Gold Technical Report: Gold price is consolidating the recent run of gains, with the 14-day Relative Strength Index (RSI) warranting caution for buyers. The leading indicator is highly overbought, suggesting that a sharp corrective downside could be in the offing. If that happens, the $2,106 support area will be critical to hold which is the 23.6% Fibonacci Retracement (Fibo) level of the recent rally from the February 14 low of $1,984 to the high of $2,142.
Acceptance below the latter is likely to trigger a fresh drop toward the 38.2% Fibo support at $2,082. However, the downside could be cushioned, as the 21-day Simple Moving Average (SMA) and the 50-day SMA Bull Cross confirmation remains in play. Gold buyers need to recapture the record high of $2,145 on a sustained basis to unleash further upside toward the $2,200 threshold.
The short term Stochastics Oscillator is at 92 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 77.54 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver prices witnessed a correction after rallying up for 3 straight sessions. It had reached overbought region after crossing above 200 days EMA this week . Last week it has been on a constant decline mode but fighting back, it crossed above 10, 50 and 100 days EMA in a single day. The recent upmoves in the past were capped around 23.40, near 200 days Exponential Moving Average, which will now act as a support. The Short term Stochastics Oscillator is at 82 and Relative Strength Index near 63.
Fundamental Report: Gold buyers take a breather after the recent relentless surge, backed by heightened expectations of aggressive interest rate cuts expectations from the US Federal Reserve (Fed), in the face of a series of soft US economic data, which fuels concerns regarding a ‘soft-landing’.
The US ISM said on Tuesday that its Services PMI slipped to 52.6 last month from 53.4 in January. A gauge of prices paid for inputs by businesses fell to 58.6 from an 11-month high of 64.0 in January. Last week, the ISM Manufacturing PMI index dropped from 49.1 in January to 47.8 in February, missing the market expectation of 49.5 by a wide margin.
Markets are currently pricing in about a 63% chance that the FED could begin easing rates in June, slightly lower than a 67% probability seen at the start of the week, according to the CME FedWatch Tool.
The next push higher in the Gold price now remains at the mercy of Fed Chair Jerome Powell’s testimony, as his words would be closely scrutinized for fresh hints on the timing and the scope of Fed rate cuts this year.
Ahead of his testimony on the semi-annual Monetary Policy Report (MPR) before the US Congress, the ADP Employment Change data and the JOLTS Job Openings survey will be keenly awaited for fresh trading action in the US Dollar, as well as, the Gold price.