Gold Technical Report: Gold prices resumed upwards journey yesterday on the back of earlier 2 days continuous rally but fizzled at the end of the day and closed near 10 days Exponential Moving Average @ 1960. The prices earlier kept climbing above July High levels breaking the 2000 mark but shying away from 2010 consistently. The technical pullback last month was strong enough to cross above 50 days, 100 days and also 200 days Exponential Moving Average in a single day. On the reverse, the 10 days EMA has also crossed 200 days and 50 days EMA signifying strength. Gold had been on decline throughout earlier but started the rally with a gap up. Prices had reached at 7 moths low and received a much awaited relief. The short term Stochastics Oscillator is at 40 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 53 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver prices also moved up parallely and posted a solid green candle for the third straight day. This week prices have crossed above all 10,50,100 and 200 days Exponential Moving Average in a single day. It is trying hard to hit the Oct month highs near 23.70 but finds hard to keep above 23.00 mark due to consistent selling pressure. The Short term Stochastics Oscillator is at 80 and Relative Strength Index near 58.
Fundamental Report: The CPI and PPI reports continue to strongly support gold prices, given the methodical decline in inflation. The significant drop in the dollar was directly related to the release of the October CPI inflation report, revealing muted growth, similar to September’s low reading. Despite forecasts by major analysts and economists predicting higher levels, the actual inflation remained below expectations. This outcome strengthens the case for the data-dependent Federal Reserve to extend its pause on rate hikes and potentially end the rate hike cycle earlier than anticipated in the September dot plot. Inflation has continued its decline from 9.1% in June 2022 to the current 3.2% year-over-year level. This steady reduction is seen as evidence that inflation is on track to reach its 2% target, likely contributing to the Federal Reserve’s decision to halt the historic 11 consecutive rate hikes. The CPI and PPI reports continue to strongly support gold prices, given the methodical decline in inflation. This trend, coupled with the lag between a rate cut and its economic effects, suggests that the Fed may not require additional quantitative tightening, opening the possibility for a pivot towards cutting interest rates rather than increasing them.