Gold Technical Report: The gold posted 4 continuous weekly rallies and is marching towards 200 DMA @1842. However it witnessed a correction yesterday. Since the 50 DMA still trading below 200 DMA , the medium term trend looks 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 200 DMA. The Short term Stochastics Oscillator is at 42 and RSI momentum is near 53.
Silver Technical Report: Silver prices trading around 50 DMA after yesterday’s correction.We may expect fresh buying support emerging against profit booking here, heralding volatility in prices, as they approach 200 DMA. Support levels are around 50 DMA at Next major resistence will be faced only around 21.00, the levels not seen after June. The Short term Stochastics Oscillator is at 50 and RSI momentum near 52.
Fundamental Report: Gold prices ended lower on Tuesday after a steep break the previous session shifted momentum to the downside. The market fell as investors ran for protection in U.S. Treasurys and the U.S. Dollar on growing concerns over a global recession. The catalyst behind the trade was weak economic data out of China and a surprise interest rate cut by China’s central bank, which signaled a slowing economy. At 06:22 GMT, gold is trading $1780, and the SPDR Gold Shares ETF (GLD) at $165.72, down $2.15 or -1.28%. Besides safe-haven buying, the dollar was also supported by hawkish comments from Federal Reserve officials in response to early signs that U.S. inflation may have peaked. Foreign demand for gold tends to drop when the U.S. Dollar strengthens.
In U.S. economic news, the New York Federal Reserve released the Empire State Manufacturing Index that unexpectedly showed a substantial contraction in regional manufacturing activity in the month of August. Another report released by the National Association of Home Builders (NAHB) unexpectedly showed a continued deterioration in U.S. homebuilder confidence in August.Gold was primarily supported last week after the dollar index retreated as signs of cooling consumer and producer price inflation in the United States prompted traders to pare bets of aggressive policy tightening by the Federal Reserve. As of Friday’s close, the odds of a 75-bps hike in September had fallen to around 45 percent and the chances of a 50-bps hike had risen to 55 percent. China’s industrial production and retail sales growth for July came in well below estimates, youth unemployment hit a record high in July, investment into real estate fell at a faster pace in July than June and investment into manufacturing slowed its pace of growth, suggesting that the post-lockdown recovery is losing stream. In other news that suggests a slowing economy, the People’s Bank of China (PBOC) said it was lowering the rate on 400 billion Yuan ($59.33 billion) of one-year-medium-term lending facility (MLF) loans to some financial institutions by 10 basis points (bps) to 2.75%, from 2.85%. The rate cut came as a surprise, but it makes sense given that new bank lending in China tumbled more than expected in July while broad credit growth slowed, as fresh COVID flare-ups, worries about jobs and a deepening property crisis made companies and consumers wary of taking on more debt. The news was enough to spook investors into buying Treasurys and the U.S. Dollar for safe-haven protection, while making gold less attractive.