Gold remains rangebound as ECB announces 75-basis point rate hike

Gold drifted lower today after the ECB announced a 75-basis point rate increase. After reaching a high today of nearly $1740 gold fell to its low of the day of $1713.70 within two hours after the ECB made the announcement.

Gold futures basis the most active December contract is trading at $1719 as of 4:40 PM ET, representing a loss of $8.50 or 0.49% on the day. This puts gold squarely in the middle of its current range of $1700 - $1735 marked by support at $1700 and resistance at $1735, the 61.8% Fibonacci retracement level.

Silver futures basis the most active August contract experienced gains for the second day in a row prompted by higher equities prices in the U.S. Silver futures are trading up by 1.07% or $0.19. Silver prices have risen quite nicely since hitting a low of $17.40 on September 1st a price not seen since June 2020. Since then, silver futures have risen by more than $1 in just over a week’s time.

The changes in the precious metals today were entirely due to normal trading as the U.S. dollar index ended the day basically unchanged after hitting a 20-year high intra-day yesterday above 110.50. Currently, the dollar index is pegged at 109.41 after a fractional gain of 0.06%.

The dollar is likely to continue its rise as interest rates in the United States continue to rise.

Comments by Chairman Jerome Powell strengthened the probability that the next Fed hike will be 75-basis points. The CME’s FedWatch tool fund is now pricing in an 85% chance of a 75-basis-point rate hike by the Fed at its September 20-21 policy meeting.

Editor’s Note: I have caught the common cold so there will be no Video Report today.

Wishing you as always good trading and good health,