Fundamental News and Triggers

• Active Gold June contract has touched a record high of $3504 (~Rs 99178) today, as the dollar fell to a three-year low below 98. President Trump increased pressure on the Federal Reserve, calling for a dramatic rate reduction and even considering replacing Fed Chair Powell.
• Trump criticized Fed Chair Jerome Powell again on Monday, warning that unless interest rates are cut promptly, the US economy will slow. The comments on Powell reinforced concerns about the Fed’s independence in establishing monetary policy, as well as the outlook for US assets.
• Furthermore, amidst the trade war, China accused the US of abusing tariffs and warned governments, not to seek an agreement with the US that compromised Beijing’s interests.
• Together, these considerations have led to strong safe-haven demand for gold, which is now up 30% this year.

Technical Triggers

• After touching $3500, positioning appears crowded in the short run, and technical indications suggest near-term overbought condition. Therefore, one must exercise extreme caution because prices have skyrocketed in a relatively short period.
• If prices fall below $3450 (~Rs 97000), we may see a topping-out signal and profit-booking can move prices southward to around $3300 (~Rs 94000).
• Silver prices have been trading in the range of $32 (~ Rs 94000) and $33 (~ Rs 97000) and are expected to continue same range this week.

Support and Resistance

 

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