Gold Prices Look Vulnerable to Deeper Reversal

Gold

The yellow metal has been back under pressure this week amidst a resurgence in the US dollar.

The rally in the dollar comes despite the July FOMC meeting minutes failing to indicate the Fed’s willingness to set a timeframe for raising rates.

At the last meeting, the minutes indicated that some members were in favor of providing a clearer view of when rates might be raised again. However, the minutes this Wednesday provided no follow-through on this.

The fed instead simply reiterated its message of concern over the US economic outlook after COVID-19.

Data this week has not particularly favored the dollar either. The Philly Fed manufacturing index undershot expectations and the weekly unemployment claims number came in higher than expected as well.

Despite poorer data and dovish FOMC minutes, the dollar has managed to reverse losses this week. It is now back up to trading in the green as of writing.

Prices are falling just back below the opening price of the week.

Gold Prices Posting a Lower High?

Gold prices have reversed from the recent all-time highs posted around the 2073.74 level.

Following a brief move below the 1919.92 level, price has now potentially posted a lower high just above the 1980.66 level.

If price breaks below the rising trend line this could signal the start of a broader reversal targeting the 1826.71 level initially.

Silver

Silver prices have managed to remain in the green this week, albeit by a fine margin.

Despite the moves lower in gold which have exerted downside pressure on silver, the market has been held up by the resilient strength in equities prices.

Equities, particularly industrial stocks, have remained well supported over recent weeks.

The latest set of PMI data sets highlighted the ongoing recovery in global manufacturing. This has helped keep the demand outlook for silver buoyant.

Silver Prices Remain Positive on the Week

Despite the firm reversal which kicked in just ahead of testing the 30.1117 earlier this month, we saw prices breaking briefly below the 25.1018 level.

The dip found buying interest, and price has since reversed back above the level.

For now, however, the recovery remains capped by the 27.4502 level resistance.

While this level holds, the risk of a further move lower remains seen. To the downside, any further break below the 25.1018 level will open the way for a test of the 20.4050 level next.