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GOLD AND SILVER MARKET ANALYSIS

Here is the Gold and Silver Market Analysis:

  • Gold’s Decline Continues as US Inflation Data Looms
  • XAU/USD Shows Downward Movement, Targeting $1915 and the 200-SMA
  • Silver Experiences Drop Following Breakthrough of Established Trend

Gold and Silver Market Analysis

This analysis identifies key support and resistance levels. 

GOLD’S DESCENT PERSISTS BEFORE US INFLATION RELEASE

Gold is in the midst of a declining trend as the week progresses, potentially marking three consecutive weeks of losses. However, recent price movements seem disconnected from the typical influencers, namely the US dollar and US treasury yields. The US dollar benchmark, or DXY (dollar basket), has also seen a decline before the upcoming US CPI release. Correspondingly, the US 10-year yield is slightly lower, about 4%, ahead of a significant 10-year US bond auction.

This illustrates a long-term breakdown, with prices falling below the ascending channel, testing channel support, and subsequently trending downward. A prominent support level resides at $1875, indicating a potential drop below the psychological level of 1900.

Traders often seek a support/resistance retest post-breakout to determine optimal entry points.

GOLD’S MOVEMENT TOWARDS $1915 AND THE 200-DAY SMA

Trading activity has been peculiar, with the US dollar, 10-year yields, S&P 500, and gold all declining simultaneously as of the time of writing. Ahead of the CPI release, interest rate expectations remain steady, with an 85% likelihood of no interest rate changes by the Fed in September. Given the Fed’s approach to peak rates or its potential attainment, an elevated CPI reading may not boost the dollar as substantially as prior readings.

Yet, considering rates are expected to remain high until Q2 2024, the opportunity cost of holding gold is likely to persist as a concern. Naturally, the appeal of the metal as a safe haven can’t be disregarded, particularly as US credit card debt exceeds $1 trillion for the first time, and a recent Fed survey indicates tighter credit conditions from US lenders.

Immediate support appears at $1915, and breaching this level could highlight the psychological barrier of 1900, coinciding with the 200-day simple moving average (SMA). Resistance is marked by trendline resistance followed by $1937.

SILVER’S DESCENT AFTER BREAKING ESTABLISHED TREND

Silver presents a more pessimistic outlook than its counterpart, gold. Penetrating the 200 SMA implies increased downside risk. The MACD indicator also hints at bearish momentum.

The next challenge arises at the 38.6% Fibonacci retracement of the substantial decline between 2021 and 2022, situated at $22.35. This is followed by a support range of approximately between $21.40 and $22.10. Resistance is represented by the 200 SMA, and the $24.65 level remains a distant consideration.

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