XAU/USD Analysis
In the wake of the Federal Reserve’s pronouncement about its monetary strategy, gold and silver prices have started to decline. Chair Jerome Powell essentially suggested a “higher for longer” strategy there, which led financial markets to price in a higher terminal Federal Funds rate and delay expectations of rate reduction further out into the future.
The US dollar increased in reaction, which put pressure on precious commodities like gold and silver to decline. Treasury yields also increased. On the daily chart below, the XAU/USD pair rejected a recently developed, July-era near-term falling trendline. This has created an opportunity to revisit the April rising support level, which is quite near the 1903.46 38.2% Fibonacci retracement level.
A clearing below the latter would allow for a stronger technical bearish tilt. Otherwise, the 23.6% level of 1971.63 is exposed by moving past the short-term falling resistance.
USD/XAG Analysis
Silver, however, is in a comparable bind following the Fed. A stronger Greenback and longer-term increases in borrowing costs would probably put pressure on XAG/USD.
Silver may be seen reversing lower on the daily chart, heading towards the August rising support area. In general, a range of declining resistance from May and this rising support have been where XAG/USD has been consolidating.
As a result, the overall technical picture is unchanged. However, the basic effects of the Fed on silver could pave the way for a prolonged decline. As a result, pay special attention to growing support. Breaking lower reveals the 21.24 mark at 78.6% Fibonacci retracement.