Neutral comments from Fed Chair, in her Testimony, and return of Chinese players from New Year holidays strengthened precious metal bucket during mid-week; however, the prices of Gold and Silver have been going down since the start of the Friday as improved Core CPI numbers from US, published on Thursday, strengthened the USD, which generally causes adverse moves into the precious metals’ safe haven demand. Market players are likely to concentrate more on the first revision to US Q4 2014 GDP number, scheduled for Friday, in order to determine rest of the working week moves for the USD, that in-turn will become important for precious metals as well.
Irrespective of gold’s up-move to week’s high, on Thursday, strength of the USD pulled back the yellow metal during the later hours of the day. On a broader look, the descending trend channel continue signaling the weakness in gold prices with $1200, encompassing 76.4% Fibo of its January up-move, being immediate support and the $1221, including the channel resistance and the 61.8% Fibo, indicating near resistance. On the break of $1200, the channel support, near $1180, is likely restricting the pair gold decline, breaking which the January low of $1167 and the $1145 levels are likely providing consecutive resistances. On the upside, a break of $1221 can quickly fuel the pair’s up-move towards 100-day EMA, near $1230, and the 50% Fibo at $1238 before rallying to $1245 and $1256 resistance levels which restrict medium-term up-move of the gold prices.
Silver prices continue trading in the falling wedge technical formation since late-January with $16.80 acting as an immediate resistance and the $16.00 support line, also encompassing the 23.6% Fibo of its July – December 2014 decline, restricting the immediate downside of the white metal. On the upside, a break of $16.80, is quickly followed by the 100-day EMA & 38.2% Fibo, near $17.05, breaking which the Silver prices can rally towards $17.90 and could further advance to $18.50 which can restrict the medium-term up-move. Should the prices weaken below $16.00 on a closing basis, $15.50 is likely important support for the Silver to restrict the decline towards $15 and the $14.30 levels.
US DOLLAR INDEX (I.USDX)
Better than expected inflation number fuelled the US Dollar Index (I.USDX) towards one month high on Thursday, however, horizontal line resistance, near 95.55 – 95.60 region, is likely restricting the index’s immediate up-move. Should it break the 95.55 – 95.60 region, it can rally towards testing the 161.8% FE of its May 2011 – July 2012 up-move, near 97.00 mark; however psychological resistance near 96.00 can become intermediate resistance. On the downside, ascending trend-line support, also the psychological mark 94.00, seems restricting the index decline to 50-day EMA, 93.00 mark. Moreover, an extended decline below 93.00, also surpassing the 92.50, could pave the way for the index decline towards 100% FE, near psychological magnet of 90.00.
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