Daily Report – 07 September 2022

07 September 2022
OTC Market Data
High
Low
Close
Previous
Change USD
Change %
Gold
1726
1700
1701
1710
-9.00
-0.53%
Silver
18.57
17.93
17.98
18.14
-0.16
-0.88%

Gold Technical Report: The gold prices are hovering around 1700 levels after the last week’s selloff.The short term trend looks bearish as prices are unable to crossover 50 DMA. Any further slippage down the nearest main bottom at $1680 will turn the main trend negative. On the upside, the next resistance will be at 50 DMA @ 1747. The Short term Stochastics Oscillator is at 31 and RSI momentum is near 34.

Support 3
Support 2
Support 1
Current Market Price
Resistance 1
Resistance 2
Resistance 3
1619
1648
1680
1698
1717
1747
1767

Silver Technical Report: Silver witnessed continued selling pressure last week and resumed the same trend yesterday after showing some reversal signs for earlier 2 days . Medium term trend looks bearish as 20 DMA has crossed below 200 DMA on weekly charts. The next major resistence will be faced around 50 DMA around 19.25. The Short term Stochastics Oscillator is at 45 and RSI momentum near 35.

Support 3
Support 2
Support 1
Current Market Price
Resistance 1
Resistance 2
Resistance 3
17.00
17.34
17.88
18.00
18.28
18.56
18.84

Fundamental Report: Gold prices finished lower on Tuesday after giving back early gains. The selling pressure was fueled by concerns about the aggressive pace of interest rate hikes to curb inflation, a surge in Treasury yields and a stronger U.S. Dollar. On Tuesday, gold settled at $1701, down $8.70 or -0.57%. The SPDR Gold Shares ETF (GLD) closed at $158.36, down $0.90 or -0.56%. Early in the day the Reserve Bank of Australia (RBA) raised its benchmark rate by 50-basis-points. On Wednesday, the Bank of Canada (BOC) is expected to hike rates by 75-basis-points. On Thursday, the European Central Bank (ECB) is forecast to deliver a 75-basis-point interest rate hike to tame surging prices. Traders are also leaning toward a 75-basis-point rate hike by the Federal Reserve following its September 20-21 policy meeting. Benchmark U.S. Treasury yields rose to their highest levels since June on expectations that the Fed will keep hiking interest rates. Higher yields raise the opportunity cost of holding non-yielding gold. The U.S. Dollar jumped to a two-decade high after data showed the U.S. services industry picked up in August, making gold more expensive for overseas buyers.

The, worries about rising interest have been pushing gold prices lower for a third consecutive week. In fact, as of Friday’s close, the chances of a 75-basis-point rate hike by the Fed on September 21 had fallen from 74% (pre-NFP report) to 56% (post-NFP report). Non-Farm Payrolls rose solidly in August amid an otherwise slowing economy, while the unemployment rate ticked higher as more workers rejoined the labor force, the Bureau of Labor Statistics reported Friday. The economy added 315,000 jobs for the month, just below the Dow Jones estimate for 318,000 and well off the 526,000 in July and the lowest monthly gain since April 2021. The unemployment rate rose to 3.7%, two-tenths of a percentage point higher than expectations, largely due to a gain in the labor force participation rate to 62.4%, tied for the highest level of the year. Wages continued to rise, though slightly less than expectations. Average hourly earnings increased 0.3% for the month and 5.2% from a year ago, both 0.1 percentage point below estimates. The response by the overall market surprised most traders with some calling it a “goldilocks” report, meaning it didn’t suggest weakness, but it’s wasn’t too strong to prompt a supersized rate hike by the Fed. The yield on the 2-year Treasury note ticked lower on Friday after August’s jobs report came in near expectations and eased some fears that a hot labor market would force the Federal Reserve to continue hiking rates at an aggressive pace in order to tame surging prices. The dollar eased from a 20-year high on Friday after data showed the pace of U.S. hiring rose more than expected in August, but wage growth moderated and unemployment ticked higher, giving the Federal Reserve some wiggle room when it raises interest rates later this month. According to the CME’s FedWatch tool, there is a 68.5% probability that the Federal Reserve will raise rates by 75 basis points during the September FOMC meeting. There is definitely no denying that Central banks across the world have fallen “way behind the curve” in tackling inflation and now find themselves in a high-stakes race – frantically trying to raise rates too fast, too late – inevitably risking an overshoot that pushes the global economy into a recession. Just over a month ago, the European Central Bank joined the global “Rate-Hike Club”, by raising interest rates for the first time in more than a decade. And they definitely did it in style with a larger-than-expected 50 basis point hike – in an attempt to play catch-up with the rest of their peers. A week later, the U.S Federal Reserve raised interest rates by another “super-sized” 75 basis points for the second month in a row – officially embarking on its most aggressive monetary tightening cycle since 1981. Literally within days, the Bank of England followed in the ECB’s and Federal Reserve’s aggressive footsteps by unleashing their first “super-sized” interest-rate hike since 1995. Fast forward to September and we’re once again on the verge of yet another blockbuster month for “jumbo-sized” central bank rate hikes. This week the European Central Bank is expected to hike interest rates sharply after inflation hit a record high in August, driven mainly by soaring energy prices. Eurozone inflation could enter double digits as early as next month, which could force the EBC to respond with a “market-moving” 75 basis point rate hike this week.

Key US Economic Reports & Events
When
Actual
Expected
Previous
Trade Balance
4:30 PM
-
-70.2B
-79.6B
FOMC Member Mester Speaks
6:00 PM
-
-
-
FOMC Member Brainard Speaks
8:35 PM
-
-
-
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