Daily Report – 22 August 2022

22 August 2022
OTC Market Data
High
Low
Close
Previous
Change USD
Change %
Gold
1760
1745
1746
1758
-12
-0.68%
Silver
19.55
19.00
19.03
19.52
-0.49
-2.51%

Gold Technical Report: The gold had posted a heavy correction last week, after 4 continuous weekly rallies earlier. Not just that, gold has declined for the all the five consecutive days last week. The medium term trend looks further bearish. Any slippage down the nearest main bottom at $1676 will turn the Main trend negative. On the upside, the immediate resistance are 50 DMA @ 1773 , last week’s high at 1808 and then 200 DMA @1840. The Short term Stochastics Oscillator is oversold at 5 and RSI momentum is near 41.

Support 3
Support 2
Support 1
Current Market Price
Resistance 1
Resistance 2
Resistance 3
1676
1708
1733
1744
1773
1808
1840

Silver Technical Report: Silver posted 5 straight continuous day of losses last week . It looks further bearish as It has crossed below both 50 DMA and 20 DMA.However, the 20 DMA is approaching 50 DMA and if it crosses above, we can expects some pullback in prices. The next major resistence will be faced around 50 DMA around 20.00. The Short term Stochastics Oscillator is oversold at 6 and RSI momentum near 38.

Support 3
Support 2
Support 1
Current Market Price
Resistance 1
Resistance 2
Resistance 3
18.00
18.20
18.60
19.02
19.36
20.00
20.34

Fundamental Report: Gold prices drifted lower last week as traders continue to digest the minutes of the Fed’s July meeting that featured hawkish comments about its rate hike plans and remarks about a possible slowdown in rate increases if the economy weakens. Some traders read the overall minutes as hawkish. Some saw it as dovish. While others thought the minutes were less-hawkish. Today’s early price action suggests traders are assessing the impact of all three possible outcomes. This is leading to a lackluster, low volume trade. Prices could straddle for a short-term until they get some clarity from the FedWatch tool, Treasury yields and the U.S. Dollar. According to the CME’s FedWatch Tool, the probability of a 75-basis-point rate hike in September moved down to 38.5% from 61.5%. The probability of a 50-basis-point rate hike rose from 38.5% to 61.5%. In their July meeting minutes, Fed officials said the pace of future rate hikes would depend on incoming economic data, as well as assessments of how the economy was adapting to the higher rates already approved. After the release of the minutes, traders of futures tied to the Fed’s policy rate saw a half-percentage-point rate hike as more likely in September.

Although four consecutive rate hikes might seem like the Federal Reserve is raising rates too quickly to combat headline inflation at 8.5%. If you think that it couldn’t get much worse simply look back in history to realize that is an incorrect assumption. Between 2004 and 2006 the Federal Reserve raised interest rates 17 times. The net result was to take Fed funds rates from 1% to 5 ¼% to curb inflation and cool down an economy that was excessively overheated. Commercial banks raised their rates to 8.25% which is the real cost of borrowing capital by corporations. Another factor to consider is many analysts and economists including myself understand that to effectively reduce inflation from its current level of 8.5% to an acceptable target of approximately 2%, interest rates at 2 ½% will have a minimal and tepid effect. The consensus amongst economists that believe that the Federal Reserve has been soft in regards to raising rates believes that the fed funds rate at minimum needs to be at 4 ½% if there is any hope that inflation will be reduced to two or 3%.

Key US Economic Reports & Events
When
Actual
Expected
Previous
The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Please note that ISA BULLION DMCC makes no warranty, expressed or implied, as to the accuracy or completeness of the information and opinions herein. No responsibility or liability is accepted for any loss or damage howsoever arising that you may suffer as a result of this information and any and all responsibility and liability is expressly disclaimed by ISA BULLION DMCC or any of them or any of their respective directors, partners, officers, affiliates, employees or agents ISA BULLION DMCC is registered & licensed as a FREEZONE Company under the Rules & Regulations of DMCCA.