Gold and silver futures remained under heavy selling pressure through Friday, extending the sharp correction that began earlier in the week. As highlighted in my previous market updates on Thursday, both metals achieved all of the downside targets from our earlier sell recommendations, rewarding traders who followed the bearish strategy.
During Friday’s Asian trading session, traded near the $4025 range per ounce, while hovered around $57.400 range. Despite the recent weakness, volatility remains exceptionally high, making disciplined risk management essential for traders.
Why Did Gold and Silver Fall?
The recent decline in precious metals has been driven by a combination of geopolitical uncertainty, inflation concerns, and expectations surrounding US monetary policy. Markets continue to monitor renewed tensions in the Middle East, particularly around the Strait of Hormuz, following fresh exchanges involving the United States and Iran.
Meanwhile, Yemen’s Houthi movement has again threatened commercial shipping routes in the Red Sea, keeping geopolitical risks elevated. At the same time, rising crude oil prices have increased concerns that inflation could remain persistent. Higher energy costs may complicate the Federal Reserve’s inflation fight and reinforce expectations that interest rates could stay elevated for longer. Since gold and silver do not generate interest income, a higher rate environment generally limits their upside potential.
Investors are also focused on the upcoming Federal Open Market Committee (FOMC) meeting scheduled for July 28 and July 29. Market participants will closely analyze the Fed’s policy statement and comments from Chair Kevin Warsh for fresh guidance on future interest-rate decisions. Any hawkish signals could continue to pressure precious metals.
Technical View: Is Profit Booking About to Begin?
Following three consecutive sessions of aggressive selling and a sharp decline from recent highs, both gold and silver now appear to be approaching technically oversold territory. In my view, traders who initiated sell positions earlier in the week may now begin locking in profits. Such short covering activity often provides the catalyst for a temporary rebound, particularly after an extended selloff. Rather than initiating fresh short positions at current levels, traders may consider booking profits from existing bearish trades and watching for signs of stabilization before considering fresh long positions.
Intraday & Short Term Trading Strategy – Gold and Silver Futures:
Buy Gold August Futures
Buy Zone: $4020 – 4025 range per ounce
Targets: $4080, $4100, $4120
Stop Loss: As per your risk management.
Buy Silver September Futures
Buy Zone: $57.400 – 57.600 range
Targets: $59.000, $59.500, $60.000
Stop Loss: As per your risk management.
Conclusion:
After a sharp multi-session correction, gold and silver appear to be entering a phase where profit booking by short sellers could trigger a technical rebound. Traders who followed earlier sell recommendations may consider securing gains, while those looking for fresh opportunities can monitor price action for confirmation of a recovery. Given the current volatility, maintaining disciplined position sizing and strict risk management remains crucial. The upcoming FOMC meeting and further developments in the US dollar, Treasury yields, and geopolitical tensions are likely to determine the next significant move in precious metals.
