As Silver Selloff Persists, Gold Tumbles after European Open; Whats the Next Move?
Gold and Silver: What’s Happening in the Market?
Positive Start to the Week
The Asian session saw gold doing well, but it pulled back a bit after the European open. The precious metal is trying to reach the $1950 mark, while silver is struggling to take advantage of recent developments.
Increase in Feds interest rate coincides with noteworthy advancements in China
The market had a good start to the week because of positive news from China and the US. China saw an increase in real estate transactions after mortgage rates were cut, and a special bureau was set up for the private economy. This, along with expectations for more stimulus, boosted market sentiment. However, it’s uncertain if this optimism will last. The US data on Friday was good for the market. It reduced fears of a US recession and kept the idea of Fed rate hikes at bay. This could keep gold prices moving forward.
What to Expect for the Rest of the Week
There isn’t much high-impact US data this week, so gold prices will likely be driven by overall sentiment. Developments in China will also play a role in setting the tone.
Silver is currently facing a key area of support around the $23.50-$24.00 mark. It has had four successive days of losses, but there is support just below the current price. There is also a pattern that suggests silver could rally upwards. However, a selloff is possible if it retests the lower end of the triangle pattern.
Gold prices have been doing well and are close to a key resistance area around $1950. If it breaks this level, the bullish momentum will continue. However, if it fails to break this level, bears may regain interest. Gold is currently trading between the 50 and 100-day moving averages. If gold moves lower, it will find support around $1940 before focusing on the 50-day moving average. The range breakout from last week could also serve as a key area of support. The key drivers for gold prices this week will be the Dollar Index (DXY) and developments in China. If sentiment improves, the US dollar may weaken, which could push gold prices higher.
Retail traders are overwhelmingly long on gold and silver. This contrarian view suggests that gold and silver may fall.