Gold Technical Report: The gold prices are trying to form a base above 1700 levels after the last week’s selloff.The short term trend looks bearish as prices are unable to crossover 50 DMA. Any further slippage down the nearest main bottom at $1676 will turn the main trend negative. On the upside, the next resistance will be at 50 DMA @ 1745. The Short term Stochastics Oscillator is at 60 and RSI momentum is near 42.
Silver Technical Report: Silver witnessed continued selling pressure last week and showing reversal signs as it posted a big bullish candle yesterday after an inverted hammer candlestick pattern a day before. Medium term trend looks bearish as 20 DMA has crossed below 200 DMA on weekly charts. The next major resistence will be faced around 50 DMA around 19.25. The Short term Stochastics Oscillator is at 72 and RSI momentum near 42.
Fundamental Report: Gold prices are inching higher on Wednesday after erasing an earlier loss. Technically, buyers may have come in at $1701.70 as they continued to defend the psychological $1700.00 level. Fundamentally, a dip in Treasury yields and a pullback from its intraday high by the U.S. Dollar may have encouraged some of the weaker shorts to cover their positions. Despite today’s early rebound, however, the overall trend is down with the weakness expected to continue due to a strong U.S. economy and expectations of aggressive interest rate hikes by the Federal Reserve. A series of rate hikes by several major central banks are also expected to keep a lid on prices. The SPDR Gold Shares ETF (GLD) settled at $158.36, down $0.90 or -0.56%. The U.S. trade deficit fell 12.6% in July to a nine-month low of $70.6 billion, reflecting a smaller appetite among Americans for imports and a strong dollar that’s making foreign goods less expensive to buy. Imports dropped 2.9% to 329.9 billion in July. Exports rose 0.2% to $259.3 billion, the government said Tuesday. The shrinking trade gap adds to mounting evidence confirming the U.S. did not fall into a recession in the first half of 2022. The smaller trade gap is expected to give a boost to gross domestic product in the third quarter. The U.S. economy is forecast to expand in the July to September period after GDP declined in the first and second quarters. A lower trade deficit adds to GDP and a rising trade gap subtracts from GDP. The sharp decline in first-quarter GDP largely stemmed from a record trade deficit early in the year. A lower trade gap could “add close to 1.5 percentage points to third-quarter GDP growth, which we forecast will be 3.%,” wrote Paul Ashworth, chief North America economist at Capital Economics, in a note to clients. On Thursday, the European Central Bank (ECB) is forecast to deliver a 75-basis-point interest rate hike to tame surging prices. Traders are also leaning toward a 75-basis-point rate hike by the Federal Reserve following its September 20-21 policy meeting.