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Monthly Wrap of the Bullion Markets (August 2022)

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“Selling pressure on the higher ends! Higher Low theory negated, Double Bottom now on the cards for Gold.”

The Bullions started the month of August with a very strong bullish bias, with Gold being up by about 5% and Silver being up by almost 10-13% in the previous month, everyone expected this momentum too continue. However, both the yellow metal and Silver failed to keep up with the traders expectations.

Gold Monthly Synopsis

Starting on a positive bias, Gold tried to breach its breakdown point of $1840. But the selling pressure was way too strong. On 10 Aug a shooting star candle was formed on the daily charts suggesting weakness in the Gold prices. From 15 Aug Gold started its down-move by falling about 1.5% in a single day. Since then the bears came into action.

Gold fell for 7 days continuously, ending each day at a price lower than the previous day. Then we saw some short covering for 3 days. This 3 days of short term bullishness, was confused with a higher low, as a result of which opportunist buyers might have had entered. However, this short-term up-move was nothing but a partial profit booking by the sellers who timed the move “perfectly”. Gold made a classic Bearish Flag. The Flag was formed within a range of $40. The lower end of the flag was breached on 26 Aug. The flag reached its theoretical target within a week.

TechnicalChart for Gold

Silver Monthly Synopsis

Just like Gold this metal too started on a positive bias however, it clearly failed to maintain the momentum. Highlighted in the charts, we can clearly see that Silver faced a strong rejection near $20.50-20.80 range. The metal after reaching into this range consolidated for about 4 days. On 15th Aug the selling came in. Since then Silver traded with a negative bias.

Now just like Gold created a bearish flag Silver too did the same. The only difference is that Silver fell more. After breaking down from the lower trendline of the bearish flag, Silver reached its theoretical target pretty quickly. But is didn’t stop there on 31 Aug i.e. the last day of the month Silver fell by almost 3%.

TechnicalChart for Silver

Conclusion

There is no doubt in this, the bullion markets is clearly dominated by the bears, the question is “Will we some support based buying?”

Silver fell about 14% in the month of August while at the same time Gold fell by 5-5.50%.

Silver in comparison to Gold fell more, meaning that the sellers were more active in Silver. Silver now is hovering around a previous breakout range which might act as some support if the Macro Data provides support. While at the same time, Gold is hovering around it’s recent low. There are still chances of a double bottom on this precious metal. All eyes are now on the Non-Farm Payrolls which are to be released on 2 September.

Happy Trading and Investing!!

Disclaimer:- The Author(Shivank Goswami) is an independent multi-asset class Investor and Trader, and not a registered Investment Analyst and Advisor. This article has been written for educational purposes only and should not be considered as an Investment or Trading Advice. Kindly contact your authorized stock advisor before taking any trades or investment decisions. Past performance is not a guarantee for a future return, nor is it an indication of any future performance. The information contained in this article has been compiled from a variety of official sources and is subject to change at any time without notice. Both the Author and GoldLane give no assurance or warranty that information on this site is current and accurate, and take no responsibility for matters arising from changed circumstances or other information or material which may affect the accuracy of the information on this article.

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About author
Shivank Goswami is an independent Multi-Asset Class Investor and Trader. He specializes in analyzing and trading various derivative markets. His articles are primarily focused on simplifying complex financial market concepts. Lately, he has authored an e-book (available on amazon) titled, 'Hedging Bullion Trades- Why Trade Naked, When you can Hedge?' The book explores several ways by using which Bullion Traders can Hedge their Bullion Futures positions that too, without using the Illiquid Options segment.
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