Gold Technical Report: Gold medium term trend continues to remain bearish after some 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 $1822-1845.Both, the Short term Stochastics Oscillator at 21 and RSI momentum below 28 are signaling short term oversold positions .
Silver Technical Report: Silver medium term trend is bearish after some 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 32 and RSI momentum below 30 are signaling short term oversold positions .
Fundamental Report: The After a one-day reprieve from its bear market, gold went lower on Thursday, hurt by fears the U.S. Federal Reserve could move toward a more aggressive interest rate hike at its July 26-27 monetary policy meeting to fight red-hot inflation. At 04:50 GMT, gold prices are at $1727.90, down $7.60 or -0.44%. The SPDR Gold Shares ETF (GLD) settled at $161.59, up $0.76 or +0.47%. Gold posted a volatile two-sided reaction on Wednesday, following the release of the U.S. Consumer Price Index report that showed annual inflation jumped 9.1% in June, the sharpest spike in more than four decades. Traders were looking for an 8.8% increase. The news produced a volatile reaction in most major markets as traders reacted to the headline inflation figures, but there wasn’t very much directional movement. This suggests traders believe the Fed will front-load its rate hikes but not necessarily increase overall rate hike expectations. According to the FedWatch indicator, the Fed is seen ramping up its battle with sky-high inflation with a supersized 100 basis points rate hike at its upcoming policy meeting on July 26-27.
With some experts still pressing for a 75-basis point rate hike at the Fed meeting, and others now pushing for a 100-basis point rate hike, there is enough room to produce a choppy, two-sided trade ahead of the Fed decision. To look at it another way, based on the inflation data, some traders now see a 75-basis point rate hike as “dovish” when compared to the possibility of a 100-basis point rate hike. Traders are now awaiting inflation data on producer prices (PPI), due to be released at 12:30 GMT. Another hot inflation reading is likely to put pressure on the Fed to front-load its rate hike advances with a 100-basis point hike in July. If the PPI report is neutral then traders are likely to sit on their hands until Friday’s U.S. Retail Sales report. A strong retail sales report will signal to the Fed that the economy is in good enough shape to handle an aggressive, front-loaded rate hike. This will solidify the chances of a 100-basis point rate hike, which would be bearish for gold. A weak retail sales report will likely convince the Fed that a 75-point rate hike would be sufficient at this time. This is likely to trigger a short-covering rally in gold.
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.