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Welcome to Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike.

In this week’s report, we are getting technical on S&P, gold, and GBP/USD.

Powell re-ignites hard-landing, rate hike fears

• Powell warned peak rate hike likely higher than expected
• Dollar and short-dated bond yields jump
• Gold, stocks, crude and foreign currencies slump

At the time of writing, risk was off the menu after basically everything sold off on the back of Fed Chair Jerome Powell’s hawkish remarks to the Senate Banking Committee.

What did Powell say?

Powell warned of more hikes and said the peak interest rate might be higher than expected. He sounded more hawkish than some had envisaged. Fears over a potential hard landing were revived given the monetary policy transmission lag. This hit oil prices and base metals, with WTI falling 2.7% at the time of writing. There was no silver lining for precious metals either. Gold (-1.5%), silver (-3.9%) and platinum (-4.3%) all slumped, joining base metals such as copper (-2.3%). The dollar was going in one direction and stocks in the other.

S&P gives up much of Friday’s gains

Easy comes easy goes. After hitting a wall of resistance around 4070, the S&P has fold off to fall back down to that key 4000 level which the bulls must defend if they want to prevent a bigger sell-off. Failure to do so could see the benchmark stock index drop to re-test the 200-may MA near 3940 and potentially head further lower.

Where could gold go from here?

While there is always the possibility of a short-term bounce from oversold levels, gold could be heading to a fresh multi-week low. Silver had already broken its prior low and was trading in the low-$20.00s.

So, gold could also break last week’s low around $1805 and test the next round level of $1800 before deciding on its next move. It may even reach $1800 before the day is over. Unlike equity markets, precious metals don’t pay any dividends. The don’t pay any interest either, unlike bonds. With the dollar rebounding and the yield on the 2-year US government bonds breaking out to a new high near 5%, gold would do very well to hold support around current levels.

Regardless of what happens in the next few hours, a daily close below Friday’s range at $1835 would keep the short-term bias decidedly bearish.

Even if gold were to find unexpected support in the next few days, it still faces a few other big levels ahead – for example at $1900. So, the bulls have a lot of wood to chop before we turn positive on the technical outlook of the metal again. For now, the path of least resistance is still to the downside.

GBP/USD eyes break below 1.1850

The GBP/USD has fallen back below 1.20 handle yet again. Given the GBP/USD's refusal to stay above 1.20, the path of least resistance remains to the downside and, as such, a drop below recent lows around 1.1841 looks increasingly likely now.

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