Gold Technical Report: Gold prices declined heavily on Friday to end the week in red. However, managed to come off the day low to close just above 10 DMA @ 2008. The selloff started a day before when the new highs around 2080 attracted profit booking. Both 10 DMA and 50 DMA @ 1956 are trading above 200 DMA @ 1815 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 65 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 56 (it is considered overbought when above 70 and oversold when below 30) .
Silver Technical Report: The silver prices also corrected along with gold prices and reversed the last 3 days’ winning streak. It has a strong support near the common reigon around 23.32/23.53 of 100 DMA and 50 DMA are meeting. The medium term trend looks bullish as both of these averages above 200 DMA @ 21.70. The Short term Stochastics Oscillator is at 80 and Relative Strength Index near 64.
Fundamental Report: Gold prices tumbled on Friday as the U.S. Labor Department released the nonfarm payroll jobs report which revealed that the labor market is robust as well as resilient considering the massive campaign by the Federal Reserve to slow the economy by raising rates to over 5% in just over a year. These reports beat estimates and suggests that the economy in the United States continues to be strong with 253,000 new jobs added last month. The report also showed that the unemployment rate fell to 3.4% down 0.1% when compared to the prior month. In addition, the report revealed that wages rose. The unemployment rate of 3.4% matches January’s level with both months being at a level not seen since 1969. According to the New York Times, “Job growth was broad-based, even if less vigorous than the eye-popping numbers of 2022 when the nation was rapidly digging out of a deep pandemic deficit. Leisure and hospitality added 31,000 jobs, down from a 73,000-job average over the past six months but another step toward its high in early 2020.”
Earlier, last week, 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 and 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 that 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.