Gold Technical Report: Gold medium term trend is looking flat to bullish. Any slippage down the nearest main bottom at $1786 will reaffirm the downtrend. On the upside, the immediate resistance is the 200 DMA at 1844 and then 50 DMA zone at $1855. A trade through $1855 will change the main trend to up. Short term Stochastics Oscillator is looking up at 27 and RSI momentum is flat but poised just below midline at 45.
Silver Technical Report: Silver medium term trend is flat. Further slippage down the main bottom at $ 20.88 will reaffirm the downtrend. On the upside, the immediate resistance is the 20 DMA zone at $21.60. A trade through 50 DMA $22.06 will change the main trend to up. Short term Stochastics Oscillator is flat at 44.
Fundamental Report: The Gold is edging lower shortly after the mid-session as a surge in Treasury yields weighed on demand for non-yielding bullion. Traders were also monitoring the European Central Bank’s forum in Portugal for any cues on policy moves. Traders are particularly interested in the size of the expected rate hike in September. At 17:43 GMT, August Comex gold is trading $1823.70, down $6.60 or -0.36%. The SPDR Gold Shares ETF (GLD) is at $169.90, down $0.19 or -0.11%. U.S. Treasury yields were higher to start the week as market players assessed the prospect of central banks implementing more interest rate hikes to curb soaring inflation. Additionally, investors are watching for any signs of future policy moves as central bank heads, including ECB President Christine Lagarde and Fed Chair Jerome Powell, attend the annual forum in Sintra. In other news, traders downplayed the news that Britain, the United States, Japan and Canada were planning to ban imports of Russian gold.
On Wednesday the Bureau of Economic Analysis (BEA) will release its latest numbers on real GDP which will be followed on Thursday by the PCE for May 2022. Concerns over a potential recession which will either be confirmed or negated by Wednesday’s GDP report. According to a report by Dr. David Kelly, Chief Global Strategist at J.P. Morgan asset management, “1Q22 Real GDP showed the economy contracted at a 1.5% annual rate in 1Q22, a deceleration from the boomy 4Q21. Weakness was primarily led by volatile trade and inventory data. Trade subtracted 3.2% from overall GDP growth as exports fell sharply and imports soared.” The report also said that first-quarter 2022 earnings have held up better than expected. However, inflation continues to far exceed the FOMC’s 2% target with the May CPI report indicating hotter than expected inflation despite hopes by the Federal Reserve that it would moderate. He concluded the following; first, the Federal Reserve could push the economy into a recession if it over-tightens in response to supply-driven inflation. Secondly, heightened geopolitical tensions with Russia could result in continued energy shortages, low consumer confidence, and dampening growth. Lastly, he concluded that markets may remain depressed and volatile until investors receive clarity on inflation and the Fed.
The other key report which will be released on Thursday is the PCE price index for May. The PCE for April revealed a slight uptick in core inflation increasing by 0.2% month over month. However. This was a decrease from the increase in March which came in at a 0.9% increase in MoM. Although we will have to wait until Thursday for the official PCE price index from the BEA, last week they reported that “The U.S. current-account deficit widened by $66.6 billion, or 29.6 percent, to $291.4 billion in the first quarter of 2022, according to statistics released today by the U.S. Bureau of Economic Analysis. The revised fourth-quarter deficit was $224.8 billion. The first-quarter deficit was 4.8 percent of current-dollar gross domestic product, up from 3.7 percent in the fourth quarter.”