Gold Technical Report: Gold medium term trend continues to remain bearish after 4 DOJI candles on the daily charts. The prices also fail to overcome the 1800 mark. The 50 DMA has already crossed below 200 DMA on daily charts. Any slippage down the nearest main bottom at $1676 will turn the Main trend negative. On the upside, the immediate resistance is the Psychological mark of 1800 and then 200 DMA and 50 DMA zone at $1825-1845.Both, the Short term Stochastics Oscillator at 4 and RSI momentum below 24 are signaling short term oversold positions .
Silver Technical Report: Silver medium term trend is bearish after 4 DOJI candles including red candle signaling continuation of downtrend on the daily charts. The prices also continue to trade below threshold 20.00 on daily chart and after some value buying was overweighed by continuous selling pressure. On the upside, the major uptrend reversal will come only at 20 DMA zone at $20.46. Both, the Short term Stochastics Oscillator at 22 and RSI momentum below 26 are signaling short term oversold positions .
Fundamental Report: The Gold prices are trading nearly flat on Tuesday after hitting its lowest level since August 9, 2021 earlier in the session. Helping to cap gains are a surge in the U.S. Dollar against a basket of major currencies. A dip in Treasury yields overnight could be helping to limit losses. At 09:54 GMT, gold is trading $1733.40, up $1.70 or +0.10%. The SPDR Gold Shares ETF (GLD) settled at $161.45, down $0.85 or -0.52%. The market fell on Monday as the dollar climbed higher against most its major counterparts on safe-haven demand amid recession worries as Russia turned off Nord Stream 1 for annual maintenance. The biggest fear is that Moscow could extend the shutdown due to the war in Ukraine. Despite the clearly bearish fundamentals, the price action suggests traders are a little tentative due to economic releases this week covering consumer and producer price inflation, retail sales and industrial production. The economic data could offer clues as to whether inflation has peaked as the Federal Reserve moves closer to its July 26 -27 monetary policy committee meeting. The early consensus suggests a higher-than-expected Consumer Price Index (CPI) print on Wednesday could be a major negative for gold prices because it would greenlight another 75 basis point rate hike by the Fed. U.S. Treasury yields ticked downward on Tuesday as traders prepared for key inflation figures due out later this week. The 2-year dropped 6 basis points to trade at 3.0078% but remained above the 10-year Treasury, which dropped 6 basis points to 2.9225%, dropping back the 3% mark. The yield on the 30-year Treasury bond traded 5 basis points lower at 3.1257%.
The U.S. Dollar Index, which is comprised of six major peers, with the Euro most heavily weighted, is currently testing its highest level since October 2002 at 108.26. Meanwhile, the Euro is hovering close to a 20-year low near parity to the dollar on Tuesday amid concerns that an energy crisis could tip Europe into recession, while the U.S. Federal Reserve continues to aggressively tighten policy to curb inflation. Bullion is likely to lose value if interest rates rise and the U.S. Dollar increases in value. These factors are essentially driving the market lower and keeping gold buyers on the sidelines. Although we may see a periodic short-covering rally, it doesn’t make sense to the major investors to buy non-yielding gold when they can get paid to own Treasurys. Furthermore, the rising dollar is making bullion too expensive to attract foreign buyers.
Reports suggesting that China could start imposing lockdowns in the face of rising coronavirus infections and the worsening global economic outlook weighed heavily on sentiment. International Monetary Fund (IMF) Managing Director Kristalina Georgieva told Reuters that the global economy has “darkened significantly” since April and noted that they couldn’t rule out a global recession next year given the elevated risks. India, the world’s second-biggest consumer of gold, announced that it has raised the basic import duty on the precious metal to 12.5% from 7.5%, further clouding gold’s demand outlook. In its Gold Mid-Year Outlook 2022, “we expect widespread economic slowdown to pressure consumer demand for gold, particularly with many markets seeing notably higher local gold prices,” said the World Gold Council. Assessing the Indian government’s action, “high local inflation, uncertainty about the economic outlook and the surprise increase of the import duty for gold – aimed in part to mitigate the impacts of rupee weakness – will likely weigh on the recovery of gold consumer demand,” the organization explained.