Gold Technical Report: Gold prices continued to strengthen yesterday after a consolidation earlier. 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 1792 on Daily charts currently. The Major support stands at 50 DMA @1712. The short-term Stochastics Oscillator is at 55 and the Relative Strength Index is at 63.
Silver Technical Report: The silver prices, parallel with gold prices marched up smartly yesterday. The prices continue to trade above 200 DMA @21.25. On the downside, major support is only at 50 DMA @20.60, crossing below which may change the medium-term trend into negative. The Short term Stochastics Oscillator is at 64 and the RSI momentum is near 66.
Fundamental Report: Gold’s current price consolidation in gold indicated that the dramatic decline that occurred on Monday was more akin to a one-and-done scenario than the beginning of a correction. It was the equal or slightly higher low on Tuesday that was just as important as the fractional gains. It indicated solid value buying support for gold at lower levels. Yesterday gold had a respectable price advance recovering roughly half of the decline traders witnessed on Monday. But the key takeaway from the fractional gains on Tuesday is that market participants are waiting for the latest information on inflation when the CPI (Consumer Price Index) is released next Tuesday and the Federal Reserve’s last FOMC meeting of the year concludes on the following day. The most crucial factor in gold in recent and upcoming price changes is that it has been and will continue to be driven by headlines. Market participants are by large anticipating that the Federal Reserve will announce a 50-basis point rate hike rather than 75-basis points. According to the CME’s FedWatch tool, there is a 79.4% probability of a 50-BP rate hike, with only a 20.6% probability of a 75-BP rate hike by the Fed next week. This would break the 75-BP rate hike cycle set by the Federal Reserve beginning in June. This means that a rate hike of ½ a percent next week has been largely factored or baked into the pricing.