Gold Technical Report: After the massive fall on last week, gold prices seem to retrace the fall this week. As long as they trade below the main level of $1680, they poses the risk of the main trend turning negative. We may expect some pullback towards 200 DMA on weekly charts.On the upside, the next major resistance will be above 50 DMA @ 1732. The Short term Stochastics Oscillator is at 40 and RSI momentum is 38.
Silver Technical Report: After the massive fall on last week, silver prices seem to retrace the fall this week.The next major resistence will be faced around 18.95 at 20 PMA and 19.26 at 50 PMA. The Short term Stochastics Oscillator is at 31 and RSI momentum near 45.
Fundamental Report: The Gold attempts a relief rally as the Dollar falls from Its highest value. Along with the massive rate increases, Fed officials signaled the intention of continuing to hike until the funds level hits a “terminal rate,” or end point of 4.6% in 2023. Additionally, the “dot plot” of individual member’s expectations doesn’t point to rate cuts until 2024. In their quarterly updates of estimates for rates and economic data, officials coalesced around expectations for the unemployment rate to rise to 4.4% by next year from its current 3.7%. GDP growth is also expected to slow to 0.2% for 2022, rising slightly in the following years to a longer-term rate of just 1.8%. Finally, headline inflation is expected to drift down to 5.4% this year, as measured by the Fed’s preferred personal consumption index and core inflation is expected to decline to 4.5% this year. Also, A wave of risk aversion whacked financial markets on Wednesday after President Vladimir Putin declared a partial mobilization over Ukraine and accused the West of ‘nuclear blackmail’. Ukrainian President Volodymyr Zelenskyy demanded punishment for Russia in his remarks to the United Nations General Assembly on Wednesday. “A crime has been committed against Ukraine, and we demand just punishment,” he said in video remarks, the only state leader allowed to appear virtually this year. He warned that Russia’s warfare near nuclear plants meant no one was safe and again made an appeal for Russia to be branded as a state sponsor of terrorism by all nations — something the Biden administration has so far said it is against. “We must finally recognize Russia as a state sponsor of terrorists, at all levels, in all countries,” Zelenskyy urged. “This is the foundation for restoring global security.”
In one of the most sudden shifts in global economic policymaking seen in decades, central bankers launch a co-ordinated assault on inflation – delivering an historic tally of interest-rate hikes totalling more than “700 basis-points combined”, within a single week. Perhaps the most important take away from this round of rate hikes – was the “like for like” economic projections put out by the Fed and its global peers – stating that “inflation is likely to accelerate further before it begins to moderate”. The hard fact is that as long as we have interest rates below the inflation rate, even if they’re higher, they’re still negative – and negative interest rates put upward pressure on inflation. Ultimately, you can’t fight inflation with negative interest rates. That’s like trying to put out a fire with gasoline. Surprisingly, this is something central bankers still don’t seem to have figured out, which is leaving them spinning their wheels and hardly even getting close to bending the curve on inflation. The gain in gold is most probably a relief rally based upon short covering and those market participants believing gold is so oversold that this is an opportunistic time to buy the dip. However, since gold prices are so deeply correlated to dollar strength or weakness, likely, further rate hikes or increases at the next two FOMC meetings this year could reignite dollar strength taking it passed its current high just below 115.