Gold and Silver Downside Pressure Remains

Spot Gold: Downside Expected after False Break

On Tuesday, the ICE US Dollar rebounded 0.5% after it managed to keep the 93.00 level in the last few sessions. Spot gold dropped 1.6% and was down for a second straight session, wiping out the gains made last Friday. Official data showed that US core CPI rose 1.7% in September, holding up well since marking a low of 1.2% in May and June, suggesting that the Fed is facing less deflationary pressure.

Investors will also focus on Friday's US retail sales data, which is expected to grow 0.8% on month in September, compared with +0.6% in August.

From a technical point of view, spot gold may have shown a false breakout on the daily chart. It has retreated sharply after breaking above a declining trend line drawn from August, and has formed a bearish evening star pattern. The level at $1,935 may be considered as the nearest resistance, while the 1st and 2nd support are expected to be located at $1,848 and $1,825 respectively.

Source: Gain Capital, TradingView

Silver: End of Technical Rebound

On a daily chart, silver might have resumed its downtrend following a recent rebound. It has formed a bearish evening star pattern after reaching a declining trend line drawn from August. The level at $25.85 may be considered as the nearest resistance, while the 1st and 2nd support are expected to be located at $22.87 and $21.67 respectively.

Source: Gain Capital, TradingView

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