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 and continued the down fall. The medium term trend looks further bearish. Any slippage down the nearest main bottom at $1680 will turn the Main trend negative. On the upside, the immediate resistance are 50 DMA @ 1770 , last week’s high at 1808 and then 200 DMA @1839. The Short term Stochastics Oscillator is oversold at 12 and RSI momentum is near 40.
Silver Technical Report: Silver posted 5 straight continuous day of losses last week and also continued the downfall yesterday. 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 expect 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 9 and RSI momentum near 38.
Fundamental Report: Gold prices drifted lower as the U.S. Dollar continued its climb amid rising expectations of aggressive rate hikes by the U.S. Federal Reserve. Trader expectations for a super-sized 75-basis-point rate hike jumped to 54.5%, overtaking a 50 basis-point rate hike, which now stands at 45.5%. At 6:30 GMT gold is trading $1737. This is up from an intraday low of $1728. The SPDR Gold Shares ETF (GLD) is at $162.02, down $0.70 or -0.43%. The downfall started 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.
Early last week, four Fed officials called for further aggressive monetary tightening including St. Louis Fed President James Bullard, San Francisco Fed President Mary Daly, Kansas City Fed President Esther George and Minneapolis Neel Kashkari. Their collective hawkish comments helped break support in the gold market leading to an end of the week sell-off that extended into Monday’s session. Driving today’s early weakness are late Friday’s comments from Richmond Fed President Thomas Barkin, who said central bankers were inclined towards faster, front-loaded interest rate increases, even if that meant risking a U.S. economic recession.
Not only are higher Treasury yields making the dollar a more attractive investment, but increasing bets for a global recession are also driving up its safe-haven appeal. Global investors are seeking protection in the greenback for a number of reasons including Russia’s planned shutdown of a key pipeline that supplies natural gas to Germany, and China’s decision to slash its benchmark interest rate in order to stimulate a weakening economy. The strong dollar is driving down foreign demand for dollar-denominated gold.