Gold Technical Report: Gold gave up yesterday on selling pressure after 3 days of continuou efforts to stabilize after the sharp fall it suffered last week and closed near 50 DMA @ 1851. Till, the 50DMA is trading over 200 DMA @ 1774, the medium term trend looks upwards. The long term support stands at 200 DMA below which the trend may turn bearish. The short term Stochastics Oscillator is at 12 and Relative Strength Index is at 42.
Silver Technical Report: The silver prices also fell following the suit and closed below 50 DMA @ 23.38. The medium term trend looks up as the prices continue to trade above 100 DMA @ 21.71. As 50 DMA trades above 200 DMA @ 20.94 on daily charts, gives indication of Buy on Dip. The Short term Stochastics Oscillator is at 10 and RSI momentum near 33.
Fundamental Report: It has become clear that the Federal Reserve will make good on its commitment to continue rate hikes and sustain those higher levels throughout this entire year. Any doubt in that the Fed would back off from its current strategy has diminished. Simply put, reality has finally set in that the Fed’s words were not just rhetoric but a warning to investors that they plan to put into motion what Chairman Powell first announced on August 25 last year at the Jackson Hole economic symposium. Jerome Powell’s keynote speech was meant to warn the American public to brace as they would begin an aggressive and hawkish process to bring inflation back down to their 2% target.
Investors continue to base their decisions on the belief that the Federal Reserve would not make good on this commitment. Slowly market sentiment moved to a stance of uncertainty rather than doubt but that has now changed over the last couple of weeks. The unfounded optimism diminished, as clarity of the upcoming steps by the Fed needed to be taken seriously. Finally, corporations and individual investors have accepted the reality that they need to brace themselves for an upcoming and continued restrictive monetary policy.