Gold Rebounds As Traders Focus On Falling Treasury Yields
Gold rallied as traders evaluated hawkish comments from Fed Chair Warsh and reacted to the pullback in Treasury yields.
Fed raised the federal funds rate by 25 bps and indicated that it would raise rates again to fight inflation. Fed proved its independence, so the bond market has calmed down, at least in the near term. The yield of 2-year Treasuries pulled back towards the 4.68% level, while the yield of 10-year Treasuries settled below 4.95%. Falling Treasury yields provided material support to gold markets.
FedWatch Tool indicates that there is a 50.9% chance that Fed will raise rates at the next meeting in October. The probability of two rate hikes by December is estimated at 37.2%.
Typically, rising interest rates are bearish for gold and other precious metals that pay no interest. However, the market bets that Fed will raise rates quickly and push inflation lower. In this scenario, inflation will remain under control, so Fed would not be forced to raise rates even higher in the future.
U.S. dollar pulled back against a broad basket of currencies as traders took some money off the table after the strong rally. Weaker dollar served as an additional positive catalyst for gold markets in today’s trading session.
Gold settled back above the support level at $4300 – $4320 and is trying to settle above $4350. In case this attempt is successful, gold will head towards the $4400 level. If gold manages to settle above $4400, it will head towards the resistance level at $4480 – $4500.
Silver Soars As Traders Shrug Off Worries About Hawkish Fed
Silver rallied as gold/silver ratio pulled back towards the 66.00 level. In case gold/silver ratio declines below 66.00, it will move towards the 65.00 level, which will be bullish for silver.
Currently, silver is trying to settle above the resistance level at $65.00 – $66.00. In case this attempt is successful, silver will move towards the $68.00 level. If silver manages to settle above $68.00, it will move towards $70.00. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
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See all Gold forecastsPlatinum Tests The $1800 Level
Platinum has also moved higher as traders focused on the strong rally in gold and silver markets. Palladium markets gained 1%, providing additional support to platinum.
From the technical point of view, platinum made another attempt to settle above the resistance level at $1780 – $1800 but failed to develop sufficient upside momentum. In case platinum settles above $1800, it will head towards the next resistance level, which is located in the $1870 – $1890 range. A move above the $1890 level will open the way to the test of the $1950 level.
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