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Monthly Wrap of the Bullion Markets (July 2022)

3 Mins read

“Volatility at it’s peak!” The Bullions traded with utmost volatility throughout the month of July. Let us go through a brief technical monthly wrap of the bullion markets, and understand the current trends.

Gold

Gold Daily Chart
Gold Daily Chart

Starting with Gold, it mostly traded with a bearish bias since the start of the month, after taking an interim support at $1790 (a weekly support) on 1st July, Gold was looking pretty stable. However, on 5th July Gold started to trade below the said support, and since then selling only intensified! With the Gold Silver Ratio hovering near the 90 zones, investors and traders all around the world reduced their bullish bets on the yellow metal, and started taking bearish positions.

The selling was very fierce because this down move was backed by heavy volumes across exchanges. This bearish move stopped only when Gold started to trade near $1680, which again is a very strong support for Gold in the international charts. Gold fell about 6.88% in July! But that’s not it! 

Like I mentioned bullions traded with High Volatility, which means that there was more to this down move. To the surprise of most, Gold along with Silver covered most of the down move and ended the month with a positive note. 

Silver

Silver Daily Chart
Silver Daily Chart

Just like Gold, Silver too traded most of the month with bears on its side. However being more volatile than Gold, Silver tanked about 10.42% in the month of July. Silver by falling at a speed much faster than Gold, forced the Gold Silver Ratio to trade above 90. The breakdown in Silver started below $20.62 and stalled when this precious metal reached around $18.32.

Just like in the case of Gold, Volume vouched for the bearish trend in Silver too! However, once the down move stalled, the Silver Investors, looked at this, as an opportunity to place bullish bets on silver. Since, it fell more in comparison to Gold and was trading near the 200 DMA, the ball was in the court of the bulls, and they sure did hit it with full force. As a result, buyers wiped out all the sellers and helped Silver to close near the monthly opening level.

But after all, why did the Bullion tanked so much, and then recovered so quickly?

There were many factors affecting the bullion markets, one of the reasons for Gold and Silver to tank was a stronger dollar. DXY traded with a bullish structure in July and made a high near 109. Since, a stronger dollar is not good for Gold and Silver valuations, both the assets tanked. However, as soon as dollar reversed from it’s swing high the bullion markets recovered.

In India too, the USD/INR Currency pair breached 80 however it did not sustain above it, due to global reversal in Dollar strength and certain counter active measures taken by the RBI.

Conclusion

Such Volatility in the Bullion markets is always ‘Interesting to Track and Trade’, with momentum on both ends, both the Bulls and Bears made money. But this was all the past, what about the month of August?

With the Global tensions building up, will the volatility continue? We never know, since these are events beyond our reach we cannot comment on them, but on a technical basis both the bullions have formed a bullish structure on all time frames, however they still have failed to breach the breakdown points which are $1790 in Gold and $20.50 in Silver. Gold and Silver both made an attempt to break them on 2 Aug, but failed to do so. This clearly shows that even though the trend is positive, but investors and traders are waiting for market to show a clear picture. Let’s see what the market has for us in August!

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 gives no assurance or warranty that information on this site is current and accurate, and takes 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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