Gold Tests Support At $4000 – $4020
Gold is losing ground as traders focus on the strong rally of the U.S. dollar. The American currency gained ground against a broad basket of currencies as traders focused on hawkish changes in Fed policy outlook. Strong dollar is bearish for dollar-denominated commodities as it makes them more expensive for buyers who have other currencies.
FedWatch Tool indicates that there is a 12.9% probability that Fed will raise the federal funds rate by 50 bps at the next meeting in December. The market believes that there is no chance that Fed will keep rates unchanged amid rising inflationary pressure. Traders also expect that Fed will also continue the rate hike cycle in January. Rising interest rates are bearish for gold that pays no interest.
From a big picture point of view, rising interest rate environment may present a serious problem for gold bulls. While central bank demand stays strong as central banks attempt to diversify their holdings, investment demand may fall as investors choose interest-paying alternatives.
Currently, gold is trying to settle back below the support at $4000 – $4020. In case this attempt is successful, gold will head towards the next support, which is located in the $3890 – $3910 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
On the upside, gold needs to settle above the $4020 level to have a chance to gain upside momentum in the near term. In this case, gold will head towards the $4100 level. A move above $4100 will open the way to the test of the resistance level at $4180 – $4200.
Silver Moves Higher Despite Strong Dollar
Silver gained some ground as gold/silver ratio pulled back below 77.00. If gold/silver ratio stays below 77.00, it will head towards the 75.00 level, which will be bullish for silver.
The technical picture remains unchanged as silver is stuck near the $52.00 level. If silver manages to settle above $52.00, it will head towards the $54.00 level. A move above $54.00 will push silver towards $55.00.
On the support side, a successful test of the support at $51.00 – $52.00 will push silver towards the next support level, which is located in the $47.00 – $48.00 range.
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See all Gold forecastsPlatinum Moves Away From Session Highs
Platinum pulled back from session highs as traders focused on strong dollar and continued to take profits after the recent rebound. Palladium markets were up by +2.2%, which was bullish for platinum. However, the strong rally in palladium markets did not provide support to platinum prices today.
If platinum pulls back below the $1500 level, it will head towards the support, which is located in the $1440 – $1460 range. On the upside, a move above the resistance at $1520 – $1540 will open the way to the test of the next resistance at $1600 – $1620. In case platinum climbs above the $1620 level, it will head towards the 50 MA at $1656.
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