Gold Technical Report: The gold witnessed some profit booking to end the last week on a weaker note and continued the same trend on Monday into the new week. If prices do break above the main level of $1681, the medium-term trend will turn positive. Also at the same level is resistance as the current 50 DMA on Daily charts. The short-term Stochastics Oscillator is at 14 and the Relative Strength Index is at 41.
Silver Technical Report: The silver prices also posted a week closing last Friday in the footsteps of Gold and faced some more selling yesterday. But more or less it managed to bounce back above 50 DMA at 19.08. On the downside, major support is only at 18.00, crossing below which will change the medium-term trend into negative. On the upside, a crossing of 200 DMA at 21.52 will change the main trend to positive. The Short term Stochastics Oscillator is at 49 and the RSI momentum is near 52.
Fundamental Report: Gold prices are edging higher on Tuesday, mirroring the dip in U.S. Treasury yields and the U.S. Dollar. The price action suggests investors are squaring positions ahead of the Federal Reserve’s monetary policy and interest rate announcements on Wednesday. At 05:10 GMT gold prices are trading $1641.80, up $1.10 or +0.07%. On Monday, the SPDR Gold Shares ETF (GLD) settled at $151.93, down $1.23 or -0.80%. Treasury yields are drifting lower early Tuesday as traders lighten positions ahead of the start of the Fed’s two-day meeting that ends with policy and interest rate announcements on Wednesday. Traders are widely expecting the Fed to hike interest rates by 75 basis points. This would be the sixth rate hike of the year and the fourth supersized hike in a row as the central bank fights to curtail high inflation. In addition to the rate hike, investors are hoping to gain some clarity regarding the Federal Reserve’s future policy pathway from the meeting, as questions remain over how high rates will be hiked in late 2022 and throughout 2023, according to CNBC. Additionally, there are lingering concerns that the Fed’s aggressive rate hikes are dragging the U.S. economy into a recession, and economic data has been sending mixed signals about inflation.
The U.S. Dollar eased back on Tuesday from a one-week top against a basket of major currencies, as traders reacted to a dip in Treasury yields while pondering the tone of the message Federal Reserve officials will deliver at Wednesday’s monetary policy meeting. The safe-haven greenback is being pressured overnight after stocks rebounded in Asia, led by a strong performance in China. This also lifted the major U.S. stock indexes. The rise in risk sentiment also dampened demand for Treasury yields. Volume is below average and the trade is a little tentative with many of the major players sitting on the sidelines as they await the start of the Fed’s two-day meeting later today. Friday, This would take the Feds benchmark rate to between 450 and 500 basis points by the end of 2022. However, today’s report came in below expectations predicted by Bloomberg News. Their survey predicted that the PCE Index would come in at a 6.3% rise in September year-over-year. The report sent a clear message; rate hikes enacted by the Federal Reserve this year have had profoundly little impact on the cost of goods and services and inflation continues to remain persistent at a 40-year high. The 3rd Q GDP revealed that our economy is once again growing and has not been severely hindered by the Federal Reserve’s interest rate hikes. The Federal Reserve will continue and maybe even increase the size of their rate hikes to a full 1%. The gold prices will remain volatile as we go into the FOMC meeting. Ahead of the Fed’s decisions, gold traders are assessing the chances of a slowdown in the pace of future interest rate hikes and the odds of the Fed continuing its hawkish tightening path. Depending on which way policymakers lean, we could see a trade of $1700 or a breakdown under $1600. Risk sentiment is likely to control the price action in today’s thinly traded market.