Gold Technical Report: On Wednesday, gold prices moved up strongly and closed above 50 days Exponential Moving Average @ 1945 after more than a month. Yesterday, gold remained sideways and closed with a Doji but 10 days EMA @ 1936 crossed above 100 DMA @ 1932, hence further upside movement looks possible. If this happens with strong volumes, it will open room for further advancement upto the major psychological level of 2000. Main support level is near 200 days EMA @ 1872. The short term Stochastics Oscillator is at 94 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 60 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver marched ahead strongly with good volumes for the second consecutive day. It has crossed above both 50 and 100 days EMA on Wednesday, and hinted about fresh upmove . The main target now is 25.00 , a major psychological level for silver and the main support is near 200 days EMA @ 22.46. The Short term Stochastics Oscillator is at 97 and Relative Strength Index near 67.
Fundamental Report: US Treasury Yields and the Dollar plummeted after US Producer Prices unexpectedly fell, increasing speculation that the Federal Reserve may be nearing the end of its rate-hiking cycle. US May PPI rose just 0.1%, missing estimates at 0.2%. Which followed a recent drop in the US CPI. The Dollar Index (DXY), which gauges the value of the Greenback against 6 major currencies, sank below 100 for the first time in 17 months. On Wednesday, Labor Department released the latest inflationary report, the Consumer Price Index (CPI) for June. The report revealed that inflation has declined to its lowest monthly increase since August 2021. The Consumer Price Index gained 0.2% last month double the increase of 0.1% in May. The vast majority of increases in consumer pricing was in the category of shelter which made up 70% of last month’s rise in the CPI. Increases were also evident in automobile insurance, and fuel which rose 1.0 %. However, there was a significant decrease in the cost of used trucks and cars. The rate of core inflation slowed from 5.3% in May to 4.8% last month. The importance of this decline is that the Federal Reserve believes that the core rate is the best predictor of inflationary trends. However, core inflation at 4.8% is still more than double the Fed’s target of 2% so even with last month’s decline the report indicates that both headline and core inflation continues to be troublesome as each month brings higher pricing for consumers across-the-board.
As both these CPI and PPI figures broadly suggest, the inflation is declining considering that it is roughly half of last year’s inflation rate of 9.1%. However, inflation is still running at a level that is unlikely to soften the resolve of the Federal Reserve from raising rates two times this year. There continues to be an exceedingly high probability of an interest rate hike of ¼% by the Federal Reserve at the next FOMC meeting at the end of this month. According to the CME’s FedWatch tool, the probability of ¼% rate hike implemented on July 26 is 92.4%, down fractionally from yesterday’s forecast of 93%, and 90.5% one week ago. There is however only a 12.9% probability that the Fed will implement back-to-back rate hikes in both the July and September FOMC meeting.