Gold Loses Main Catalyst, but Gains on FOMC Minutes

Precious Metals Technical Outlook

Aug 17, 5:05 pm
Gold prices

It has been a bumpy ride for metals over the past few weeks. However, the general momentum remains positive on most time frames.

Yet, metals need more catalysts to clear the way for further gains this year. Otherwise, they are going nowhere.

The Fed Saved The Day

Yesterday, metals were at this week’s lows right before the Federal Reserve’s meeting minutes. However, that has changed dramatically right after the FOMC Meeting Minutes were published.

Gold spiked by more than $15, while Silver added more than 0.6c reaching as high as 17.20’s within few minutes.

The main reason behind such rally came right from the Federal Reserve statement; the Fed noted that many of the members believe that the Fed should wait with the next rate hike until inflation shows new signs of improvement.

Moreover, several members showed their concerns on why inflation hasn't improved for the past few months, despite all of the measures that the Fed took.

Such remarks sent a clear message to the market that the federal reserve might not be able to raise rates anytime soon. At least we know that September’s meeting is off the table now.

Metals Remain At Risk

Despite the Federal Reserve statement, traders are advised to follow the news carefully, especially with the latest geopolitical tensions.

Over the past few days, some reports were saying that North Korea will postpone its attack on the US airbase in Guam. At the same time, Trump decided to respond to these reports by saying that this is a wise decision and kept his threat for a catastrophic event if North Korea decided to launch any missiles.

With geopolitical tensions are easing according to what we saw over the past few days,  Gold had lost one of the positive catalysts, at least for now. Therefore, the risk for another leg lower is still there.

Therefore, traders should be very careful over the next few days/weeks.

Triple Top Pattern on Gold

Gold managed to rise once again right from the same area that we noted in our previous reports, between 1280 and 1270.

Gold tested 1270 on Tuesday and Wednesday and spiked all the way to 1290 earlier this morning. However, from a technical point of view, some would say that Gold is forming a triple top formation on the daily chart.

This is true. However, it needs to prove that by staying below the 1290’s over the next few hours/days. Otherwise, a breakout would be more likely and may test the $1300 over the next few days.

On the downside view, the breakout probability remains high as long as Gold stays above the previous bottom around $1270.

Silver Trying To Stabilize

Silver is trying to stabilize above $17 after it managed to break above that resistance during yesterday’s trading. However, it is still struggling, and at the same time, it is supported by 200 DAY MA.

A break above 17.20’s is still needed to clear the way for further gains ahead, probably toward the next resistance which stands at 17.60.

Otherwise, another leg lower could be seen back to 16.80 followed by yesterday’s support area around 16.60 and maybe 16.40.

 
Nour Eldeen Al-Hammoury

Nour Eldeen Al-Hammoury has more than ten years of experience in focusing on foreign exchange and global economic developments, as well as central bank policies and intermarket analysis (global markets relationships). Nour Eldeen is a regular on many major TV networks (several times each) such as: BBC Radio, BBC World News, Al-Jazeera, Al-Hurra TV CNBC Europe, CNBC Asia, CNBC Arabia, Al Arabiya, Bloomberg, Russia Today, Dubai TV, Sama Dubai, Skynews Arabia, Qatar TV and Future TV News.