Gold Technical Report: The gold witnessed a volatile session yesterday ahead of the Fed event but ended the day with a negative bias. Only if prices do break above the main level of $1676, 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 20 and the Relative Strength Index is at 42.
Silver Technical Report: The silver prices also saw a volatile session yesterday parallel with Gold and ended the day with a negative bias. However, the positive for silver unlike gold is that prices still manage to trade above 50 DMA at 19.09. 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 21.48 will change the main trend to positive. The Short term Stochastics Oscillator is at 40 and the RSI momentum is near 50.
Fundamental Report: In a widely anticipated move, the Federal Reserve raised its Fed Funds rate by 75 basis points. This is the fourth consecutive supersized rate hike this year. While the central bank remains focused on bringing inflation down, it does appear to be adjusting its stance. “The Committee anticipates that ongoing increases in the target range will be appropriate to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. Analysts and economists expected the Federal Reserve to signal a slowdown in its tightening cycle in December and through the early part of 2023.
Some economists note that the Federal Reserve still sees resilient strength and high inflation in the economy. The Fed reiterated its stance that it is committed to bringing inflation back down to its 2% objective. “Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the statement said. “The Committee is highly attentive to inflation risks.” Paul Ashworth, Chief North America Economist at Capital Economics, said that with interest rates in restrictive territory the U.S. central bank has room to slow the pace of its tightening. “Barring another upside inflation surprise in the October and November CPI reports, which we can’t completely rule out, it looks like the Fed is laying the groundwork to shift down to a 50bp hike in December and, if we’re right that core inflation will start to show signs of slowing soon, a 25bp rate hike at the January meeting next year,” he said.