Why are gold, silver prices falling? [Video]
(Ipek Ozkardeskaya – Swissquote Bank Ltd)
Sentiment is mixed. The S&P500 eked out small gains after a volatile session. The FOMC minutes, released yesterday, came as a confirmation that the Federal Reserve (Fed) remains fully committed to bringing inflation down, even if it means slower growth.
But, the recession talk, lower energy prices, and the softening Fed hawks despite yesterday’s hawkish minutes weigh on the US 10-year yield, and the the 2-10 year portion of the US yield curve inverted, which is read as ‘recession’ is either here, or about to hit the fan.
Gold prices are on a freefall mode due to the strong dollar, and silver extends losses below $20 level. The mint ratio is above 90, hinting that either gold is still expensive, or silver is relatively cheap. But whether their prices will go up or down depends on US dollar.
The dollar trades at 20-year highs, and keeps pushing higher.
Activity in Fed funds futures price in more than 93% chances for a 75bp hike by the end of this month, but many people think that the deteriorating economy since the Fed’s June could bring the Fed to hike by 50bp only instead of 75bp this month. The market chatter hints that the market pricing has room to get more dovish rather than more hawkish.
In oil, we now see a clear pivot, as investors prefer selling tops rather than buying dips. Tensions between G7 and Russia is an upside risk in the short run, but if the attention remains on demand side, we could see limited upside, and a further downside in oil prices.
Daily technical and trading outlook – EUR/USD
(AceTrader Team)
Trend daily chart
Down
Daily Indicators
Bullish convergences
21 HR EMA
1.0205
55 HR EMA
1.0265
Trend hourly chart
Down
Hourly Indicators
Bullish convergences
13 HR RSI
38
14 HR DMI
-ve
Daily analysis
Resumption of recent downtrend
Resistance
1.0276 – Wed’s high
1.0236 – Tue’s low (now res)
1.0201 – Hourly chart
Support
1.0163 – Wed’s fresh near 20-year low
1.0145 – 61.8% proj. of 1.0448-1.0236 fm 1.0276
1.0104 – 80.9% proj. of 1.0448-1.0236 fm 1.0276
EUR/USD – 1.0188.. Although euro swung sideways in Asia y’day following selloff to a near 20-year low of 1.0236 Tue, price met renewed selling in Europe at 1.0276 n tumbled to 1.0163 in NY morning b4 staging a minor recovery.
On the bigger picture, despite euro’s LT upmove fm 2017 near 14-year low of 1.0341 to a fresh 3-year peak of 1.2555 in mid-Feb 2018, decline to a near 3-year 1.0637 low (Mar 2020) signals correction has ended. Although euro staged a rally to a near 33-month 1.2349 peak in early Jan 2021, subsequent selloff to 1.1705 (Mar) signals top is made. Euro’s break of 1.1705 n then firm breach below 2020 bottom at 1.0637 in Apr to a 5-year bottom of 1.0350 in mid-May would re- test 2017 1.0341 low (Jan). Euro’s selloff on Tue due to safe-haven usd buying would pressure price to 1.0213 next, then twd 1.0078 (61.8% proj. of 1.1495-1.03 50 measured fm 1.0786. Only weekly close abv 1.0350 risks retrace. twd 1.0488.
Today, as Wed’s 1.0163 low was also accompanied with bullish convergences on hourly indicators, subsequent recovery would bring initial range trading b4 downtrend resumes, reckon 1.0100/10 would remain intact n yield a much-needed minor correction. Only abv 1.0236 risks stronger retrace. to 1.0271/76 b4 down.