Gold prices fell to the lowest in more than six weeks on Thursday, on expectations of further U.S. interest rate increases this year and receding political uncertainty in Europe. The dollar index initially strengthened after the U.S. Federal Reserve played down any threats to this year's planned rate increases, sending real yields up. What is more, optimism about an EU-friendly election outcome in France has calmed investor's nerves. As a result, investment assets that have safe haven characteristics, such as the yen and gold, have been sold off. Any turnaround is not expected in near term with room for further decline. The focus is now shifting to Friday's U.S. non-farm payrolls report for April, which could reinforce expectations of higher U.S. interest rates in June.
On technical front, spot gold was down 0.8 percent at $1,227.94 an ounce after touching $1,225.20, the lowest since March 17, and extending losses below the 50- and 200-day moving averages. Support was seen around $1,221, the 100-day moving average. In the very near term we continue to expect that gold will trade moderately lower. But a technical rebound is still likely.
Silver continued to fall, down 0.6 percent at $16.295, having hit a four-month low of $16.17. It has fallen around 13 percent since reaching a five-month high of $18.65 in mid-April. Technically, silver is expected to move further south with strong downward momentum. But as losses extend, demand for technical rebound is increasing. A short-lived correction can be expected.

 
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