It’s more of carry trade and crude oil prices that is gold and silver prices. Silver once again outperformed gold as September future rose to a high of $1268.0 before settling lower at $1251.50. Gold December future consolidated in $630-$640 range. The US dollar has gained even as inventory of unsold homes increased to the highest level in 13 years. The Eurozone as well as US economy are performing below market expectations which are supporting the US dollar at the moment. The diplomacy continues between Iran and US and its allies.
The inability of gold December future to edge past $644.50 has resulted in more and more short positions getting created near $637-$639 zone. This is next best thing to happen. Once gold edges past the $645 mark (probably after the labour day weekend on 4th September), these short positions will get squared and gold will once again start its bull run. August, historically has been a dull month for gold. Technically spot gold has a key support at $609.00 and a daily close below $609 will result in a slide to $586.50 and $566.60.
Silver is also an industrial metal and not affected by central bank sales, so it looks more bullish than gold. The uses of silver are much more than gold and there are no new mines found in the recent months. Fundamentals suggest that there is more value to invest in silver than gold.
GOLD -- DECEMBER FUTURE
Gold needs to close over $643.50 to be in bullish zone. Support stands at $626.80 and $623.20 with the key short term support at $616.80. Resistance is at $634.50, $639.
SILVER -- SEPTEMBER FUTURE
A break of $1272 will result in $1320 very quickly. On the lower side $1224 and $1212 are the initial support levels with $1188 as the key weekly support.
Happy Profitable Trading
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