Gold Technical Report: Gold continued the selling bout yesterday which started a day before after crossing below 10 DMA @ 2008 and then further below 2000 mark. Gold has been facing moderate pressure on continuous profit booking after it made a new high around 2080 earlier this month. It managed to find some support near 50 DMA @ 1980 at the closing. The current prices are trading above major support at 200 DMA @ 1824 (below which the trend may turn bearish ) hence, the medium term trend looks upwards. The short term Stochastics Oscillator is at 13 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 43 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver prices traded in narrow band yesterday as it enters between the 50 DMA @ 24.10 and 100 DMA @ 23.36. It has major support of 100 DMA @ 23.33. The medium term trend looks intact as both of these averages above 200 DMA @ 21.86. The Short term Stochastics Oscillator is at 9 and Relative Strength Index near 36.
Fundamental Report: The Washington standoff over raising the debt ceiling has raised economic concerns on a global basis. Treasury Secretary Janet Yellen again warned this week that a U.S. default could come as early as June 1st. Her dire warning is also confirmed by projections of both the Bipartisan Policy Center and the Congressional Budget Office. A nonpartisan congressional report cited a “significant risk” of a historic default within the first two weeks of June. A report by the U.S. Congressional Budget Office confirmed statements by Treasury Secretary Janet Yellen’s warning that a government default could come as early as June 1. Then there is also Biden’s veiled threat of using the 14th amendment if no agreement is forthcoming before June 1. Probably the source of this newfound optimism is that there was some discussion of a short-term extension to avoid the U.S. defaulting on its obligations. While this is only a conjecture the fact that the ideology of the Republicans and Democrats remain so far apart that the only way to get an agreement by the end of the week would involve some sort of two-part negotiations consisting of short-term solutions which would be followed by a more detailed negotiation at a later date.