Gold Technical Report: Gold price is carving out a potential bear flag on the daily chart, following the last week’s downside break below the critical short-term ascending 21-Daily Moving Average (DMA), now at $1,912.
The 14-day Relative Strength Index (RSI) is inching higher but still lurks below the midline, suggesting that Gold sellers still have an upper hand.
But the higher lows seen so far this week keep Gold buyers hopeful for a decent recovery. It’s worth reminding that Gold price remains vulnerable so long as the 21DMA resistance holds.
For a sustained move higher, the Gold price needs to take out strong resistance around $1,885. The $1,900 threshold will be next on Gold buyers’ radars.
On the flip side, the four-week low of $1,860 is the immediate support, below which the bullish 50DMA at $1,850 could come to the rescue of bulls.
Acceptance below the latter will trigger a fresh downswing toward the January 5 low of $1,825.
Silver Technical Report: The silver prices, too traded sideways after facing a downfall on the previous 3 trading days and closed below support near 50 DMA @23.37. The medium-term trend looks up as the prices continue to trade above 100 DMA @21.66. As 50 DMA trades above 200 DMA @20.97 on daily charts, gives an indication of Buy on Dip. The Short term Stochastics Oscillator is at 7 which is oversold and the RSI momentum is near 37.
Fundamental Report: Gold was slightly higher late in the session on Tuesday after giving back most of its earlier gains. After treading water shortly after the opening, the market surged to its high of the session as the U.S. Dollar collapsed following dovish comments from U.S. Federal Reserve Chair Jerome Powell.
Although the U.S. Dollar declined as Powell spoke, Treasury yields ticked higher Tuesday even after the central bank chief suggested that the central bank is making headway in its efforts to tamp down inflation. This likely limited gold’s gains.
Powell’s speech actually contained a mixed message. On one hand, he indicated that the disinflationary process was underway. On the other, he suggested that the Fed may still need to hike more aggressively.
“The reality is we’re going to react to the data,” Powell said during an appearance before the Economic Club of Washington. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”