Gold Technical Report: Gold inched up further yesterday with a quick bounce back from the support at 10 DMA around 1920 on an intraday low basis. The rally looks stronger as it has convincingly surpassed the important psychological 1900 mark a second time. The golden crossover of 50DMA @1824 over 200 DMA @1775 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 93 and Relative Strength Index is at 73.
Silver Technical Report: The silver prices, witnessed a good bounceback yesterday continuing the earlier rally. The medium-term trend looks up as the prices continue to trade above 50 DMA @23.03. As 50 DMA has crossed above 200 DMA @21.06 on daily charts, gives an indication of Buy on Dip. The Short term Stochastics Oscillator is at 72 and the RSI momentum is near 53.
Fundamental Report: On Friday the Bureau of Economic Analysis (BEA) will release the most current information on inflation for December. Current estimates are anticipating a continued decline in core inflation from 4.7% in November to 4.4% (year-over-year) last month. This is welcome news to Americans, but more importantly, is the last critical economic report that the Federal Reserve will have available as it convenes to decide the pace and size of upcoming interest rate hikes. Although Federal Reserve members have expressed mixed messages regarding their opinion on the pace of upcoming rate hikes as well as their upside target to take their benchmark “fed funds” rate to. It is currently widely accepted that the Fed will raise rates by ¼%, the first small rate hike since their first rate hike in March of last year.
The Federal Reserve had maintained rates between 0 and ¼% since 2018. That ended in March 2022 when the Federal Reserve raise rates by ¼%. What followed a series of extremely aggressive rate hikes of ½ a percent in May. Followed by four consecutive ¾% hikes in June, July, September, and November. Finally, in December they only raise rates by half a percent. Collectively the seven consecutive rate hikes took interest rates from near zero to between 4 ¼ and 4 ½%. It is widely expected that the Federal Reserve will slow the pace of rate hikes with a ¼% rate hike during the January FOMC meeting. The CME’s FedWatch tool currently is forecasting that there is a 99.7% probability that the Fed will raise rates by only ¼% and a 0.3% probability that the Fed will raise rates by ½ %. The Federal Reserve is also on record according to their most recent economic projections released in December of last year that they expect to take their benchmark rate just above 5% and not reduce that level for the entire year and possibly into the first or second quarter 0f 2024.