Gold Technical Report: Gold registered a consecutive correction yesterday after a continuous rally of 5 days earlier. It has strong support at 10 DMA in 1886. The rally will be confirmed if it convincingly overcomes the important psychological 1900 mark. The golden crossover of 50DMA @1801 over 200 DMA @1777 last week has boosted the rally so far. The Medium term support stands at 200 DMA below which the trend may turn bearish. The short-term Stochastics Oscillator is at 63 and Relative Strength Index is at 65.
Silver Technical Report: The silver prices, too declined following the Gold prices yesterday, after a robust performance last week. The medium-term trend looks up as the prices continue to trade above 50 DMA @22.77. As 50 DMA has crossed above 200 DMA @21.05 on daily charts, gives an indication of Buy on Dip. The Short term Stochastics Oscillator is at 62 and the RSI momentum is near 55.
Fundamental Report: Gold closed lower on Tuesday after another test of an eight-month high failed to draw enough buyers to sustain the move. Buyers supported the market in hopes that the U.S. Federal Reserve would adopt a less aggressive approach to rate hikes going forward. Meanwhile, helping to put a lid on prices and encourage profit-taking were higher Treasury yields and a firm U.S. Dollar. The SPDR Gold Shares ETF finished at $177.58, down $1.18 or -0.66%. A short-term pullback in gold prices could be in the cards since traders have already priced in a smaller-than-usual rate hike by the Fed at its Jan. 31 – Feb. 1 policy meeting. The market is expecting 90.6% odds of a 25 basis point rate hike from the Fed and sees rates peaking at 4.94% in June, while most Fed officials see rates landing north of 5% into the next year.
There seems to be genuine angst and concern regarding where inflation will be by the end of the year. The opinions of analysts and economic “experts” contain a varying spectrum of forecasts that market participants are having a difficult time sorting through the wide range of predictions. At one end of the spectrum, analysts are forecasting that inflation will decline to 3% by the end of 2023. However, some analysts believe the worst is yet to come and that inflation will remain elevated throughout 2023. With such a wide range of economic forecasts and predictions it is easy to understand why market participants have lost clarity regarding where inflation will fall by the end of the year.