Gold Technical Report: Gold prices settled higher, while posting its first weekly gain in six on Friday. We may further witness some fresh value buying supported by 1700 mark. However, since the 50 DMA trading below 200 DMA on daily charts keeps medium term still bearish. Any slippage down the nearest main bottom at $1676 will turn the Main trend negative. On the upside, the immediate resistance for main trend is the Psychological mark of 1800 which is also near 50 DMA. The Short term Stochastics Oscillator is overbought at 80 and RSI momentum is just below 38.
Silver Technical Report: Silver prices remains bearish after breaching 19.00 mark. The value buying is being overweighed by continuous selling pressure. On the upside, the medium term reversal will come only at 20 DMA zone at $19.25. The Short term Stochastics Oscillator is at 52 and RSI momentum near 32.
Fundamental Report: Gold prices closed higher for the first time in six last week as a sharp break in U.S. Treasury yields and a drop in the U.S. Dollar from a multi-year high bolstered non-yielding bullion’s safe-haven appeal as economic risks persisted. The market was trading flat for several days before plunging to $1680 last week. The price level proved to be attractive to investors, triggering the daily technical closing price reversal bottom that eventually led to a weekly closing price reversal bottom.
After a prolonged move down due to expectations of a massive rate hike by the U.S. Federal Reserve on July 27, gold prices stabilized as traders reduced the chances of the Fed going supersized with a full basis point rate hike. Expectations for a 100 basis points rate hike by the Fed at its policy meeting stood at about 29% on Friday, according to CME’s FedWatch Tool after reaching as high as 80% the week before. In addition to the drop in Treasury yields and a huge rate hike by the Fed, the dollar eased after the Euro jumped against the greenback, following a more than expected interest rate hike by the European Central Bank (ECB). Concerns over U.S. economic also put a dent in investor sentiment after the release of more downbeat economic data. On Friday, a preliminary reading on the U.S. PMI Composite output index – which tracks activity across the services and manufacturing sectors – fell to 47.5, indicating contracting economic output. It’s the index’s lowest level in more than two years.
The previous session, weekly initial jobless claims rose the week-ending July 15 to the highest in eight months, while a gauge of factory activity slumped in July, offering further indications that the U.S. economy is slowing as rising interest rates and high inflation weigh on spending power. All eyes will turn to the Federal Reserve this week with the start of a two-day policy meeting on July 26-27. Gold traders will be assessing whether the U.S. central bank will hike interest rates by 75 basis points or the more aggressive 100 basis points. There is no denying that the previous quarter was monumental for monetary policy as central bankers across the world ramped up their fight against rapidly surging inflation while acknowledging that inflationary pressures could persist for years – driven in part by the war in Ukraine, worsening supply chain disruptions and effects of COVID related shutdowns in China. Once again in the 3rd quarter of 2022, global monetary policy continues to be a dominant force driving market sentiment almost on a daily basis – And that narrative shows no signs of slowing down anytime soon. However, traders will all be watching for comments about the chances of an economic slowdown or a recession, and what the central bank plans to do at its September meeting.