After Janet Yellen gave a press conference on June 14, both gold and silver futures decreased in the afternoon trading session. As expected, the Fed increased rates a quarter point, but the Fed Chair’s remarks were seen as aggressive and supportive of the U.S dollar. This aggressive view on rates seems to have taken precious metals by surprise since August gold futures were trading close to 1260.0 an ounce near the electronic close down roughly $15.00 from settlement in the late afternoon trading session.
Silver futures in July dropped nearly .28 cents from settlement trading below $17.00 an ounce at 16.86. Yellen had stated that due to the current conditions of the economy, the committee predicts a further interest rate in 2017 and 2018.
Yellen, the Fed Chair, did not seem to be phased by the concerns of weak inflation even though the Fed’s forecast of 1.6% inflation. It has now been made clear to the public that Yellen is more focused on perceived future economic growth instead of the Fed’s own inflation predictions of 2%. Both the stock market and the bond market had a reaction to Yellen’s remarks but they were muted as both markets moved marginally lower while the Dollar took a turn for the better.
Following the late session sell-off, chart action for both gold and silver will be crucial going forward. As of right now, the 50 day moving average for gold is trading at 1263.9. If gold is unable to hold at this level, the 100 day moving average at 1249.9 and the 200 day moving average of 1251.2 will have to hold out or the market might go back to the mid-April lows that fell below 1220.0. It’s important to keep in mind that August gold had traded up to 1284.0 in the early morning trading session which followed the underwhelming CPI and retail sales results. In regards to July silver, second support for the current week is down at 16.78 A close below here will send the market to 16.56.
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