Gold Technical Report: The gold prices rallied towards 50 DMA last week but could not post a close above it.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 70 and RSI momentum is near 57.
Silver Technical Report: Silver prices look little tired after a week’s rally taking a rest above 50 DMA at 20.33. 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 70 and RSI momentum near 62.
Fundamental Report: Gold prices are edging higher in a lackluster trade on Monday, helped by a slight dip in U.S. Treasury yields and a weaker U.S. Dollar. The market is also trading inside Friday’s range, which suggests investor indecision and impending volatility. The market is being capped by worries over a super-sized rate hike by the Federal Reserve. Low volume is also contributing to the tight trade with most of the major players sitting on the sidelines ahead of Wednesday’s U.S. consumer inflation report. Gold is trading $1788.70, up $1.50 or +0.26%. The SPDR Gold Shares ETF (GLD). settled at $165.29, down $1.88 or -1.13%. Traders are currently pricing in a 73.5% probability the Fed continues the pace of 75-basis point rate hikes for its next policy decision on September 21 to take soaring inflation after U.S. job growth unexpectedly accelerated in July. Unless that probability moves significantly in either direction, gold is likely to drift inside a trading range. However, conditions could change on Wednesday with the release of the U.S. Consumer Price Index (CPI) report that could offer more clues on the Fed’s rate hike path.
Last month, the European Central Bank finally joined the global “Rate-Hike Club”, by delivering its first interest rate increase since 2011. And they definitely did it in style, by surprising the market with a larger-than-expected 50 basis point hike, in an attempt to play catch-up with the rest of its peers. A week later, the U.S Federal Reserve raised interest rates by another “super-sized” 75 basis points for the second month in a row – verging on its most aggressive cycle of monetary tightening since 1981. And then on Thursday – the Bank of England followed in the ECB’s and Federal Reserve’s aggressive footsteps by unleashing its first “super-sized” interest-rate hike since 1995. As traders know – every major central bank rate hike enviably pushes the global economy one step closer to a recession. Those odds increased last week with the International Monetary Fund warning that the worldwide race to raise interest rates poses a significant risk of a “double-dip” recession. A double-dip occurs when two successive recessions happen relatively close to one another, and the second one happens because of compounded effects from the first. The last time the global economy experienced a double-dip recession was in the 1980s. Back in the early 1980’s, the global economy entered a short recession that lasted just six months, followed by a two-year downturn that stretched from the 1981 through to the fall of 1983. According to Goldman Sachs, the parallels between then and now are strikingly identical. A very short-lived recession in 2020, may now be followed by a severe and prolonged recession ahead.