Gold prices extended losses from the prior session in European trade on Monday, holding near a three-week low as the U.S. dollar hovered at a more than four-month high amid renewed expectations for a Federal Reserve rate hike later this year.
There is an expectations for a Federal Reserve rate hike later this year boosted the U.S. dollar and as investors looked to buy into rising equity markets rather than purchasing safe-haven assets.
A recent string of better than expected U.S. data reignited speculation that the Fed will raise interest rates before the end of the year. Interest rate futures are currently pricing in a 45% chance of a rate hike by December, compared with less than 20% a week ago and up from 9% at the start of this month.
The U.S. central bank is not expected to take action on interest rates at the conclusion of its two-day policy meeting on Wednesday, as policymakers wait for the dust to settle from Britain's decision to leave the EU. But market players will scrutinize the Fed's policy statement for fresh guidance on the pace of interest rate hikes over the next several months.
Gold is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
The US Dollar boosted by the diverging monetary policy outlook between the Fed and other global central banks. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. The yellow metal remained supported amid speculation central banks in Europe and Asia will step up monetary stimulus in the next few months to counteract the negative economic shock from the Brexit vote.
Gold is up almost 25% for the year to date, boosted by concerns over global growth and expectations of monetary stimulus. Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge. Prices surged to a more than two-year high of $1,377.50 earlier in July, as concerns surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.
Gold
Support at 30600---30450 and Resistance at 30900---31150
Still trend looks weak and could test 30600---30450. Further downside panic will see only close below 30450 mark else it could test its resistance level of 30900---31150 again
Further upside rally will see only close above 31150 mark
Trade with levels only
Silver
Support at 45800---45500 and Resistance at 47000
Looks weak and could test 45800---45500 mark. Further downside panic will see only close below 45500 mark else it could test its resistance level of 47000 again
Further upside rally will see only close above 47000 mark
Trade with levels only
Copper
Support at 330 and Resistance at 340
Either side break or close with volume will decide further... Till then traders can trade in a range with strict stop loss and wait for confirmation
