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Gold retreated from a 10-month high amid indications for Fed’s monetary policy tightening

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Gold retreated from a 10-month high hit the previous session after minutes from the US Federal Reserve’s last meeting revived hopes for further monetary policy tightening by the end of the year. This weakened price of the safe haven assets, such as gold and precious metals, causing the depreciation of gold, silver, platinum, and palladium. However, most of the investors remain bullish on the precious metals even at these extreme levels, as retracement was expected.

The price of spot gold fell by 0.2% to 1,334.96 USD per ounce, having hit 1,346.73 USD in the previous session, which is its highest level since April 19.

The US gold futures slipped 0.77% to 1,337.50 USD per ounce.

Fed minutes have taken some of the dovishness out of the market and is causing a slight softening in gold. In the minutes of its latest meeting, the Fed said the US economy and its labor market remained strong, prompting some expectations of at least one more rate hike this year. Higher rates tend to weigh on non-yielding gold.

Meanwhile, palladium fell by 1.34% to 1,468.60 USD per ounce, after the metal briefly surpassed the 1,500 USD level on Wednesday. The main reason for the price drop is profit taking in the short term at the level of 1,500 USD, but the overall fundamental outlook remains the same.

The market is troubled by lack of supply at a time when the emission standards are being tightened and any correction at this stage will be looked upon as a potential buying opportunity. The supply deficit is likely to widen this year as stricter emissions standards increase demand for catalytic converters.

However, while prices have risen, holdings of palladium-backed exchange-traded funds (ETFs) are now below 800,000 ounces compared with 1.3 million ounces in early 2018.

Among other precious metals, platinum dipped 0.3% to 820.01 USD per ounce, while silver fell by 0.66% to 15.92 USD per ounce.

Gold price analysis

Gold finally broke down of its Asian session consolidation phase and was now seen extending the overnight retracement slide from 10-month tops.

The gold is no longer trading inside the “overbought zone” and may continue moving downwards to reach the support at the 1,335-1,328 USD area.

Gold futures

The precious metal is forming the first descending impulse towards 1335.25 USD. Later, the market may form one more ascending structure to reach 1340.50 and then resume trading upwards with the first target at 1324.24 USD.

Immediate support is pegged near the 1,335 USD level, which if broken might prompt some additional long-unwinding trade and accelerate the slide towards testing the 1,330-1,328 USD support area.

On the flip side, momentum beyond 1,342 USD level now seems to confront some resistance near the 1,346-1,347 USD region ahead of 1,351-1,352 USD supply zone.

Silver price analysis

During trading yesterday, the price of silver rose from 15.95 USD to 16.03 USD per ounce. This morning it trades at 16.05 USD.

silver futures

Today, if the silver overcomes the resistance range of 16.16-16.17 USD, the precious metal will target reaching and testing the zone 16.31-16.31 USD. Upon success, the upward movement will continue at 16.43-16.43 USD.

If the silver fells below the support range of 15.91-15.90 USD, the next support will be the zone 15.79-5.78 USD. In a breakthrough, the downward trend may continue to 15.65-15.64 USD.