Gold Technical Report: Gold medium term trend is looking flat. Any slippage down the nearest main bottom at $1786 will reaffirm the downtrend. On the upside, the immediate resistance is the 200 DMA at 1843 and then 50 DMA zone at $1858. A trade through $1858 will change the main trend to up. Short term Stochastics Oscillator is pointing down at 32 and RSI momentum is flat but poised just below midline at 47.50.
Silver Technical Report: Silver medium term trend is looking up. Further slippage down the main bottom at $ 20.88 will reaffirm the downtrend. On the upside, the immediate resistance is the 20 DMA zone at $21.65. A trade through 50 DMA $22.18 will change the main trend to up. Short term Stochastics Oscillator is flat at 3.
Fundamental Report: The Chairman Powell’s testimony before Congress this week painted a dire economic outlook which will include the continued contraction of the national GDP coupled with continued interest rate hikes. During his testimony, it was evident that there was a subtle difference in his word track that was uncharacteristic and a dramatic change from his usual refined method. The chairman made it clear that the Federal Reserve has one goal in mind above all others and that is to reduce the level of inflation. They emphatically stated that the actions of the Federal Reserve will most likely lead to a recession rather than a soft landing.
The revisions by the Federal Reserve to their monetary policy most certainly would contract the economy and bring on a recession. A recession is defined as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.” The last GDP report revealed that the United States had an economic expansion leading to a 6.9% growth in the GDP for Q4 of 2021. If advanced estimates for the GDP Q1 are correct it will indicate a decrease in the real gross domestic product (GDP) for the first quarter of this year. The last occurrence of a contracting GDP quarter to quarter occurred during Q2 of 2020. However, the following quarter (Q3 2020) revealed a robust increase in national GDP.
While a recession can stabilize gold pricing, and higher inflation certainly creates a bullish undertone for the precious yellow metal, rising interest rates have become a primary focus on the future price of gold and has pressured pricing lower since March of this year. Gold has declined just over 12% from the highs of $2070 in March to gold’s current pricing of $1828. While it seems as though there is strong support for gold at $1800 depending on how aggressive the Federal Reserve becomes in regards to further rate hikes. Besides the GDP report due out on Wednesday, on Thursday the government will release its latest core inflationary numbers when the U.S. PCE price index report is published.