Gold Technical Report: Gold registered a strong bounce back yesterday after continuous nervousness for 3 days before that. It has strong support at 10 DMA in 1902. The rally looks stronger as it has convincingly surpassed the important psychological 1900 mark for the second time. The golden crossover of 50DMA @1810 over 200 DMA @1778 earlier this month 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 74 and Relative Strength Index is at 70.
Silver Technical Report: The silver prices, too moved up smartly following the Gold prices yesterday, after seeing a decline for the earlier 2 consecutive days. The medium-term trend looks up as the prices continue to trade above 50 DMA @22.87. As 50 DMA has crossed above 200 DMA @21.03 on daily charts, gives an indication of Buy on Dip. The Short term Stochastics Oscillator is at 40 and the RSI momentum is near 55.
Fundamental Report: Gold prices got a booster amidst mixed economic data as investors sought safe-haven assets while simultaneously avoiding the intrinsic risk of US equities. The financial markets echoed the uncertainty of market participants which caused a decline in US equities today, and strong gains in gold as a safe-haven play. This was certainly a day in which investors sought safe-haven assets while simultaneously avoiding the intrinsic risk of US equities. The fact that the United States continues to spend more than it has, is a systemic problem. On each former occasion, the political administration procrastinated by kicking the can down the road, only to offer a solution at the 11th hour. That solution has always been to raise the debt ceiling. Most importantly, the elevated level of inflation can only magnify the problem.
Ongoing a major development, the United States of America hit the debt ceiling set by Congress which is currently over $31 trillion. This will force the Secretary of the Treasury Janet L. Yellen to take “extraordinary measures” by not paying all of the nation’s bills. This prompted Secretary Yellen to send a letter to the congressional leadership today. This letter follows a letter she sent on January 13 in which she urged Congress to act promptly to protect the full faith and credit of the United States. Recent statements by many officials of the Fed have addressed the need to continue their aggressive monetary policy of interest rate hikes as their major tool to address and reduce the current level of inflation. The Federal Reserve is on record stating its plan to take its benchmark rate to above 5% even with recent data indicating that inflationary pressures might have peaked. Currently, analysts and market participants are anticipating that the Fed will raise rates by ¼% at the next FOMC meeting. This is in alignment with the CME’s FedWatch Tool which is forecasting a 93.3% probability of a 25-bps rate hike, and a 6.7% probability of a 50-bps rate hike by the Fed at their next meeting. The Federal Reserve raised its benchmark rate more aggressively last year than any other time since the 1980s. Beginning in March 2022 the Fed raised rates at every FOMC meeting with four consecutive jumbo 75-bps rate hikes. This took the Fed’s benchmark rate from 0-25 bps in February to 425-450 bps by the end of the year. The Federal Reserve is currently anticipating that they will raise rates until they reach their target of 5 ¼ to 5 ½% this year.