Monthly Wrap of the Bullion Markets (August 2022)

  • Commodities Analysis

Monthly Wrap of the Bullion Markets (August 2022)

"Selling pressure on the higher ends! Higher Low theory negated, Double Bottom now on the cards for Gold ."

The Bullions started the month of August with a very strong bullish bias, with Gold being up by about 5% and Silver being up by almost 10-13% in the previous month, everyone expected this momentum to continue. However, both the yellow metal and Silver failed to keep up with the trader's expectations.

Gold Monthly Synopsis

Starting on a positive bias, Gold tried to breach its recent breakdown point of $1840. But the selling pressure was way too strong. On 10 Aug a shooting star candle was formed on the daily charts suggesting weakness in the Gold prices. From 15 Aug Gold started its down-move by falling about 1.5% in a single day. Since then the bears came into action.

Gold fell for 7 days continuously, ending each day at a price lower than the previous day. Then we saw some short covering for 3 days. These 3 days of short-term bullishness, were confused with a higher low, as a result of which opportunist buyers might have entered. However, this short-term up-move was nothing but a partial profit booking by the sellers who timed the move "perfectly". Gold made a classic Bearish Flag. The Flag was formed within a range of $40. The lower end of the flag was breached on 26 Aug. Since the bears dominated the markets the prices reached the theoretical target of the bearish flag within a week.

Gold Technical chart

Silver Monthly Synopsis

Just like Gold this metal too started on a positive bias however, it clearly failed to maintain the momentum. Highlighted in the charts, we can clearly see that Silver faced a strong rejection near the $20.50-20.80 range. The metal after reaching this range consolidated for about 4 days. On 15th Aug the selling came in. Since then Silver traded with a negative bias.

Now just like Gold created a bearish flag, Silver too did the same. The only difference is that Silver fell more. After breaking down from the lower trendline of the bearish flag, Silver reached its theoretical target pretty quickly. But it didn't stop there, on 31 Aug i.e. the last day of the month Silver fell by almost 3%.

Silver Technical chart

Conclusion

There is no doubt about this, the bullion market is clearly dominated by the bears, the question is "Will we have some support-based buying?"

Silver fell about 14% in the month of August while at the same time Gold fell by 5-5.50%.

Silver in comparison to Gold fell more, meaning that the sellers were more active in Silver. Silver now is hovering around a previous breakout range which might act as some support if the Macro Data provides support. While at the same time, Gold is hovering around its recent low. There are still chances of a double bottom on this precious metal. All eyes are now on the Non-Farm Payrolls which are to be released on 2 September.

Happy Trading and Investing!!

Disclaimer:- The Author (Shivank Goswami) is an independent multi-asset class Investor and Trader, and not a registered Investment Analyst and Advisor. This article has been written for educational purposes only and should not be considered as an Investment or Trading Advice. Kindly contact your authorized stock advisor before taking any trades or investment decisions. Past performance is not a guarantee for a future return, nor is it an indication of any future performance. The information contained in this article has been compiled from a variety of official sources and is subject to change at any time without notice. Both the Author and GoldLane give no assurance or warranty that information on this site is current and accurate, and take no responsibility for matters arising from changed circumstances or other information or material which may affect the accuracy of the information on this article. 

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100

Related Articles