Gold Moves Lower As Oil Markets Rally
Gold pulls back as traders focus on rising oil prices. Brent oil climbed above the $106.00 level amid escalation in the Middle East. Iran-backed Houthis attacked Saudi airports, raising worries about wider conflict in the region.
High oil prices will force central banks to raise rates to fight inflation, which will be bearish for gold. High interest rates serve as a negative catalyst for precious metals that pay no interest.
Kazakhstan’s central bank has recently announced that it would start selling gold as Treasury yields increased to attractive levels. Deputy Governor Aliya Moldabekova said that dollar had become an attractive option, reducing the attractiveness of gold as an investment.
I’d note that the share of gold in Kazakhstan’s reserves has increased to 78%, so it’s not surprising to see that the central bank has started to search for alternatives.
Kazakhstan’s example shows that yields matter for decision makers. Many central banks buy gold to diversify their reserves, but some institutions are ready to take a closer look at the share of gold in their portfolios amid rising bond yields.
FedWatch Tool shows that the probability of a rate hike at the meeting in October has climbed back above the 20% level. The market does not expect that Fed will raise rates soon but prepares for a potential rate hike in December.
Gold made an attempt to settle above the resistance at $4160 – $4180 but lost momentum and pulled back. If gold settles back below the $4160 level, it will head towards the $4100 level. A move below $4100 will open the way to the test of the support at $4000 – $4020.
Silver Retreats As Gold/Silver Ratio Climbs Above 69
Silver pulls back as gold/silver ratio climbed back above the 69.00 level. A move above 69.00 will push gold/silver ratio towards the psychologically important 70.00 level, which will be bearish for silver.
In case silver settles below the $60.00 level, it will head towards the nearest support, which is located in the $56.00 – $57.00 range. A move below the $56.00 level will provide silver with an opportunity to gain additional downside momentum.
On the upside, a successful test of the resistance at $61.00 – $62.00 will push silver towards the 50 MA at $64.32. If silver climbs above the 50 MA, it will head towards the resistance level at $65.00 – $66.00.
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See all Gold forecastsPlatinum Moves Lower Amid Falling Demand For Precious Metals
Platinum pulled back from session highs as traders reacted to the rally in the oil markets. Palladium markets were down by -0.5%, which was bearish for platinum.
If platinum pulls back below the $1650 level, it will head towards the nearest support, which is located in the $1600 – $1620 range. RSI is in the moderate territory, so there is plenty of room to gain downside momentum in the near term.
On the upside, a move above the $1720 level will open the way to the test of the 50 MA at $1761. In case platinum manages to settle above the 50 MA, it will head towards the next resistance at $1780 – $1800.
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