Gold Technical Report: Gold prices witnessed pullback yesterday after a red DOJI , a day before. Medium trend had picked up pace after crossing 50 DMA which is at 1689 on Daily charts currently. The next Major resistance is 200 DMA @ 1798, above which the main trend may turn positive. The short term Stochastics Oscillator is at 66 and Relative Strength Index is at 60.
Silver Technical Report: The silver prices had marched up nicely last week after crossing forcefully 200 DMA @ 21.31, but witnessed some profit booking yesterday and closed below the same. Downside, major support is only at 50 DMA @ 19.98, crossing below which may change the medium term trend into negative. The Short term Stochastics Oscillator is at 48 and RSI momentum near 57.
Fundamental Report: The Weakness in both gold and silver today is the byproduct of multiple events. Concerns about mass protests in China are front and center. According to the New York Times, “After a weekend of confrontations between officials and demonstrators, video from two sites in Shanghai and Beijing showed a heavy security presence.” Chinese citizens have staged protests against China’s strict Covid restrictions and lockdowns which have led to nationwide protests. Investors are concerned that the lockdowns and strict restrictions will limit economic growth in China the world’s second-largest economy. Various members of the Federal Reserve have been extremely vocal about upcoming interest rate hikes. One of the more hawkish Federal Reserve members is the St. Louis Fed President James Bullard. Last week he commented on the need for the Federal Reserve’s benchmark rate to go as high as 7% to deal with lowering inflation.
Investors are wondering if Chairman Powell will soften the hawkish rhetoric when he speaks on Wednesday at an event hosted by the Brookings Institution in Washington. Currently, it is widely assumed that the Federal Reserve will raise its benchmark rate by 50 basis points in December. However, the probability of a 50-basis point rate hike has been decreasing. Currently, the CME’s FedWatch tool believes there is a 67.5% probability that the Fed will raise its benchmark rate by 50 basis points at the last FOMC meeting of the year. Only one day ago the CME’s FedWatch tool was predicting a 75.8% probability, and one week ago it was predicting an 80.6% probability.