Gold Technical Report: The gold witnessed little profit booking yesterday after a strong rally for more than a week. The prices had picked up pace after crossing 50 DMA @ 1681on Daily charts and were slightly overbought. The next Major resistance is 200 DMA @1801, above which the main trend will turn positive. The short-term Stochastics Oscillator is at 58 and the Relative Strength Index is at 65.
Silver Technical Report: The silver prices also parallel with Gold faced selling pressure and closed below the support of 200 DMA @ 21.40. On the downside, major support is only at 50 DMA @ 19.76, crossing below which will change the medium-term trend into negative. The Short term Stochastics Oscillator is at 25 and the RSI momentum is near 57.
Fundamental Report: One of the primary catalysts behind the recent rally, came after the hotly anticipated U.S Consumer Price Inflation reading rose less than expected in October – boosting expectations that supersize rate hikes are likely now in the rearview mirror. Last week’s cooler-than-expected Consumer Price Inflation data offered some relief to the Fed, potentially indicating that October could be the start of a disinflationary trend that lasts through next year. The Producer Price Index – rose 8% in October compared to an 8.4% increase in September. While still historically high, it was the smallest increase since July of last year and significantly better than forecasts. This is the second back-to-back inflation report this month to show signs of cooling in the rising prices that have plagued the economy. The producer index is generally considered a good leading indicator for inflation as it gauges pipeline prices that eventually work their way into the marketplace. PPI differs from the more widely followed consumer price index as the former measures the prices that producers receive at the wholesale level while CPI reflects what consumers pay. For most of this year, the Federal Reserve has been aggressively raising interest rates in hopes of bringing down inflation. The central bank has increased its benchmark borrowing rate six times for a total of 3.75% – including four straight 75-basis point rate hikes. Following this week’s data Traders have started pricing in a strong possibility that the Fed will only hike rates by half a percentage point in December. Wagers are also increasing that the Fed will downshift the pace of rate hikes even further to a quarter percentage point increase by the first half of 2023. That view seems to be shared by Federal Reserve Vice Chairman Lael Brainard who said this week that “if the economic data continues to show inflation is on the decline, then the central bank could scale back the extent of its future rate hikes”.