Gold Technical Report: Gold prices continued the up move for the third consecutive day and registered an all-time high of 2081 on an intra-day basis before cooling off on profit booking. That high is 12 points above the prior record high of 2,070 from March 2022. Both 10 DMA @2008 and 50 DMA @1952 are trading above 200 DMA @1813 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 78 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 64 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver prices also continued the upwards march for the third consecutive day but it’s still very far from an all-time high. It has strong support near the common region around 23.30/23.45 where 100 DMA and 50 DMA are meeting. The medium-term trend looks bullish as both of these averages are above 200 DMA @21.66. The Short term Stochastics Oscillator is at 75 and Relative Strength Index is near 70.
Fundamental Report: Gold has two primary fundamental drivers. One is the USD Index, and the other is the interest rates/ inflation. The Federal Reserve concluded this month’s FOMC meeting and as expected the Fed raised its terminal rate by ¼%. This takes 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 not only would have a detrimental effect on the economy but it would also have less of an effect on reducing inflation. Inflation has hit an area in which many sectors remain persistent or sticky. 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 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.
The US Bureau of Labor Statistics (BLS) will release the April jobs report on Friday, May 5 at 12:30 GMT. Expectations are for a 181K rise following the better-than-expected 236K increase recorded in March. Meanwhile, the unemployment rate is expected to stay at 3.5% and average hourly earnings are expected to remain steady at 4.2% YoY.