Thin market conditions have made trading extremely volatile in the metals market. Gold and silver fell after a technical break down and sellers on every rise. The unearthing of London terror plot resulted in crude oil prices and US dollar gains further accentuated the fall of gold and silver. Gold December future fell to a low of $645.50 and silver September future fell to a low of $1207 before settling at $646.00 and $1210.50.
The past four years has resulted in global interest rates being cut, later when crude oil prices started rising from $26 a barrel, central banks started raising interest rates, now when crude oil prices are over $70a barrel central banks led by the Fed have paused on their interest rates hikes. Gold has risen from $340 to $735 in this period. There has been a secular bull run in gold and silver as well as commodities in general. We are in a new phase of a long term bull rally, where volatility will increase and there will be short term battle between bulls and bears. The free money created by excess global liquidity is no more. So the pace of rise in gold and silver will be slower as compared the past twelve months.
One should use the August dips as an opportunity to invest for the medium to long term. Markets were expecting the US dollar nose dive and gold and silver to rise after the Fed interest rate pause which did not happen.
GOLD
Gold is technically bearish. Gold has made several attempts to break $670 and has been unsuccessful which could result in testing of the 100 day MA at $636.20. On the higher side $658.50 is the initial resistance with $666-$668 as the key short term resistance.
SILVER
Silver still looks a bit shaky and needs to hold $1192 on closing basis to prevent a fall to $1162 and $1138. On the higher side $1237 is the initial resistance with 1259 as the key short term resistance.
Happy Profitable Trading & A Great Weekend
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