Gold, Silver on Rebound Mode Ahead of FOMC Minutes

Turnaround Tuesday.

It is a Wall Street cliché for a market that reverses on Tuesday movements performed on Monday, and it seems to be happening today in Metals.

Hi FX Emperors! We are entering a market that is buying gold and silver, and selling dollars, but it is mostly focused on the FOMC minutes that will be released on Wednesday.

Equities are trading positive on the day; however, a weak earnings report from Home Depot as the retail construction supplier blamed trade war as one of the reasons for their lower-than-expected numbers and its dovish outlook.

Home Depot considers that the increase in tariffs associated with the trade war between the United States and China could hit consumer spending. The company is, then, raising another red flag about a possible recession in America.

As CEO Craig Menear said in a statement, “today we are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs.”

Previously On Monday, Germany announced its plan to make a contingency program in case of crisis or recession. They also said that Germany is strong enough with a healthy economy to face any emergency.

All eyes on FOMC minutes

On Wednesday, all eyes seem to be focused on the Federal Reserve and tomorrow’s FOMC minutes to watch how America’s central bank decided to cut interest rate in its last meeting.

The market will be watching for any hint about further rate cuts and an update about the United States economy and the impact of the trade war on domestic spending.

Gold positive after two days of losses

Gold is trading positive on Tuesday as investors are taking a breath after two days of declines. Risk appetite is around the market, but traders don’t forget the warnings about a potential global recession in the middle term.

XAU/USD is trading in a rebound mode after performing declines in the last few days. On Tuesday, it found support at 1,490, same minimum of Monday. Then, it started to recover ground, but the movement stopped at 1,510.

Currently, gold is reclaiming the 1,500 level as the metal is moving 0.60% positive at 1,504. However, technical studies are suggesting that the downside is alive and healthy. Watch out the MACD indicator that is about to cross lines in the daily chart.

Besides, fundamental factors are also suggesting more declines amid a possible risk appetite. However, tomorrow’s FOMC minute will be the catalyst. Watch out hints about potential interest rate changes in the next months.

To the downside, XAU/USD is facing immediate support at 1,490, below there, watch the critical 1,480 and then the 1,440 as the most vital buying zones in the short term.

To the upside, the pair needs a close above the 1,500 area to consolidate levels and build a new leg for the upside. Above there, 1,520 and 1,535 are the levels to watch.

Silver retakes the 17.00 level

Silver is bouncing from 16.85, minimum of Monday and Tuesday. The unit is currently trading at 17.00, 0.80% positive on the day.

The recovery is significant as the unit has been moving down in the last two trading sessions. Technical factors re suggesting an imminent decline to levels beyond the 16.80 area.

In that framework, if silver breaks below the 16.80, it will find new supports at 16.60 and then 16.00. To the upside, the unit needs to consolidate levels above the 17.00 area, and then it will find resistance at 17.20 and then 17.50.