Gold Technical Report: Gold slipped further on Friday to end the week with losses. The selling pressure that started at the start of this month when Gold shed almost 100 dollars in 2 consecutive days, continues to date. It’s also clear that the 10 DMA @1830 has crossed below the 50 DMA @1866. But since 50 DMA is trading over 200 DMA @1775, 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 16 and Relative Strength Index is at 32.
Silver Technical Report: The silver prices, too following Gold, faced selling pressure on Friday for the third consecutive day and closed below the 200 DMA @20.97. The medium-term trend can be considered up only if the prices move above 100 DMA @21.93. The Short term Stochastics Oscillator is at 23 and the RSI momentum is near 24.
Fundamental Report: The core PCE increased by 0.6% in January when compared to the prior month, taking the year-over-year PCE to 5.382%. Friday’s PCE report resulted from surging consumer spending after a dramatic decline at the end of last year. According to the BEA, “Personal income increased $131.1 billion (0.6 percent) in January, according to estimates released on Friday by the Bureau of Economic Analysis. Disposable personal income (DPI) increased by $387.4 billion (2.0 percent) and personal consumption expenditures (PCE) increased by $312.5 billion (1.8 percent). The PCE price index increased 0.6 percent in January. Excluding food and energy, the PCE price index also increased by 0.6 percent (table 9). Real DPI increased 1.4 percent and Real PCE increased 1.1 percent; goods increased 2.2 percent and services increased 0.6 percent.”
This raises expectations that the Federal Reserve will raise rates by ¼% for the next three consecutive FOMC meetings. This also raises the expectations by market participants that the terminal fed funds rate will move to a higher target than 5.1%. Most importantly, this report confirms that components of inflation remain sticky or persistent. This is after an extremely hawkish monetary policy by the Federal Reserve has raised rates at the last eight consecutive FOMC meetings. The Fed raised its benchmark rate from near zero in March 2022 to 4.5% – 4.75% last month. It has also raised the probability of ½ a percent rate hike at the next FOMC meeting in March. According to the CME’s Fedwatch tool, there is a 27% probability of that outcome.