Gold and silver fell after the Fed decided to pause the interest rates hikes. Gold december future fell to a low of $646.40 while silver September future fell to a low of $1202. The Federal Reserve on Tuesday held US interest rates at 5.25 per cent, ending an unbroken series of rises that began in June 2004. The US dollar gained after the Fed statement signalled that it still saw inflation risks and could raise rates further.
The current fall in gold and silver is due to profit taking. Everyday is not a Sunday. After the June FOMC gold and silver had rallied and retail investors had gone long in anticipation of the same. This time the opposite has happened and so the profit taking. Markets are confused on how to react to the Fed statement.
It will be technical market for both gold and silver as the summer trading is yet to come to an end. There could be short term linkage between gold prices and the US dollar. It all boils down to crude oil for the Fed as well as global interest rates as the current global inflation is commodity induced. There could be some profit taking in gold silver which could push the prices lower. However one should use the sharp declines to go long, specially for medium to long term investors. The middle crisis is not over. However US president George Bush will try his best to contain crude oil prices as well as commodity prices till the US state elections in November.
GOLD
Gold is consolidating in wider $630 - $670 range. Gold needs to close over $658 and also break $669 to continue its short term bullish momentum else the current wider trading range of $630.00 - $670.00 will continue.
SILVER
Silver looks a bit shaky and needs to hold $1192 to prevent a fall to $1162 and $1135. On the higher side $1237 and $1256 are the resistance zones.
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