Gold Technical Report: Gold prices displayed some strength yesterday after a consolidation of the last two days. After a strong rally last week the gold seems to be catching pace again. However, the prices continue to trade below the crucial 1800 mark and 200 DMA at 1796 on Daily charts currently. The Major support stands at 50 DMA @1707. The short-term Stochastics Oscillator is at 43 and the Relative Strength Index is at 61.
Silver Technical Report: The silver prices, parallel with gold prices marched up smartly yesterday. The prices continue to trade above 200 DMA @ 21.24. On the downside, major support is only at 50 DMA @ 20.50, crossing below which may change the medium-term trend into negative. The Short term Stochastics Oscillator is at 44 and the RSI momentum is near 62.
Fundamental Report: Gold increased sharply on Wednesday, supported by a plunge in Treasury yields and a U.S. dollar retreat. The moves were fueled by the thought of slower Fed rate hikes at its policy meeting next week. As of the close, the odds of a 50 basis point rate hike sit at 74.7%, while the chances of a 75 basis point rate hike are at 25.3%. On Wednesday the SPDR Gold Shares ETF finished at $166.34, up $1.50 or +0.91%. The benchmark U.S. 10-year Treasury yield dropped to a near three-month low, driving down demand for the U.S. Dollar, which fell half a percent against a basket of currencies. Lower yields tend to lower the opportunity cost of holding gold, which pays no interest. A weaker greenback tends to drive up foreign demand for dollar-denominated gold. The market awaits next week’s 2-day FOMC meeting which begins on Tuesday, December 13. After the conclusion of the last FOMC meeting of the year, the Federal Reserve will release a statement followed by Chairman Powell’s press conference. Powell’s speech last week, caused extreme volatility leading to a dynamic price spike in both precious metals. Market participants immediately reacted to Powell’s speech by focusing on the fact the Federal Reserve was planning to slow the pace of interest-rate hikes. However, today they seemed to disregard Powell’s remarks about how the Federal Reserve would slow the pace of rate hikes. They changed their focus to the fact that the Federal Reserve is maintaining an extremely hawkish demeanor with more rate hikes at a slower pace. In other words, market participants focused on the time it would take the Federal Reserve to lower inflation to its target rate rather than the fact that the Fed intends to slow down the size of individual rate hikes. But the jobs report raised doubts over whether the Fed can afford to change its aggressive monetary policy tightening, encouraging investors to book profits and driving prices lower into the close.