The price of gold and silver looks overly optimistic
- The price of gold has recovered to $ 1830, and now we are consolidating here for further bullish recovery.
- A weak dollar has a positive effect on the price of silver; today’s high is at $ 21.87.
- Markets are convinced that the Fed will have to take more drastic measures to bring inflation under control.
Gold chart analysis
After the price dropped to 1786 dollars yesterday, we have been in a bullish trend since then. The price has recovered to $ 1830, and now we are consolidating here for further bullish recovery. We are still in a falling channel, so we expect the price to rise to the top line of the channel at the $ 1850 level. Additional resistance to us is the MA200 moving average. At the moment, a weak dollar could push a further recovery of the price above the upper line of the channel. Potential targets above are 1858 dollars, 1865 dollars, 1880 dollars, 1900 dollars, etc. For the bearish option, we need negative consolidation and pullback prices below $ 1820. Potential bearish targets are $ 1,810, $ 1,800, and $ 1,790. Maybe we will see a new lower low for this month.
Silver chart analysis
A weak dollar has a positive effect on the price of silver; today’s high is at $ 21.87. Silver has been in a bullish trend since the beginning of the week after it bottomed out at $ 20.42 on Friday. Since then, the price has erased 50.0% of its loss since the last fall from $ 23.34 to $ 20.42. Additional support is now the MA200 moving average, and our target is the upper trend line in the zone around $ 22.47-22.55. In that zone, we can expect greater resistance and a possible new withdrawal of the price of silver. For the bearish option, we need negative consolidation and a pullback below the 38.2% Fibonacci level to $ 21.50. After that, our potential bearish targets are a 23% Fibonacci level at $ 21.15 and a max drop to the previous May lower low.
Markets are convinced that the Fed will have to take more drastic measures to bring inflation under control and that it has fully paid for the rate increase of at least 50 basis points for the next two FED meetings. Together with the impulse to take risks, this led to a new step-up in the yield on US Treasury bonds. It should act as a wind for gold in a safe haven.
Therefore, the focus will remain on Fed President Jerome Powell’s speech on Thursday. Investors will seek indications of the possibility of increasing the rate by 75 basis points in June, which will play a key role in boosting demand for the USD in the near future.
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