Gold Technical Report: Gold prices stabilized a bit and tried to move up yesterday. It seems to be in an attempt to form a base around 2000 levels however closed just below 10 DMA @ 2024. Gold has been facing moderate pressure on continuous profit booking after it made a new high around 2080 earlier this month. for Both 10 DMA and 50 DMA @ 1978 are trading above 200 DMA @ 1822 hence, 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 27 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 52 (it is considered overbought when above 70 and oversold when below 30) .
Silver Technical Report: The silver prices remained in narrow range yesterday . It has a strong support near the common region around 23.95/23.37 of 50 DMA and 100 DMA respectively. The medium term trend looks bullish as both of these averages above 200 DMA @ 21.83. The Short term Stochastics Oscillator is at 10 and Relative Strength Index near 37.
Fundamental Report: A second debt limit meeting between President Joe Biden and Senate majority leader McCarthy and other top congressional leaders will be held tomorrow, Tuesday, May 16. The divide between both sides was too wide for any progress to result from their first meeting. Staff on both sides negotiated through back channels to find common ground and potential compromises over the weekend. The probability that tomorrow’s talks will yield any progress is remote, and the number of days remaining before June 1st is dwindling.
It happens as, the interest rates continue to rise and liquidity continues to dry up – those concerns are only going to get bigger. It seems incredible to think that just over a year ago, interest rates were still near zero. Now 13 months later and after 10 consecutive hikes – the Federal Reserve has increased interest rates to 5.25% – the highest level since 2007. Similarly, the Bank of England has now hiked interest rates 12 times to 4.50% – and they might not stop there. Historically, every time Central banks have engaged in an interest rate hiking cycle, they have kept going “until something eventually breaks”. Which is exact situation they find themselves in, once again. Back when interest rates were near zero, global banks scooped up record amounts of Bonds. But as traders know – when interest rates go up, bond values go down. That’s one of the major reasons why a whole lot of banks now find themselves in deep trouble. The rapid pace of rate hikes has meant that bonds held by banks have fallen in value and are now trading significantly below what they paid for them. Currently, the value of unrealized losses in bond portfolios held by some of the world’s most widely-recognized banks is close to hitting $2 trillion dollars – and that number is growing by the day. the risk of a U.S debt default is greater than it’s ever been, adding yet another crisis to the growing list of current crises. According to a report released by the International Monetary Fund – Gold has become the world’s number one asset class of choice for those seeking protection, diversification and high returns on offer to them in the current economic climate. U.S Debt Default is now ‘A Real Possibility’ and Google searches for the phrase “How To Trade Gold” are now at their highest level on record ever.