Gold Technical Report: Gold prices consolidated further with a downward bias after a moderate correction on Friday. The prices formed a Doji candle and closed below 10 Day Moving Average (DMA) in @2007. Both 10 DMA and 50 DMA @1912 are trading above 200 DMA @1795 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 45 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 57 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver prices also following suit, corrected yesterday for a second consecutive day, but are still trading near a 12-month high. It has strong support near the common area of 100 DMA @22.93 and 50 DMA @22.54. The medium-term trend looks bullish as both of these averages are above 200 DMA @21.24. The Short term Stochastics Oscillator is at 54 and Relative Strength Index is near 65.
Fundamental Report: The Recent statements by members of the Federal Reserve have maintained its current hawkish demeanor underscoring the need for the Fed to continue raising interest rates. On Friday speaking at a conference in San Antonio Texas Federal Reserve Governor Christopher Waller said, “Because financial conditions have not significantly tightened, the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further.” Governor Waller called the most recent March CPI report “mixed news” that indicated that the Federal Reserve has not made much progress on its goal to reduce inflation. He referenced core consumer prices rising 0.4% or higher for the last four consecutive months as proof that the Federal Reserve needs to continue its aggressive stance of rate hikes. It must be noted that some economists including Mohamed El-Erian and BlackRock are convinced that inflation is not on track anywhere near the Federal Reserve’s target of 2%. In a note, a strategist at BlackRock said, “Inflation in the US is not on track to settle anywhere close to the Federal Reserve’s 2% target, in our view. That was reinforced by March inflation data,” This is in line with CME’s FedWatch tool that reveals there is an 86.7% probability that the Federal Reserve will implement another rate hike of ¼% which would take their terminal benchmark rate to between 5% and 5 ¼%. Persistently high inflation will continue to be highly supportive of gold as pricing builds a base and eventual support at $2000.