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Gold back under pressure as official interest rates continue to rise

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Nick Goold

Gold

Gold broke out of its range trading conditions last week, moving lower on prospects of higher official US interest rates. Fed Chairman Powell testified to the Senate that he expects another two interest rate increases by the end of the year. Gold's only return is higher prices, so higher interest rates make cash more attractive to Gold. Last week the central banks of England, Switzerland, and Norway all raised official interest rates to control inflation.

The week ahead sees Fed Chairman Powell testify again; while his message will unlikely change, it could encourage further selling from investors. On the data front, US durable goods on Tuesday and Friday's release of US GDP and inflation could move Gold prices significantly.

The 10-day moving average is now pointing Gold prices lower, and a test of $1,900 support and lower is possible in the week ahead. Looking for selling opportunities if prices stay below $1,935 should be the best strategy for short- and medium-term traders in the week ahead.

Gold daily chart June 26

Resistance: 1938, 1984, 2000, 2032, 2050, 2080

Support: 1900, 1889, 1870, 1830

Oil

Oil's recent recovery failed at $72.50 resistance last week as prospects of higher official interest rates in the second half of 2023 increased the possibility of a recession in different parts of the world. European manufacturing PMI data was poor, which encouraged speculators to sell Oil. There is hope of increased demand in Europe and the US as many holidaymakers return to driving over the summer.

Friday's price action was positive as Oil prices easily held support at $67.00, and renewed tensions in Russia saw buyers return to the market. The technical indicators remain very flat, so it is hard to predict when and what the next major trend could be. The best trading strategy remains to trade the $67.00 to $75.00 range.

WTI daily chart June 26

Resistance: 75.00, 79.00, 82.50

Support: 67.00, 65.00, 64.00, 62.00

Great