Gold Technical Report: As spot gold has broken below $1900 a key and significant psychological price point ,prices slid further yesterday, for the straight fourth session and closed near the day low. The 10 days Exponential Moving Average @ 1908 is poised to cross below 200 days EMA @ 1906. Also, 50 days EMA and 100 EMA are at close conjunction near 1936. The prices will have to regain 1900 quickly now to display any strength. The short term Stochastics Oscillator is at 5 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 33 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver prices tried gaining some strength yesterday after a decline for the straight four sessions earlier but in the end slipped from intra day high to close below 10 days EMA@ 22.89. This may be a technical pullback after the 10 days EMA last week crossed below 200 days EMA @ 23.15 indicating bearishness. The prices need to stabilize at these levels which is also low we saw in June from where it had moved all the way up to major psychological levels of 25.00. The Short term Stochastics Oscillator is at 14 and Relative Strength Index near 40.
Fundamental Report : The FED minutes from the July FOMC meeting sparked a major selloff in US bonds and notes taking yields to their highest levels since 2011. Yields on longer-dated US debt instruments such as the 10-year note and 30-year bonds moved to their highest closing level in years. Yield on the 10-year government treasuries rose by 4.9 basis points from 4.258% to 4.307% when compared to the yields yesterday. That takes yields on 10-year US debt instruments to the highest level since 2007. Higher yields placed strong pressure on gold prices today and inversely strengthened the US dollar.The market expects that Federal Reserve will most likely continue to have a restrictive monetary policy which most likely will include an additional rate hike of ¼% this year. The Federal Reserve continues to be laser-focused on the reduction of inflationary pressures in the United States and recent economic data indicates that the robust GDP growth provides the Federal Reserve with more latitude in their aggressive actions. The Fed’s goal continues to be to take core inflation down to its target of 2%. Overall, there is a consensus that the Federal Reserve will not raise rates at the next FOMC meeting in September. At the same time, according to the CME’s FedWatch tool, there is a one in three chance that the Fed will implement one more 0.25% rate hike this year. Since interest rate hikes this year have resulted in bearish market sentiment taking gold lower, today’s minutes will most likely continue that trend.