Gold Technical Report: Gold slipped further yesterday for the third consecutive day as the market seems to be factoring in the nervousness from heavy selling shock on 2 consecutive days at the start of the month when it shed almost 100 Dollars. It’s also clear from the fact that the 10 DMA @1836 has crossed below the 50 DMA @1863. But since 50 DMA is trading over 200 DMA @1776, 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 28 and Relative Strength Index is at 35.
Silver Technical Report: The silver prices, too following Gold, faced selling pressure yesterday for the second consecutive day and closed below the 100 DMA @21.92. The medium-term trend can be considered up only if the prices move above 100 DMA. As 50 DMA @23.10 trades above 200 DMA @20.98 on daily charts, gives an indication of Buy on Dip. The Short term Stochastics Oscillator is at 45 and the RSI momentum is near 30.
Fundamental Report: The Gold prices slipped lower on Thursday, but the market is being supported by a dip in Treasury yields and a slightly weaker U.S. Dollar. The price action seems to suggest that traders are still assessing the impact of the Fed minutes while dealing with the fact that interest rates are going to stay higher for longer than previously anticipated, which should keep a lid on prices. The SPDR Gold Shares ETF (GLD) settled at $169.65, down $0.97 or -0.57%.
The Fed minutes released on Wednesday were essentially stale data. They did state that policymakers agreed rates would need to move higher, but that the shift to smaller-sized hikes would let them calibrate more closely with incoming data. Essentially this means that the Fed is still looking to fight inflation by raising interest rates, just not as aggressively as before. Hence, the 25-basis point hike on Feb. 1 and similar rate hikes are being priced for March, May, and June. But since the Feb. 1 interest rate decision, economic conditions have changed considerably. Inflation is still too high. The jobs market is still too tight. Consumers are still spending and the services industry is strong. The economy is so hot that investors now expect rates to peak at 5.362% in July and remain above 5% through the year. The day before the last Fed rate hike on Feb. 1, the terminal rate was 4.88%. It’s the rapid rise from 4.88% to 5.362% that has spooked gold investors into selling.