Gold Technical Report: Gold prices continued to strengthen last week to close at 3 month high. The gold seems to be catching pace again as the prices try hard to cross above the crucial 1800 mark and 200 DMA at 1793 on Daily charts currently. The Major support stands at 50 DMA @1713. The short-term Stochastics Oscillator is at 57 and the Relative Strength Index is at 60.
Silver Technical Report: The silver prices, parallel with gold prices marched up smartly last week. The prices continue to trade above 200 DMA @21.22. On the downside, significant support is only at 50 DMA @20.66, crossing below which may change the medium-term trend into negative. The Short term Stochastics Oscillator is at 81 and the RSI momentum is near 68.
Fundamental Report: Gold closed surprisingly higher on Friday despite a rise in U.S. Treasury yields and a firm U.S. Dollar. Traders seemed to shrug off hotter-than-expected U.S. producer price (PPI) data, which held in check expectations for a 50-basis point rate hike this week. However, it also raised the chances of a recession since the Fed will now have to hold rates at a higher level for a longer period than previously expected. The SPDR Gold Shares ETF (GLD) finished at $167.07, up $0.60 or +0.36%. Yields rose and the dollar was steady after U.S. producer inflation data for November came in above expectations, bolstering the case for continued interest rate hikes by the Federal Reserve even if at a slower pace. U.S. producer prices (PPI) rose 0.3% last month, data showed, above the 0.2% forecast by economists polled by Reuters.
While the PPI report shows the underlying trend in inflation is moderating, it’s heightening concerns among market participants that this week’s consumer price inflation (CPI) report, which comes out on Tuesday before the December Fed interest rate decision on Wednesday, could also surprise the upside. After the release of the PPI report, financial market traders were still leaning toward a 50 basis point rate hike but gold traders seemed to be relieved it wasn’t much higher. One theory is we’re moving closer to the time and the rate at which the Fed will stop raising rates. “The market seems to be focused on a light at the end of the tunnel, a point at which the Fed is done raising interest rates and based on what we’ve seen general support in gold,” said David Meger, director of metals trading at High Ridge Future. The next major move in gold prices will be dependent on Tuesday’s CPI report. And this data will determine how much the U.S. central bank increases its benchmark rate and the rhetoric of Fed Chair Jerome Powell at the post-meeting press conference.