Gold Technical Report: Gold prices corrected yesterday and market seemd to be in a consolidation mood. The prices made intra day high and faced resistance near 10 Day Moving Average (DMA) @ 2007 for second consecutive day. Both 10 DMA and 50 DMA @ 1916 are trading above 200 DMA @ 1798 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 32 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 55 (it is considered overbought when above 70 and oversold when below 30) .
Silver Technical Report: The silver prices tried to march ahead but failed to cross previous day’s high. It has a strong support near the common area of 100 DMA @ 22.98 and 50 DMA @ 22.62. The medium term trend looks bullish as both of these averages above 200 DMA @ 21.31. The Short term Stochastics Oscillator is at 35 and Relative Strength Index near 66.
Fundamental Report: As gold subsides towards sub 2000 levels, due to reduced bullish market sentiment it appears, the reason to be the Federal Reserve officials who continue to reiterate the need for taking interest rates higher. Federal Reserve officials will go silent one week before the May FOMC meeting beginning on Saturday, April 22. Two Fed officials have been extremely vocal both suggesting the need to continue to raise interest rates even after the anticipated ¼% rate hike occurs in May. Last week Fed Governor Christopher Waller said that the Federal Reserve needs to continue raising interest rates because of the high level of inflation. “Economic output and employment are continuing to grow at a solid pace while inflation remains much too high,” Waller said, noting that investors should not expect rates to fall any time soon. “Monetary policy will need to remain tight for a substantial period of time, and longer than markets anticipate,”. Fed Governor Waller was resolute when he spoke on Friday saying, “Despite a year of aggressive rate increases U.S. central bankers “haven’t made much progress” in returning inflation to their 2% target and need to move interest rates higher still.” Addressing current inflationary pressures Waller said that inflation has “basically moved sideways with no apparent downward movement… Monetary policy needs to be tightened further. How much further will depend on incoming data on inflation, the real economy, and the extent of tightening credit conditions.”
St. Louis Federal Reserve President James Bullard underscored the need for higher U.S. interest rates to combat inflation.Market participants will continue to focus on more comments from Fed officials this week before the Feds standard blackout period that will begin on April 22, ahead of the 2-3 May FOMC meeting. The 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.