Gold Technical Report: Gold prices jumped up yesterday after 2 days of consolidation. The prices maintained the support of 10 days Exponential Moving Average and moved above the 2000 mark. However, in the end attracted profit booking near recent high of 2008 and declined a bit. The short term Stochastics Oscillator is at 87 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 62 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver prices also moved up parallely to cross 24.00 mark. Near the day high it witnessed profit booking but managed to close above 10 days Exponential Moving Average. If this strength persists, it can try to reach Aug Highs of 25.00 mark as a new target. The Short term Stochastics Oscillator is at 81 and Relative Strength Index near 62.
Fundamental Report: Gold witnessed yesterday solid gains as a result of multiple factors. First, the release of economic reports indicates that the economy in the United States has been contracting as a result of recent rate hikes by the Federal Reserve. Secondly, the Federal Reserve released its minutes from the last FOMC meeting in which the Fed continued to maintain its current interest rate level. Third, a report by the World Gold Council revealed intensified buying by central banks around the world resulting in a new record for purchases in the first nine months of the year. Lastly, except for the Federal Reserve, global central banks are beginning to cut interest rates. It was a combination of all the events cited above that propelled gold above $2000 per ounce. The World Gold Council has updated its list of gold reserves by countries revealing that many central banks aggressively added to their gold reserves. Collectively these purchases by global central banks are at a record pace for the first three quarters of 2023 which totals 800 tons, with China, Poland, and Singapore being the primary buyers. This pace is well above the total purchases for the same period in 2022.
FOMC minutes supported current expectations that the Federal Reserve’s pause not only will continue, but more importantly signals that the Fed might have concluded its aggressive interest rate hikes that began in March 2022. These hikes have effectively raised the Fed funds rate from between 0 and ¼% to between 5 ¼% and 5 ½%. Expectations by the CME’s FedWatch tool indicate the probability of a rate hike pause is 94.8% down from the probability of 99.8% a week ago.