Gold Gains Ground As Oil Prices Fall
Gold rebounds as traders focus on U.S. CPI data and react to the strong pullback in the oil markets.
U.S. Inflation Rate remained unchanged at 3.4% in August, in line with analyst expectations. Core Inflation Rate decreased from 2.5% to 2.4%.
According to FedWatch Tool, the probability of a rate hike at the meeting next week increased to 86.7%, which means that traders are almost sure that Fed will raise the federal funds rate.
The yield of 2-year Treasuries climbed above the 4.62% level as bond traders focused on inflation data. The yield of 10-year Treasuries pulled back towards 4.95% after an unsuccessful attempt to settle above the psychologically important 5.00% level.
I’d note that it’s too early to say that the situation in bond markets has calmed down. I believe that a strong pullback in the oil markets is required to push yields lower.
Rate hike expectations put pressure on gold markets in recent weeks, so gold will stay sensitive to oil price dynamics in the near term. Today, oil markets pulled back by -4% as Gulf countries planned to meet with Iran to discuss the future of the Strait of Hormuz. Falling oil prices provided material support to gold and other precious metals.
Gold failed to settle below the support at $4300 – $4320 and rebounded above the $4350 level. In case gold settles above $4400, it will head towards the resistance, which is located in the $4480 – $4500 range.
On the support side, a move below the $4300 level will open the way to the test of the 50 MA at $4269. In case gold declines below the 50 MA, it will head towards the next support at $4160 – $4180.
Silver Attempts To Settle Back Above $64.00
Silver climbed back above the $64.00 level, supported by the sell-off in the oil markets. U.S. dollar was mostly flat against a broad basket of currencies in volatile trading, which was neutral for silver and other precious metals.
The nearest resistance level for silver is located in the $65.00 – $66.00 range. If silver manages to settle above the $66.00 level, it will head towards the psychologically important $70.00 level. A move above $70.00 will push silver towards the resistance at $71.00 – $72.00. RSI is in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.
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See all Gold forecastsPlatinum Gains Ground Amid Rising Demand For Precious Metals
Platinum attempts to rebound after the strong sell-off. Palladium markets are up by +2.4%, which is bullish for platinum.
If platinum manages to settle back above the $1800 level, it will move towards the resistance level, which is located in the $1870 – $1890 range.
On the support side, platinum needs to settle below the $1780 level to have a chance to gain downside momentum in the near term. In this case, platinum will head towards the next support, which is located in the $1700 – $1720 range.
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