Gold Technical Report: Gold prices continued the up move for the second consecutive day and march towards the all-time high region. Both 10 DMA @2000 and 50 DMA @1950 are trading above 200 DMA @1812 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 71 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 63 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver prices also continued the upwards march after it registered a breakthrough from the parallel channel of the last 2 weeks. It has strong support near the common area around 23.30 where 100 DMA and 50 DMA are meeting. The medium-term trend looks bullish as both of these averages are above 200 DMA @21.63. The Short term Stochastics Oscillator is at 60 and Relative Strength Index is near 66.
Fundamental Report: As the Federal Reserve concluded this month’s FOMC meeting and as expected the Fed raised its terminal rate by ¼%. This brings the Fed benchmark rate to between 5% and 5 ¼%. Most importantly, after 10 consecutive rate hikes the Fed signaled that they may finally enact a pause of further rate increases at the next FOMC meeting in June. This would allow the Federal Reserve to assess the damage from recent bank failures, and gauge inflationary levels which will lag behind rate hikes by the Federal Reserve. A pause would also allow the Fed to wait for a resolution over the US debt ceiling dilemma. The rate hikes enacted by the Federal Reserve have definitively taken inflation down, it has also caused tremendous fallout. Continued rate hikes would not only have a detrimental effect on the economy but would also have less of an effect on reducing inflation. Inflation has hit an area in which many sectors remain persistent or sticky and as such continued rate hikes would not have the intended effect of reducing inflation but would have the unintended effect of causing more harm to the financial system. Unlike before, the Fed did not state that it “anticipates” any further rate increases, but rather said that it would monitor incoming data to determine if additional hikes “may be appropriate.” This was seen as a positive sign by traders. Despite this, during the post-meeting press conference, Powell agreed with the statement but also mentioned that the Fed still considers inflation too high and it’s too early to conclude that the rate hike cycle is over.