Gold Technical Report: Gold medium term trend is looking bearish. Any slippage down the nearest main bottom at $1786 will reaffirm the downtrend. On the upside, the immediate resistance is the 200 DMA at 1843 and then 50 DMA zone at $1860. A trade through $1860 will change the main trend to up. Short term Stochastics Oscillator is pointing down at 25 and RSI momentum is flat but poised just below midline at 43.64.
Silver Technical Report: Silver medium term trend is looking downwards after 3 consecutive red candles. 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 $21.65. A trade through 50 DMA $22.23 will change the main trend to up. Short term Stochastics Oscillator is oversold at 15 signalling possible buying support.
Fundamental Report: The Gold futures are edging lower late in the session on Thursday as the U.S. Dollar firmed following hawkish comments from U.S. Federal Chairman Jerome Powell. Gold lost its luster after Powell reiterated more aggressive monetary tightening to tame inflation, even at the expense of putting economic growth at risk. Losses were likely limited by a plunge in U.S. Treasury yields, following the release of weaker-than-expected economic data. At 17:28 GMT, August Comex gold futures are trading $1829.70, down $8.70 or -0.47%. The SPDR Gold Shares ETF (GLD) is at $170.43, down $0.88 or -0.52%. Powell told the House Finance Committee that the Fed’s commitment to curbing inflation was ‘unconditional’. Meanwhile, U.S. business activity slowed considerably in June as high inflation and decline consumer confidence dampened demand across the board, resulting in a gauge of new orders contracting for the first time in nearly two years. Flash Manufacturing PMI decreased to 52.4 from 57.0 in May. Economists polled by Reuters had forecast the index would slip to 56.0. The Flash Services Sector PMI dropped to a reading of 51.6 from 53.4 in May. Economists were looking for a slight rise to 53.9. Treasury yields plunged after the reports were released at 13:45 GMT.
Currently, core inflation is running at three times the acceptable target of 2%, and the CPI inflation index at 8.6%. Not since the 1980s has inflationary pressure been as consistent and hot as it currently is. While Chairman Powell suggested that the Federal Reserve was well aware of the challenges in front of them but they were prepared and able to bring inflation back to its 2% target. However, the facts speak for themselves, and those facts indicate that price increases have continued to accelerate over the last couple of months. The Fed’s prayers that some components of the supply chain issues will begin to unwind this year have not as of yet been answered. The Federal Reserve does not have the ability to combat inflationary pressures that are based upon supply side issues. While many of the supply side issues that arose were based upon pent-up demand after the pandemic, the new issues such as the war in Ukraine and the lockdown in China due to Covid-19 cannot be impacted by any actions of the Federal Reserve. Chairman Powell acknowledged the limitations of the tools available to the Federal Reserve saying, “We don’t have precision tools, so there is a risk that unemployment would move up, from what is historically a low level though. A labor market with 4.1% or 4.3% unemployment is still a very strong labor market.”