Gold trading at critical support of $1950-60

Fundamental News and Triggers

• Given that U.S. inflation and the labour market are currently running significantly above the central bank’s targets, surprise rate increases in Australia and Canada raised some expectations that the Fed will do the same. However, recent months have seen a significant slowdown in U.S. economic growth, leaving the Fed with little room to continue raising rates.

• The CME FedWatch tool revealed that the probability of the Fed keeping interest rates unchanged next week has dropped from 78% to 64% t in the markets. A 25 basis point increase in July is factored in by traders.

Technical Triggers

• Despite the recent weakness, gold prices are still favoring the upside, maintaining a pattern of higher highs and higher lows, and trading within a medium-term ascending channel. Next critical resistance is $2000 and $2025, to continue uptrend.

• Silver prices retraced 38.2% to $23 of its rally from $18 to $26.4 last week. Prices have rebounded to head higher towards Fibonacci resistance level of $24.4.

Support and Resistance

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