Gold Technical Report: The gold prices showed some signs of recovery yesterday from the bottom after 6 days af continuous 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 @1838. The Short term Stochastics Oscillator is oversold at 30 and RSI momentum is near 40.
Silver Technical Report: Silver showed some signs of recovery yesterday from the bottom after 6 days af continuous fall. It looks further bearish as it is trading below both 50 DMA and 20 DMA. However, since the 20 DMA has crossed 50 DMA upwards, we can expect some pullback in prices. The next major resistence will be faced around 50 DMA around 19.85. The Short term Stochastics Oscillator is oversold at 24 and RSI momentum near 40.
Fundamental Report: Gold prices moved higher on Tuesday as Treasury yields dipped and traders took profits in the US Dollar Index after it edged above its July 14 high. It’s probably just a minor indication of fewer sellers and a little more buyers, but doesn’t look as precursor to a trend changing event given the plethora of bearish news. And what are the bearish developments weighing on gold prices? Currently, it’s expectations of an aggressive interest rate hike by the Fed in September and a stronger U.S. Dollar that is not only an attractive investment because of the higher Treasury yields, but also a desirable safe-haven asset because of global recession fears. The rising expectations of aggressive rate hikes by the U.S. Federal Reserve maket rader expectations for a super-sized 75-basis-point rate hike jump to 54.5%, overtaking a 50 basis-point rate hike, which now stands at 45.5%. At 6:30 GMT gold is trading $1745. The SPDR Gold Shares ETF (GLD) is at $162.02, down $0.70 or -0.43%.
Gold is trading near a 1-month low as the strong U.S. Dollar dampened its appeal to foreign traders of dollar-denominated bullion. Higher rates have also weighed on the non-yielding asset. And conditions could worsen for gold if the market is correct in its prediction of a super-sized rate hike in September. 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.
Powell will address a crowd of central bankers in Jackson Hole Symposium, a highly anticipated speech that could signal how high U.S. borrowing costs may go. The biggest concern for gold traders is that Powell not only delivers a hawkish message but also issues a recession warning. This would give investors two reasons to buy the U.S. Dollar. Some will buy the greenback because they are chasing the yields. Some will be attracted to its safe-haven appeal.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.