Gold, XAU/USD, Silver, XAG/USD – Outlook:
- Next support Money: 1805, 1785, 1720.
- A bearish head and shoulders pattern is triggered Silver.
- What are the prospects and key levels to focus on?
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Gold and silver are each below multi-week ranges, indicating further declines are possible in the near term as U.S. Treasury yields rise.
The yield on the 10-year U.S. Treasury note hit a 16-year high last week amid growing confidence that interest rates will be longer, weighing on the zero-yielding precious metals market. On the technical chart, the 10-year Treasury yield has broken through its 2018 high of 3.26%, paving the way for a pre-Great Financial Crisis high of 5.33%.
Rising nominal interest rates, combined with easing price pressures and inflation expectations, pushed up real interest rates, raising the opportunity cost of owning the zero-yielding yellow metal. See “Are High Real Yields Starting to Eat Gold?” XAU/USD Pricing Ahead of US CPI”, published on August 10th.
XAU/USD daily chart
Charts created using TradingView
Federal Reserve President Michelle Bowman said on Monday that she remains willing to support further hikes in policy rates at future meetings if future data shows that inflation is stalling or moving too slowly, calling her hawkish strengthened his view. Additionally, an interim resolution to avert a U.S. government shutdown has eliminated the possibility of gold being bid as a safe haven.
Gold: Bearish triangle trigger
On the technical chart, XAU/USD is below key support at the 200-day moving average, near the June and August lows of 1885-1890. The importance of this support is highlighted in “Gold, Silver Prediction: Now or Forever for XAU/USD, XAG/USD” published on August 13th. The break below paved the way for the February low of 1805, which was close to strong support. With a 200 week moving average. Subsequent support is at 1785 and then 1720 (76.4% retracement of the 2022-2023 bull market).
XAU/USD weekly chart
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Gold looks very oversold on the daily chart, with the 14-day relative strength index currently below 20. This level is associated with a rebound in mid-2022. But it wasn’t enough to finish the slide. This means that a deeply oversold situation increases the likelihood of a corrective pullback, but does not necessarily mean the downtrend will end.
A decisive break below 1805 would eliminate the possibility that the spectacular year-long rally since early 2022 was a correction and not the start of a new uptrend – a point that has been evident in recent months. is emphasized. See “Gold Could Find It Tough to Crack $2000” and “Gold Weekly Forecast: Is it Turn to Turn Caitious on XAU/USD?” published March 28th. It was released on April 16th.
XAG/USD daily chart
Charts created using TradingView
Silver: Head & Shoulder Pattern Trigger
XAG/USD has broken below major converged support, including the uptrend line from late 2022, which coincides with the horizontal trend line from June that came in at around 22.00. This break triggered a bearish head and shoulders pattern, with the left shoulder at the June high, the head at the July high, and the right shoulder at the August high, paving the way for the March low at 19.85. . This bearish move is also associated with a decline below the 200-day moving average, suggesting a reversal of the uptrend from late 2022.
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— Written by DailyFX.com Strategist Manish Jaradi
— Contact and follow Jaradi on Twitter: @JaradiManish
