Gold Technical Report: From a technical perspective, some follow-through selling below the $1,990 (100-day SMA) might expose the very important 200-day SMA support, currently pegged near the $1,965 area. A convincing break below the latter will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move. The Gold price might then fall to an intermediate support near the $1,952-1,950 zone before eventually dropping to the November 2023 low, around the $1,932-1,931 region.
On the flip side, any attempted recovery beyond the $2,000 mark now seems to confront stiff resistance near the $2,011-2,012 area. That said, some follow-through buying, leading to a subsequent strength beyond the $2,015 level, might trigger a short-covering rally and lift the Gold price to the 50-day SMA, currently around the $2,030 region. The latter should act as a key pivotal point, which if cleared decisively should pave the way for additional gains beyond the $2,044-2,045 intermediate hurdle, towards the $2,065 supply zone.
The short term Stochastics Oscillator is at 4 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 36 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver prices also came crashing parallely from the highs near 50 days EMA and crossed below 10 days EMA before close. However unable to keep strength.The recent upmoves were capped around 23.40 where all 50,100 and 200 days Exponential Moving Averages are clustering. The Short term Stochastics Oscillator is at 7.78 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index near 38 (it is considered overbought when above 70 and oversold when below 30).
Fundamental Report: The Gold prices tumbled heavily yesterday as the inflation data finally took its toll on gold which, after holding strong above $2,000 this year, finally crumbled under the pressure of rates staying higher. Inflation in January was hotter than expected across the board. The headline and core monthly readings printed at 0.3% while the annual readings came in at 3.1% and 3.9%, respectively. While an improvement at the headline level, it’s less so than markets were positioned for and as a result, all but killed any hope of a first rate cut in March. Markets are now priced at 93% for a hold next month, quite the shift from a month ago. What’s more, only 75 basis points of rate cuts are now priced in this year; quite the drop from 175 at one point last month. It would appear traders now view the resilient economy will, in fact, come at quite a significant cost. Stronger than anticipated inflation figures confirmed the Federal Reserve´s stance of extending the waiting period before shifting to tighten the monetary policy through rate cuts.
Treasury Yields on the 10-year Treasury note reached a 2-1/2-month high at 4.32%, with expectations of further increases. Higher yields diminish the appeal of gold, as they offer an alternative investment return. The market anticipates yields might breach the 5.00% mark, a level last seen in October 2023.
The dollar index (DXY) is hovering near a three-month high, strengthened by the inflation data. A stronger dollar makes gold more expensive for holders of other currencies, thus dampening its demand. Speculators are eyeing 105.62 as the instrument’s next target, which doesn’t bode well for gold traders with the dollar index currently at 104.90.