Today’s analysis offers a comprehensive overview of the gold and silver markets, highlighting the fundamental and technical factors influencing current trends. Our report is designed to provide investors with the insights necessary to navigate these markets successfully.
This week’s mild inflation data from the US has rekindled expectations for interest rate cuts by the Federal Reserve (Fed), contributing to a decline in the US Dollar (USD) and US Treasury bond yields from their multi-month highs. This shift has boosted gold prices, with buyers briefly pushing the price above $2,700 in early Asian trading on Thursday. Traders are increasingly betting on a Fed rate cut in June, with rising odds for a second reduction in 2025 following the latest inflation figures. The report indicated that recent market expectations of eliminating rate cuts this year may have been overly pessimistic. The US Consumer Price Index (CPI) rose to an annual rate of 2.9% in December, up from 2.7% in November, aligning with estimates. However, core CPI, which excludes food and energy, increased by 3.2%, slightly below the forecast of 3.3%. On Tuesday, the annual Producer Price Index (PPI) rose by 3.3% in December, missing the expected growth of 3.4%, while core PPI inflation increased to 3.5% year-on-year, compared to the anticipated 3.8%.
The short-term technical outlook for gold remains favorable for buyers, bolstered by last week’s breakout from a symmetrical triangle pattern. The 14-day Relative Strength Index (RSI) is trending upward, surpassing the midline towards 60, suggesting that gold remains a ‘buy-the-dips’ opportunity in the coming days. For a new uptrend to take hold, gold prices need to close above the $2,700 barrier on a daily candlestick. Currently, the Stochastics Oscillator is at 83, and the Relative Strength Index is at 56.
Silver reached new highs as the gold/silver ratio fell below the 88.00 level. The ongoing decline in the gold/silver ratio is a bullish sign for silver. If silver remains above the 50-day moving average at $30.42, it is likely to approach the next resistance levels at $31.00 to $31.75. Currently, the short-term Stochastics Oscillator is at 80, and the Relative Strength Index (RSI) stands at 56.
In the dynamic and constantly changing bullion markets, it’s essential to stay updated with both technical and fundamental analysis to make informed investment decisions. Our report aims to offer a balanced perspective to help investors navigate the complexities of gold and silver trading.