Gold prices slipped to a near 1-week low on Tuesday as the US dollar strengthened following a deal on extending the debt ceiling in the United States. President Donald Trump and US congressional leaders agreed on Monday on a two-year extension of the debt limit and federal spending caps to avert a government default this year but adding to budget deficits in the world’s largest economy.
The spot gold fell by 0.4% to 1,418.39 USD per ounce as of 06:20 a.m ET. Prices had dropped to 1,413.80 USD earlier in the session, last touched on July 17.
Meanwhile, the US gold futures dropped 0.6% to 1,419 USD.
The analysts expect gold to trade a bit lower but hold above 1,400 USD level as consensus is still towards a rate cut and appreciation of the US dollar.
There was a sharp upward move over the past weeks in the gold price. The momentum seems to have been lost and some short-term investors have looked to take those healthy profits ahead of the US Federal Reserve decision next week, which keeps the price under pressure.
Despite underlying support, analysts say gold could post losses in the coming days. Gold may fall into a range of 1,401-1,409 USD per ounce as it has broken a support at 1,422 USD.
Meanwhile, silver stood out from its peers, rising 0.5% to 16.42 USD per ounce.
There were a rapid increase in silver Exchange Traded Fund (ETF) holdings and it’s very much a function of how low the price was and that it’s getting picked up on positive investor sentiment for safe havens such as gold and silver.
Holdings of the largest gold-backed ETF, New York’s SPDR Gold Trust, rose by 0.6% on Monday from Friday, while the largest silver-backed ETF, the iShares Silver Trust, rose 2.6% during the same period. Holdings in the silver ETF have risen about 10% so far this month.
Among other precious metals, palladium dipped 0.7% to 1,518.01 USD per ounce while platinum fell 0.3% to 841.50 USD.
Gold price analysis
Gold has made a retracement towards 1,414 USD area. The precious metal needs to break 1,422 USD in order to provide bulls with intraday momentum, while within the 1,414-1,418 USD is the zone where we should see fresh buyers.
The uptrend may be expected to continue, while pair is trading above support level 1415.50 USD, which will be followed by reaching resistance level 1,424 USD. On a positive momentum, 1,426 USD will be the target.
A downtrend will start as soon, as the pair drops below support level 1415.50. However, if the price drops below 1,414 USD we might see a neutral price action again with 1,407 USD as the target and the gold will return to its ranging – sideways movement range.
For the week, the uptrend may be expected to continue, while gold is trading above support level 1,415 USD, which will be followed by reaching a resistance level of 1,446 USD and if it keeps on moving up above that level, we may expect the pair to reach resistance level 1,470 USD. A downtrend will start as from resistance 1,446 USD, as the pair drops below support level 1,415 USD, which will be followed by moving down to support level 1,398 USD and if it keeps on moving down below that level, we may expect the pair to reach support level 1,350 USD.
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