. This shifted the chances of a 50bp or a 75bp rate hike to 50/50. That means the market is sitting on the fence about the size of the next Fed rate hike. It also suggests that traders have reduced the chances of a recession. Furthermore, it also implies that investors are waiting for more data before breaking the tie, and that data is Friday’s U.S. Non-Farm Payrolls report. In Friday’s NFP report, traders will be watching for total jobs added and the unemployment rate. They could dip because the rate hikes are slowing the economy. But the Fed will be watching Average Hourly Wages because that is the inflation component of the report. If it’s perceived as too high then the Fed will get the greenlight to continue to raise aggressively. This could be bearish for gold prices.