Today’s analysis provides an in-depth look at the gold and silver markets, offering insights into the fundamental and technical factors driving current trends. Our report aims to equip investors with the knowledge needed to navigate these markets effectively.
Fundamental Analysis
Gold pulled back as traders reacted to U.S. inflation reports, which exceeded analyst expectations. Fed may be forced to be more hawkish to fight inflation, which is bearish for gold and other precious metals that pay no interest. The hotter-than-expected inflation report leads to an increase in yields on interest-bearing bonds. 10-year US Treasury yields rebounded strongly to 4.15%. The US Dollar Index (DXY), which closely tracks the Greenback’s value against six major currencies, climbs to 103.20. Monthly headline CPI rose by 0.4%, as expected, against a 0.3% increase in January. The monthly core CPI, which excludes volatile food and energy prices, grew at a steady pace of 0.4% while investors anticipated it to rise by 0.2%. Annual headline inflation was up by 3.2% against expectations and the prior reading of 3.1%. The core CPI accelerated at 3.8% from expectations of 3.7% but lower than the former reading of 3.9%.
Gold prices corrected on Tuesday amid extremely overbought conditions, as indicated by the 14-day Relative Strength Index. From a technical perspective, the overnight swing low, seems to protect the immediate downside. A convincing break below 2142 might prompt some technical selling and drag the Gold price to the next relevant support near the 2126 zone. The subsequent slide might expose the $2,100 round figure, which should act as a strong base and a key pivotal point for short-term traders. On the flip side, any further move up is likely to face some resistance around the 2178 region ahead of the $2,195 (the record peak touched last Friday). Some follow-through buying beyond the $2,200 mark will push the Gold price to the uncharted territory and set the stage for the resumption of the recent blowout rally witnessed over the recent past. The short term Stochastics Oscillator is at 84 and Relative Strength Index is at 73.
Silver
Silver moved lower as gold/silver ratio settled back above the 89 level. From a big picture point of view, silver again needs to cross above the resistance at 24.40 and then 24.60. If silver pulls back below the $24.00 level, it will head towards the nearest support at 23.84 and then 23.60. The short term Stochastics Oscillator is at 83 and Relative Strength Index (RSI) is at 63.
Indicator Definitions
Conclusion
In the complex and ever-evolving landscape of bullion markets, staying informed with both technical and fundamental analysis is crucial for making well-informed investment decisions. Our report strives to provide a balanced view to assist investors in navigating the intricacies of gold and silver trading.