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Precious Metals Market Update

Solid ECN

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XAGUSD - Global demand for silver is under threat again

The key negative factor that influenced the dynamics of the asset was the statistical data from China, as the price of the precious metal correlates with demand from the industry. Thus, according to the July statistics, the indicator fell to 3.8% instead of 4.6% expected by analysts, which led to a decrease in annual growth rates to 3.5%, while retail sales adjusted to 2.7% from 3.1 % a month earlier. Thus, the consequences of the recent coronavirus outbreak in China are still reflected in the dynamics, which is a negative signal for silver.

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Investor demand for the metal increased over the past week: according to the US Commodity Futures Trading Commission (CFTC), net speculative positions increased to 2.9K contracts from 1.0K contracts a week earlier. It should be noted that this indicator reflects only the total demand for aggregate positions, but if you pay attention to the balance of short and long deals, last week was left for sellers, who increased the number of contracts by 2,472K, while buyers showed a decrease by 160 contracts. Globally, the "bearish" position also prevails and amounts to 30.211K against 7.398K for the "bulls."

The trading instrument continues its upward correction and is approaching the resistance line of the global downward channel.

Resistance levels: 20.81, 22.31 | Support levels: 19.80, 18.40​


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XAUUSD - Investor demand for gold is actively increasing

The XAUUSD pair is correcting in a downtrend at 1764 amid strengthening US dollar positions: the quotes rose from 105.3 to 106.6 in the USD Index due to several factors, including confirmation of the US Federal Reserve's plans to tighten monetary policy. Thus, the minutes of the meeting of the Federal Open Market Committee (FOMC), published yesterday, outlined the department's plans for September, which include raising interest rates by at least 50 basis points to combat record inflation.

Another factor in the local downward dynamics of gold was data on industrial production in China: the figure was 3.8%, which is lower than 3.9% a month earlier and significantly lower than 4.6% expected by analysts, which confirmed investors' fears about the stability of the economy of one of the largest importers and producers of precious metals.

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On the weekly chart of the asset, the price is above the resistance line of the global downward channel with dynamic boundaries 1780 – 1650. Despite the local slowdown, technical indicators strengthen the buy signal: fast EMAs on the Alligator indicator are moving above the signal line, while the AO oscillator histogram remains in the buy zone.

Resistance levels: 1782, 1847 | Support levels: 1753, 1696

 

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The XAGUSD pair continues its local corrective trend and is now around 18.94.

On the daily chart of the asset, the price of the precious metal is declining within the global downward channel with dynamic boundaries at 20 – 16. After reaching the resistance line at 20.9, the trading instrument reversed and formed another wave of decline. The target could be the global support level of 16.68. On the four-hour chart, the downside potential looks quite high, and if the quotes consolidate below the initial trend level of 61.8% on the Fibonacci extension, which coincides with the low of the year at 18.31, there will be no serious support for the price, and the position can be realized.

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Technical indicators reversed and gave a sell signal: the range of EMA fluctuations on the Alligator indicator is expanding downwards, and the AO oscillator histogram has formed the first downward bar after moving into the sell zone.​
 

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EURUSD - inflation in the EU has set another record

The European currency is resisting the growth of the dollar, trading around the 1.0014 mark after the publication of a block of macroeconomic data yesterday.

Thus, consumer prices in the EU in August added 0.5%, which led to an increase in the annual inflation rate to 9.1% from 8.9% (food and energy prices rose the most), while local inflation in countries bloc increased almost everywhere: in Italy, it reached 8.4% from 7.9% a month earlier, and in France, the figure fell to 5.8% instead of 6.1%. Rising consumer prices will require European Central Bank (ECB) officials to continue their "hawkish" policy, and already at the meeting on September 8, the interest rate could be raised immediately by 1.00%.

The American currency in yesterday's trading again renewed the annual maximum around 109.100 in the USD Index after the President of the Federal Reserve Bank of New York, John Williams, in his statement, clarified the "restrictive level of stability" of the interest rate announced by the head of the US Federal Reserve, Jerome Powell. That mark is in the 3.5% region, well above the current rate, Williams said, but experts are now evaluating the likelihood that the agency will want to reach that level in one step at its next meeting on September 21, putting significant pressure on the US economy, which and so is going through a recession.

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The trading instrument is kept within the global downward channel, correcting towards the resistance line. Technical indicators maintain a stable sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 1.0095, 1.0321 | Support levels: 0.9940, 0.9753​
 

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XAUUSD - demand for physical gold declined sharply​

According to the reports of the world's leading mints, primarily the US, August was the weakest month of this year in terms of sales of the precious metal: the US Mint sold 46,000K ounces of gold in the form of the American Eagle coin, which is 28% lower than in July and 66% down from August 2021 and American Buffalo coin sales were 17,500K ounces, down from 39,500K ounces in July.

Another worrying factor for the asset is the outflow of investors from ETFs. Thus, over the past week, metal stocks at the SPDR Gold Shares (GLD) trust decreased by 11 tons, demonstrating negative dynamics for the tenth consecutive week, while net capital outflow in August was recorded at 456.0M dollars. Data from trading floors also confirm these changes in investment demand: according to the latest report from the US Commodity Futures Trading Commission (CFTC), last week, the number of net speculative positions in gold decreased to 117.7K from 125.8K contracts. If you pay attention to the dynamics of trading, it is "bulls" that close more deals, which can serve as short-term support for quotes: last week, swap dealers liquidated sell positions by 5,296K, and buyers increased by 1,755K contracts.

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On the daily chart of the asset, the price is moving within a downward channel and, after reaching the low of the year, is preparing for a local reversal. Technical indicators maintain a sell signal, ignoring a possible local correction: fast EMAs on the Alligator indicator are kept well below the signal line, and the AO oscillator histogram is decreasing in the sell zone.

Resistance levels: 1727, 1802 | Support levels: 1696, 1640​
 

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XAUUSD - demand for gold is gradually increasing

Although the quotes of the trading instrument are near the annual lows, the demand for both physical gold and contracts remains high. Thus, the Australian Mint reported that in August, it sold 84.9K ounces of metal in the form of bars and coins, which is 57.4% higher than the same indicator last year and 7.2% higher than in July. The US Mint sold 857.0K ounces of gold as coins in the first eight months of this year, up 1.2% from last year, while Canada sold CAD 31.9M worth of coins in the second quarter compared to 24.8M Canadian dollars a year earlier.

The latest report from the US Commodity Futures Trading Commission (CFTC) last week recorded active closing of transactions by sellers, and the trend is observed in all categories: in positions backed by money, the “bulls” increased their superiority, reaching 1.294K contracts, while the “bears” there is a decrease by 4.035K. In the positions of swap dealers, buyers added 2.064K contracts, and sellers liquidated 10.359K contracts.

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On the daily chart of the asset, the price moves in a downward channel, and after reaching the low of the year, it again approaches the resistance line. Technical indicators maintain a weakening sell signal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO oscillator histogram is forming upward bars in the sell zone.

Resistance levels: 1734, 1780 | Support levels: 1696, 1650​
 

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Gold - Candlestick Analysis​

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H4​

On the four-hour chart, there is the formation of an Inverted Hammer reversal pattern at the level of 1696.34; however, the attempt of the "bulls" to seize the initiative in the XAU/USD pair was unsuccessful. This can be seen in the formation of a Bearish Engulfing pattern, which showed that the market is still under the influence of sellers. The appearance of opposite figures states uncertainty, and in the current situation the price may reverse at the support level of 1682.63 and head higher to the resistance level of 1732.43, overcoming of which will open the way for the "bulls" to the zone of 1808.60–1879.88. An alternative scenario is likely if the price breaks down the support level of 1682.63, then the instrument may drop to the area of 1628.66–1551.08.

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D1​

On the daily chart, at the level of 1696.34, there is the formation of Inverted Hammer and Hammer candlestick analysis patterns, which warn of a likely price reversal upwards, and at the moment, at the level of 1717.8, another Inverted Hammer model is being built. After a long decline in the asset, the price has probably reached the bottom and is preparing for a reversal. In the current situation, it seems possible to restore quotes to the level of 1732.43, overcoming which will allow the price to strengthen to the area of 1808.6 – 1879.88.

Support levels: 1682.63, 1628.66, 1551.08 | Resistance levels: 1732.43, 1808.6, 1879.88​
 

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Gold - A fall is possible.​

On the daily chart, a downward correction develops as the fourth wave of the higher level (4), within which the wave C of (4) forms as a momentum. Now, the third wave of the lower level iii of C of (4) is developing, within which the wave (v) of iii of C is forming.

If the assumption is correct, the XAU/USD pair will fall to the area of 1621.9–1515.1. In this scenario, critical stop loss level is 1735.23.

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XAUUSD - Investors continue to reduce their positions in gold

Today the decision of the US Federal Reserve on monetary policy will be published. Most analysts believe that the interest rate will be raised by 75 basis points, which could lead to another rise in the dollar and exceed the summer peak of 110 in the USD Index. The price of gold is tightly tied to the price of the US currency, and even taking into account the stability of the precious metal, the growth of the USD Index by 2-3% can provoke a decrease in asset quotes by 1-2%. The main scenario of analysts today assumes such a variant of price movement.

In turn, the demand for contracts for gold has recently declined slightly. According to the latest report from the US Commodity Futures Trading Commission (CFTC), sellers continued to actively reduce their positions last week, while buyers slightly strengthen them. In the positions of swap dealers, which usually react quickly to any changes in the market, buyers increased their number by 0.535 thousand contracts, while sellers reduced them by 4.059 thousand contracts. As for the general trend, the number of positions has been decreasing for the third week in a row, this time to 97.3 thousand from 103.9 thousand.

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On the weekly chart of the asset, the price is holding in a descending channel and after reaching the low of the year at 1650 is still at these levels. Technical indicators hold a sell signal, which remains quite strong: fast EMAs on the Alligator indicator are moving away from the signal line again, and the AO oscillator histogram is forming new downward bars, being in the sell zone.

Support levels: 1650, 1610 | Resistance levels: 1680, 1730​
 

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XAUUSD - Demand for gold continues to decline​

Gold prices show a slight increase, retreating from their April 2020 record lows, updated the day before, and trying to consolidate above 1630 amid increasing uncertainty about the global economic outlook.

The pressure on the XAUUSD pair remains, as the market expects further tightening of monetary policy by global financial regulators. In particular, the US Federal Reserve may go for at least one more major interest rate hike before the end of the year. In turn, the Bank of England may hold an emergency meeting in order to correct the rate, although it was previously noted that the regulator plans to take a wait-and-see position until November.

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Demand for contracts based on the precious metal continues to decline: this week, the rate of liquidation of transactions for sale significantly exceeds the statistics for purchases. According to the report of the US Commodity Futures Trading Commission (CFTC), last week the number of net speculative positions in gold decreased to 65.7 thousand from 97.3 thousand a week earlier. As for the balance of sellers and buyers, the "bears" still hold the lead in the positions of swap dealers, and their number is 150.801 thousand against 96.613 thousand for the "bulls". This week, buyers again increased the number of contracts by 6.691 thousand, which is almost 10 times more than last week's increase, while sellers reduced their positions by 21.070 thousand contracts, which is 4 times higher than the rate of liquidation last week.

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Bollinger Bands in D1 chart demonstrate a stable decrease. The price range expands from below, making way for new local lows for the "bears". MACD is declining keeping a weak sell signal (located below the signal line). Stochastic retains downward direction but is located in close proximity to its lows, which indicates the risks of oversold gold in the ultra-short term.

Resistance levels: 1640, 1653.92, 1675, 1688.58 | Support levels: 1620, 1600, 1579.25, 1562.7​
 

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Silver - Growth is possible.​

On the daily chart, a downward correction of the higher level developed as the second wave (2), within which the wave C of (2) formed and the development of the third wave (3) started. Now, the first entry wave of the lower level i of 1 of (3) is developing, within which the wave (iii) of i has ended, and a local correction is developing as the wave (iv) of i.

If the assumption is correct, the XAGUSD pair will grow to the area of 22.47 – 25.40. In this scenario, critical stop loss level is 17.97.

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Gold price continued to decline to surpass our first target at 1673 and reach the extended target at 1660, and we expect the continuation of the negative pressure to break the last level and open the way for more decline on the intraday basis, to head towards visiting 1645 followed by 1630.00 levels as next negative stations.

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Therefore, the bearish trend scenario will remain active for the upcoming period, noting that breaching 1686.4 will stop the current negative pressure and lead the price to recover again. The expected trading range for today is between 1640.00 support and 1680.00 resistance.

The expected trend for today: Bearish
 

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XAUUSD - The "bulls" reduce positions in the asset​

The situation on the gold market is still ambiguous: historically, the precious metal has always been a refuge in case of geopolitical tensions, but at the moment, its quotes are under pressure from high interest rates and, as a result, a growing dollar. The hawkish monetary policy provokes an increase in government bonds yield, which are more reliable than gold, and high rates (4% on 10-year bonds) additionally attract investor capital into bonds. Also, since the price of gold is denominated in dollars, the latter's growth will always make the metal cheaper, which is now observed.

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On the daily chart of the asset, the price is moving in a downward channel, approaching the support line.

Resistance levels: 1672, 1730 | Support levels: 1620, 1570​
 

Solid ECN

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Gold - Growth is possible.​

On the daily chart, a downward correction developed as the fourth wave of the higher level (4), within which the wave C of (4) formed as a momentum. Now, the development of the fifth wave (5) has started, within which the first entry wave of the lower level (i) of i of 1 of (5) has formed, and a local correction ended as the wave (ii) of i of 1 of (5).

If the assumption is correct, the pair XAUUSD will grow to the area of 1808.78–1861.30. In this scenario, critical stop loss level is 1613.92.

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Solid ECN

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XAGUSD - Growth is possible.​

On the daily chart, a downward correction of the higher level ended as the second wave (2), within which the wave C of (2) formed, and the development of the third wave (3) started. Now, the first entry wave of the lower level i of 1 of (3) is developing, within which the wave (iii) of I has formed, a local correction has ended as the wave (iv) of I, and the development the wave (v) of i has started.

If the assumption is correct, the XAGUSD pair will grow to the area of 21.2 – 22.47. In this scenario, critical stop loss level is 18.22.

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Solid ECN

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Gold Technical Analysis​

Gold price resumes its negative trading to move away from the EMA50, reinforcing the expectations of continuing the bearish trend in the upcoming sessions, waiting for more decline to visit 1615.00 level that represents our next main target, reminding you that the continuation of the bearish wave depends on the price stability below 1660.

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The expected trading range for today is between 1625 support and 1665 resistance, and the expected trend for today: Bearish.​
 

Solid ECN

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Gold price builds support base​

Gold price settles above 1660 level and attempts to gain the positive momentum on the intraday time frames, while the EMA50 continues to support the price from below.

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Therefore, the bullish trend scenario will remain valid and active for the upcoming period, affected by the previously completed inverted head and shoulders’ pattern, waiting to visit 1686.40 level as a next main target, reminding you that the continuation of the bullish wave depends on the price stability above 1660.

The expected trading range for today is between 1650 support and 1686 resistance, and the expected trend for today: Bullish.​
 

Solid ECN

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XAUUSD - Growth is possible.​

On the daily chart, a downward correction ended as the fourth wave of the higher level (4), within which the wave C of (4) formed as a momentum. Now, the development of the fifth wave (5) has started, within which the first entry wave of the lower level (i) of i of 1 of (5) has formed, a local correction has ended as the wave (ii) of i of 1 of (5), and the wave (iii) of i of 1 of (5) is developing.

If the assumption is correct, the XAUUSD pair will grow to the area of 1808.78–1861.3. In this scenario, critical stop loss level is 1616.73.

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Solid ECN

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Silver - Growth is possible.​

On the daily chart, a downward correction of the higher level ended as the second wave (2), within which the wave C of (2) formed, and the development of the third wave (3) started. Now, the first entry wave of the lower level i of 1 of (3) is forming, within which the wave (iii) of I has formed, a local correction has ended as the wave (iv) of i, and the wave (v) of I is developing.

If the assumption is correct, the XAGUSD pair will grow to the area of 21.2 – 22.47. In this scenario, critical stop loss level is 18.22.

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Solid ECN

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Gold price forecast​

The gold short-term downtrend continued yesterday after the test of the Intermediary Zone 1662 – 1659. The price has broken through the low of November 1. The gold sell trades reached the first target. The next downside target is the lower Target Zone 1618 – 1612. The market should reach the second target within the next two days.

I recommend entering new short trades on the corrections to strong resistance levels. The Additional Zone is now in 1645 – 1643. The trend border is the zone of 1661 – 1658. Once any of these zones is tested by the price, I suggest selling gold according to a sell pattern with the first target at today’s low.

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XAUUSD trading ideas for today:
  • Sell according to the pattern in Additional Zone 1645 - 1643. Take Profit: 1630. Stop Loss: according to the pattern rules.
  • Sell according to the pattern in Intermediary Zone 1661 - 1658. Take Profit: 1630. Stop Loss: according to the pattern rules.
 
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