NEW YORK ( TheStreet) -- Leading and momentum indicators suggest a continued bearish outlook for gold and silver this week. In addition, a stronger dollar may weaken bullion prices further. Overall we expect gold to correct to $1,150 an ounce this week.
Last week, both gold June futures and silver July futures on the COMEX witnessed a short-term trend reversal, declining 4.21% and 8.19%, respectively.
For gold, the leading indicator, Stochastic (5, 3) weekly has crossed over the overbought zone, suggesting bearish pressure for the markets this week. The momentum indicator, RSI (14) weekly has descended from 0.68 to 0.58 and is at the overbought zone implying the market may suspend any bullish sentiments. As per the Parabolic SAR (0.02, 2) daily, the market is trading under bearish pressure below $1217.6, suggesting sellers may dominate this week.
As per Fibonacci principles, the silver market is witnessing support at 50% retracement at $17.21 level. The leading indicator Stochastic (5, 3) has crossed over the overbought zone implying bearish pressure may persist for the week. The momentum indicator RSI (14) has declined from 0.68 to 0.47, signaling southward movement in silver prices.A majority of the economic data releases in the U.S. this week are expected to have a positive impact on the dollar. Improving sales of existing single family homes and new homes, rising durable goods orders, falling jobless claims and thus, an increase in income and spending levels may help markets find a reason to cheer once again, this week.