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.
Recap of Last weekGold posted its biggest weekly loss since December 11, 2009 due to continued selling pressure across financial markets. Moreover, gold's recent gains to its record levels may have allured investors to take some money off the table. Gold ended 4.21% lower at $1,176.10 per ounce on the COMEX last week. Markets remained in bearish territory for the whole week and a slump was seen in all asset classes. Despite gold retaining its safe haven status, it fell as investors had to liquidate their positions in gold to cover losses in other markets. However, some bargain hunters continued to buy gold at dips. The SPDR Gold Trust (GLD) increased its gold holdings by 6 MT to 1,220.15 MT last week.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV