Metal Commodities are Taking a Dive
Metal commodities are Taking a Dive, in early U.S. trade Monday, Gold and Silver prices are sliding dramatically, dragged down by a higher dollar index, rising Treasury rates, and lower crude oil prices.
Topics
Federal Reserve’s
Fundamental View
Russia
USD and Jobs Data
China
Technical levels
Federal Reserve’s
The United States Federal Reserve’s severely restrictive monetary policy hovers over the precious metals markets.
At the time of writing, December gold was down $19.20 at $1,666.10, while December silver was down $0.40 at $19.86.
Global stock markets were mostly lower overnight.
US market indexes are projected to open slightly lower when the New York day session begins.
Monday is Columbus Day, and many government agencies and banks are closed in the United States.
This week’s stock market traders will be paying close attention to a wave of firm earnings reports.
Gold prices have been under pressure in recent days as the US dollar continues to strengthen.
The gold price fell to a one-week low of $1,661 early Monday morning in Europe and is currently trading at $1,667, down 0.3% on the day.
As a result, the bullion investigates the two-week bounce from the annual low amid a dull day in the US, Japan, and Canada.
Fundamental View
The gold price (XAU/USD) has fallen for the fourth day in a row, as bears prepare for a new annual low around a one-week low.
However, the yellow metal’s recent decline might be connected to the strength of the US dollar,
which is supported by multi-year high Treasury rates and hawkish Fed expectations.
It’s worth noting that worries of an economic slowdown and recently muddled Fedspeak haven’t deterred dollar bulls,
with markets pricing in 75 basis points (bps) of the Fed’s rate rise in November.
Russia
Worrying statements from the World Bank (WB) and the International Monetary Fund (IMF) combine the recent
Russia-Ukraine spat deepened the risk-off attitude and led traders towards the US dollar,
weighing on the XAU/USD prices, also what should be highlighted is that Russian
President Vladimir Putin’s displeasure with the Crimean bridge explosion also calls into question the mood and weighs against gold prices.
USD and Jobs Data
Moreover, the US central bank’s upbeat predictions contrast with the market’s recent
projections of a stop in the rate rise trajectory amid an economic downturn.
The cause also might be tied to the more robust September US jobs data and aggressive Fedspeak.
China
Furthermore, contradictory news from China and geopolitical concerns from Moscow and Beijing put downward pressure on XAU/USD values.
Due to Beijing’s prominence as a significant commodities user, China’s September PMIs join worries of rising Sino-American squabbles drowning out gold prices.
Technical levels
Since last week pressure has been mounting on gold prices as the US dollar continues to grow stronger.
The US dollar index (DXY) is currently trading at 92.50, up 0.3% for the week, and gold may struggle to find direction in the short term as investors seek new triggers.
Today’s economic schedule in the United States is light but technical levels are worth watching.
The bulls in gold, a push over the $1680 resistance mark could give prices some traction with a move towards $1700, possible if this level is breached convincingly enough.
On the downside, support lies around 1660 dollars per ounce and a break below here could see selling pressure intensify with a move back towards last week’s lows around 1640 dollars per ounce.
The silver bulls have lost their tiny overall near-term technical edge.
The next price target for silver bulls is to close over sturdy technical resistance at the October high of $21.31.
The bears’ next negative price target is to close below sturdy support at $18.00.
The first resistance level is $20.00, followed by today’s high of $20.21.
The next level of support is expected at today’s low of $19.62, followed by $19.25. Wyckoff’s Market Score: 4.5.