Gold Technical Report: Gold prices moved up for third consecutive day after a four days continuous streak of selling earlier and managed to close above 10 DMA @ 1828. Since 50 DMA @ 1866 is trading over 200 DMA @ 1775, the medium term trend looks upwards. The major support stands at 200 DMA below which the trend may turn bearish. The short term Stochastics Oscillator is at 49 and Relative Strength Index is at 42.
Silver Technical Report: The silver prices, too following Gold , moved up for a second consecutive day after downfall of four consecutive days earlier and closed just above the 200 DMA @ 20.95. The medium term trend can be considered up only if the prices move above 100 DMA @ 21.98. The Short term Stochastics Oscillator is at 26 and RSI momentum near 32.
Fundamental Report: The Institute for Supply Management Data released yesterday showed activity in the Manufacturing sector contracted again in February with the ISM PMI rising from 47.4 to 47.7 (below 50 marks contraction), against market consensus of 48. The Price Paid Index rose from 44.5 to 51.3, surpassing expectations of a 45 reading. The inflation indicators of the ISM report pushed Treasury yields to the upside. The US 10-year bond yield reached 4% for the first time since November. The US Dollar reacted to the upside but lost impulse during the last minutes, as stocks and commodity prices rebounded. Commenting on the survey’s findings, “new order rates remain sluggish due to buyer and supplier disagreements regarding price levels and delivery lead times; the index increase suggests progress in February,” said Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Panelists’ companies continue to attempt to maintain head-count levels through the projected slow first half of the year in preparation for a stronger performance in the second half,” Fiore added.
According to the CME’s FedWatch tool, there is a 73.8% probability that the Fed will raise rates by 25 BPS and a 26.2% that the Fed will be more aggressive with a 50 BPS rate hike. There are some Federal Reserve officials (who can be characterized as the more hawkish of the group) that are still recommending a 50 BPS rate hike this month when the FOMC meeting convenes (March 21-22). However, many analysts including myself believe that the Federal Reserve will stick to its current narrative which is slowing the pace of rate hikes which most likely will include three 25 BPS rate hikes at the next three FOMC meetings. Lastly, it must be noted that critical reports will shape the final decision of the Federal Reserve at their next meeting which is the jobs report on March 10 and the CPI index for February on March 14. These two reports collectively will be the most current data that the Federal Reserve has to make its final decision.