Gold Technical Report: Gold continues to trade in a rangebound manner but still respects the support at 200 DMA in 1782. The rally may continue after it strides the important psychological 1800 mark and this weekly close will be important on charts, for being the final trading week of the year amidst the thin trading due to the festive season. The Medium term support stands at 50 DMA @1736 below which the trend may turn bearish. The short-term Stochastics Oscillator is at 41 and the Relative Strength Index is at 57.
Silver Technical Report: The silver prices, parallel with gold prices show a rangebound move after they performed a good show of strength on Tuesday last week. The medium-term trend looks up as the prices continue to trade above 200 DMA @21.13. As 50 DMA @21.46 has crossed above 200 DMA on daily charts, further fire-up in the rally is expected. However, some technical profit booking can be expected here if the crossover fails. The Short term Stochastics Oscillator is at 67 and the RSI momentum is near 62.
Fundamental Report: Gold had an eventful 2022. After hitting highs at $2070 in March, gold pulled back to lows at $1615 in September before rebounding toward the $1800 level. What’s in store for gold in 2023? The recent rebound in gold markets was triggered by the pullback in Treasury yields. However, yields have recently started to move higher as the Fed signaled that it was ready to push the interest rate above the 5.00% level in 2023. High-interest rates are bearish for gold that pays no interest. At this point, the key question is whether the Fed will keep rates near the 5.00% level for many months or if it will start to cut rates at the end of 2023. While the Fed’s latest signals were hawkish, many observers doubt that the central bank will be ready to put huge pressure on the economy for the whole year 2023. Gold’s dynamics will also depend on the dynamics of the U.S. dollar. The American currency had a strong 2022, although it lost momentum in October and started to pull back against a broad basket of currencies.
If the global economy suffers a serious hit in 2023, money may move back into the safe-haven U.S. dollar, which will be bearish for gold. It remains to be seen whether traders are ready to increase purchases of gold as a safe-haven asset. In 2022, safe-haven demand for gold existed in February and March, when traders focused on geopolitical tensions. Later, the combination of a stronger dollar and rising yields put significant pressure on gold and other precious metals, and traders were not ready to use them as safe-haven assets. From a big-picture point of view, gold managed to get out of the strong downside channel and is trying to develop sustainable upside momentum. If the Fed is not too hawkish, gold should have a good chance to move toward the $2000 level in 2023.