Gold Technical Report: Gold posted a robust performance last week and continues the rally this week. It has strong support at 20 DMA in 1818. The rally continues strongly after it has overcome the important psychological 1800 mark. The Medium term support stands at 200 DMA @1778 below which the trend may turn bearish. The short-term Stochastics Oscillator is at 88 and Relative Strength Index is at 67.
Silver Technical Report: The silver prices, are looking a bit tired after a smart performance last week. The medium-term trend looks up as the prices continue to trade above 200 DMA @21.08. As 50 DMA @22.28 has crossed above 200 DMA on daily charts, gives an indication of Buy on Dip. The Short term Stochastics Oscillator is at 40 and the RSI momentum is near 53.
Fundamental Report: Gold is trading at its highest value this year, although traders appear a bit cautious. Market participants will look at the December reading of the CPI (Consumer Price Index) this Thursday to gain more insight into the Federal Reserve’s 2023 monetary policy. Reuters News reported a comment made by Mary Daily the president of the San Francisco Federal Reserve Bank who said, “The Fed should try to bring inflation down “as gently as we can,” but it also “absolutely” needs to make sure high inflation does not become embedded.” This suggested that the Fed might raise rates by 50- bps, rather than 25 bps which was the anticipated rate hike that the Federal Reserve would enact at the next FOMC meeting (January 31 – February 1). During a webcast interview with the Wall Street Journal, she left open that possibility. “I can give you arguments for either side.” She confirmed the current outlook by the Federal Reserve that ultimately interest rates need to go to between 5.00% and 5.25% and remain there to bring inflation to the Federal Reserve’s target of 2%. Traders and investors are viewing the potential for a 50-bps hike as reflected by the selling pressure in both gold futures and spot pricing. However, according to the CME’s FedWatch tool, there is a 79.2% probability that the Federal Reserve will raise rates by ¼% and a 20.8% probability that they will raise rates more aggressively by 50 bps.