Gold Technical Report: Gold prices, performed a bounce back yesterday after a Doji and big red candle in previous trading sessions. Gold also managesd to close above 10 DMA @ 1828. Since 50 DMA @ 1868 is trading over 200 DMA @ 1775, 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 28 and Relative Strength Index is at 45.
Silver Technical Report: The silver prices remained in a narrow range yesterday just like the day before. Since, 50 PMA @ 21.36 has crossed below @ 200 PMA @ 21.50 on weekly charts , it indicate further selling pressure. The medium term trend can be considered up only if the prices move above 100 DMA @ 22.07. The Short term Stochastics Oscillator is at 13 and RSI momentum near 28, both indicating current oversold position.
Fundamental Report: Today’s jobs report for February contain another huge surprise with the forecast by economists coming in exceedingly higher or lower than their expectations. In January analysts were forecasting that additional new jobs added in December would come in at approximately 187,000. More so they were forecasting that the unemployment rate would come in at 3.6%. This was one of the greatest missteps by the economic forecast in terms of the magnitude of their misjudgment and underestimation of the actual numbers. The fact of the matter is it is not uncommon for the economic forecast to come close to the actual numbers. However, in the case of last month’s jobs report they underestimated it by 63%. While it is highly unlikely that their estimates will contain such an over or under-estimate as we saw last month it is very common for the actual numbers to be quite different than the estimates. That being said, some analysts have been predicting that the forecast of an additional 200,000 to 225,000 new jobs being added last month will come in well below the actual numbers. Current data is looking for the unemployment rate to rise from 3.4% in January to 3.5% in February. Recent data from the BLS release yesterday revealed that there are signs of softening in the labor market. There have been many sectors including the tech sector that have begun a massive program of layoffs which would continue to make the labor market tight but result in fewer new jobs being added.
Earlier this week, Chairman of the Federal Reserve Jerome Powell finished his semiannual congressional testimony. testimony, he opened the door for a 50-BPS rate hike at the upcoming March FOMC meeting (March 21 – 22). Earlier, on Tuesday also he addressed the Senate Banking, Housing, and Urban Affairs Committee. As anticipated the chairman delivered a strong warning that the Federal Reserve will once again modify its monetary policy to deliver tougher rate hikes at a faster pace. “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,”. His address to the Senate implies that it is likely that the Federal Reserve will reverse the slower pace evident after the January FOMC meeting in which the Fed announced a 25-BPS rate hike and hence sparked a sell off in Gold. According to the CME’s FedWatch, the probability of a more aggressive rate hike of 50-BPS has increased since yesterday from 70.5% to 79.4% today, diminishing the probability of a 25-BPS hike from 29.5% to 20.6%. However, Powell stressed the fact that the Federal Reserve will not make any final decision about the size of a potential interest rate hike until data from Friday’s jobs report and next Tuesday’s CPI report have been released. “We have not made any decision about the March meeting. We’re not going to do that until we see the additional data.” Adding that, “We will be guided by the incoming data and the evolving outlook.”