Gold Technical Report: Gold prices moved up yesterday and closed above the10 Day Moving Average (DMA) @1974. Both 10 DMA and 50 DMA @1895 are trading over 200 DMA @1785 hence, 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 11 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 60 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver witnessed some correction yesterday, but still trading near two months high. It has strong support near the common area of 100 DMA @22.58 and 50 DMA @22.20. The medium-term trend looks bullish as both of these averages are above 200 DMA @21.00. The Short term Stochastics Oscillator is at 88 and Relative Strength Index is near 67.
Fundamental Report: The New Year began with a bout of optimism that the global economy was off to a strong start in 2023. Now economists predict a deep recession is on the way caused by fallout from the collapse of several prominent banks from Silicon Valley Bank to Signature Bank as well as the disorderly implosion of Credit Suisse. After eleven consecutive days of banking turmoil, that began in the U.S. and rapidly spread across the global banking system – a trio of major central banks from the Federal Reserve, and European Central Bank to The Bank of England continued to press ahead with another round of rate hikes last month.
The Fed has now jacked up interest rates at the fast pace in history – from virtually zero to a current range of 4.75% to 5% – the highest rate since 2007. Put another way, that’s a whopping total of 475 basis points of hikes since March 2022. Conclusive evidence shows the global banking crisis was fuelled as a direct consequence of soaring interest rates and liquidity risks. But this crisis is now about to get even bigger as it rapidly morphs into a “Global Credit Crunch”. Historically, 11 of the last 14 Fed tightening cycles since World War II have been known to set the economy up for an even bigger crisis ahead.