Gold Tests The $4150 Level
Gold pulls back as traders focus on stronger dollar and rising Treasury yields. Bond markets found themselves under pressure as bond traders reacted to rising oil prices. Houthis continue to attack Saudi Arabia, raising worries about additional escalation in the Middle East.
The yield of 2-year Treasuries moved above the 4.77% level, while the yield of 10-year Treasuries settled near 4.15%. Rising yields are bearish for gold that pays no interest.
I’d note that traders do not expect that Fed will raise rates at the next meeting in October despite rising oil prices. According to FedWatch Tool, the probability of a rate hike declined to 17.2%. However, the market expects that Fed will raise rates in December and January. Traders believe that Fed will not raise rates ahead of midterm elections but will be forced to continue the rate hike cycle to fight inflation in December.
U.S. dollar gained ground against a broad basket of currencies as traders focused on looting and riots in France. More than half a million people protested in France over the weekend, and these protests have quickly become violent. U.S. dollar’s safe-haven status provided support to the American currency, which was bearish for dollar-denominated commodities, including gold.
From the technical point of view, gold failed to settle above the resistance level at $4160 – $4180 and pulled back below the $4150 level. In case gold settles below $4150, it will head towards the next support, which is located in the $4000 – $4020 range.
Silver Moves Higher As Gold/Silver Ratio Pulls Back
Silver managed to gain some ground as gold/silver ratio pulled back below the 72.50 level. In case gold/silver ratio settles below 72.50, it will head towards the 70 level, which will be bullish for silver.
Silver needs to settle above the support at $56.00 – $57.00 to have a chance to gain upside momentum in the near term. In this case, silver will head towards the psychologically important $60.00 level. A move above $60.00 will open the way to the test of the resistance at $61.00 – $62.00.
On the support side, a move below the $56.00 level will provide silver with an opportunity to gain downside momentum. In this case, silver will head towards the next support at $51.00 – $52.00.
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See all Gold forecastsPlatinum Gains Ground Despite Rising Yields
Platinum moved higher despite rising Treasury yields and higher oil prices. Palladium markets were up by +0.8%, which was bullish for platinum. It remains to be seen whether platinum will continue to move higher in case oil prices test new highs amid escalation in the Middle East. High oil prices hurt global economy and may reduce demand for platinum.
Platinum continues to rebound after an unsuccessful attempt to settle below the support level at $1600 – $1620. If platinum stays above the $1620 level, it will head towards the resistance level at $1700 – $1720. A move above the $1720 level will push platinum towards the 50 MA at $1750.
On the support side, a successful test of the support at $1600 – $1620 will open the way to the test of the next support at $1520 – $1540.
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