Gold Technical Report: Gold moved up yesterday after two consecutive red candles earlier. It also managed to close above the10 Day Moving Average (DMA) @1964. Both 10 DMA and 50 DMA @1890 are trading over 200 DMA @1782 hence, 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 50 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 61 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver prices following the suit also increased after a small correction, a day before. It has strong support near the common area of 100 DMA @22.47 and 50 DMA @22.18. The medium-term trend looks bullish as both of these averages are above 200 DMA @20.95. The Short term Stochastics Oscillator is at 75 and Relative Strength Index is near 64.
Fundamental Report: Although some concerns regarding the banking crisis might be subsiding, there continues to be potential negative economic fallout. It is unclear whether or not the recent bank failures are limited to those banks identified or whether the failure of SVB and Signature Bank of New York are precursors to more banking failures. Inflation continues to be elevated and troublesome for individuals, companies, and the economy. Interest rates remain elevated as the Federal Reserve has raised its terminal rate at every consecutive meeting since March 2022. The rate hikes by the Fed are intrinsically designed to create an economic contraction to diminish inflation; many economists believe this will ultimately result in a recession. A deal backed by U.S regulators for First Citizens Bank to purchase failed Silicon Valley Bank (SVB) has boosted global sentiment and cooled jitters over the banking sector. The renewed appetite for risk is likely to stimulate demand for global equities at the expense of safe-haven assets. However, some caution still lingers from the recent market chaos and this could encourage investors to think twice before jumping on the risk train. U.S. futures are pointing to a mixed open as market players await the Senate hearings on Silicon Valley Bank.
This week, financial markets will focus on key inflation figures from across the globe, speeches by Fed officials, and the U.S. Senate hearings on Silicon Valley Bank. Although some normality seems to be returning to markets, this could easily be disrupted by negative news or data that rekindle concerns not only over the banking sector but also inflation.