Strong US data revived bets on an imminent QE rollback from the Fed, supporting the dollar and causing bond yields to rise. The news triggered a more than 2% plunge in gold prices, four times the amplitude of the dollar’s rise against a basket of major currencies.

Silver plunged from levels near $24 at one point to $22.6, more than 5.5%, at the lower end of its trading range since last July. Despite the larger drop from the peak (-23%), Silver has been moving sideways all this time, fluctuating widely between $29 and $23.

Gold’s pullback from the highs is less intense in percentage terms (only 15%), but a downtrend has formed on the chart here with a sequence of lower peaks as the bears take control from ever lower levels.

The downtrend in Gold is supporting by solid US data pushing the moment of the Fed’s key rate hike ever closer.

Fundamentally, the current situation replicates 2014 when the FOMC was similarly on the verge of winding down balance sheet purchases. By the first public hints of Fed plans in April 2013, Gold had already sold off for six months. Subsequently, the price of Gold fell for another two and a half years, right up to the date of the Fed’s key rate hike.

Learning from the only historical example, the downtrend in Gold could continue for another year or so, based on the current rate projections. Potentially, it may come under the most fierce selling pressure during a period of reduced asset purchases for the Fed’s balance sheet.

From current levels near $1760/oz, gold investors should look to the price dynamic near the $1700 area, which has acted as support since February. A bull’s capitulation from these levels promises to pave the way for a rapid decline towards $1500.

For Silver, a sustained drop below $23 could mean a move into active selling, returning the price to the previous consolidation area around $15 before the end of the year, half the peak of February.

Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts' opinions are for informational purposes only and should not be considered as a recommendation or trading advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD remains vulnerable near 1.1600 amid firmer dollar

EUR/USD is hovering around 1.1600, on the defensive amid a broadly stronger US dollar. Markets cheer US-Sino talks and stimulus progress despite looming inflation fears. The Fed-ECB monetary policy divergence weighs down on the euro. US Consumer Confidence data awaited.

EUR/USD News

GBP/USD hovers around 1.3750, Brexit talks in London eyed

GBP/USD is trading above 1.3750, struggling for a clear direction after Monday’s rebound. Market sentiment improves on stimulus hopes, US-Sino talks but the dollar remains firmer. UK’s Frost offers EU Dec deadline to solve the row over the NI proposal. All eyes on the Brexit talks.

GBP/USD News

XAU/USD flirts with $1,800 amid stronger USD, risk-on mood

Gold snaps a five-day uptrend, refreshes intraday low of late. Market sentiment dwindles amid pre-GDP caution, light calendar. US Treasury yields rebound, add strength to the greenback.

Gold News

Traders book profits from Shiba Inu to push Dogecoin to $0.34

Dogecoin price could see some incoming speculative money from profit-taking in Shiba Inu A bullish close above the Cloud on the daily chart indicates future upswing likely. The outperformance of Shiba Inu is likely as Dogecoin lags the majority of the market.

Read more

Conference Board Consumer Confidence October Preview: Watch what we do... Premium

Confidence expected to slip to 108.3 from 109.3 in September. Michigan Consumer Sentiment eroded slightly in October. Sentiment seems divorced from labor market and Retail Sales. Federal Reserve taper will not hinge on a happy US consumer.

Read more

Majors

Cryptocurrencies

Signatures