Gold Technical Report: Gold moved up from the day lows after finding a support near 100 DMA @1937 and also hit the 10 DMA @1960. If the rally sustains, next target can be 50 DMA @1992. The fact that prices and all these averages are trading above major support at 200 DMA @1831(below which the trend may turn bearish) makes the medium term trend bullish. Gold has been facing selling pressure on continuous profit booking after it made a new high around 2080 earlier this month and now almost 120$ below the new high. The short term Stochastics Oscillator is at 28 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 45 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: The silver prices remained rangebound with an upwards bias. For last 4 days, it has been trying hard to break the resitance at 100 DMA @ 23.33. After clearing this level , next target stands at 50 DMA @24.40. The medium term trend looks intact as both of these averages above 200 DMA @22.00. The Short term Stochastics Oscillator is at 51 and Relative Strength Index near 41.
Fundamental Report: President Biden and House Speaker McCarthy reached a deal to raise the debt limit which hit $31.4 trillion In January. The 99-page bill headed over to the House Rules Committee this morning, where the committee will vote to send it over for a full house vote expected on Wednesday. The financial markets immediately began to factor this event into asset pricing. The net result was a lower dollar and yields on U.S. debt. The yield on 10-year Treasury Notes dropped to 3.697% after factoring in today’s decline of 10.7 basis points. The dollar is currently fixed at 103.965 after factoring in a decline of 0.16%. However, Fed officials have taken a hawkish stance on interest rates in recent days. This has somewhat offset the safe-haven flows related to the U.S. debt ceiling situation, as higher interest rates diminish the appeal of zero-yield bullion. Neel Kashkari, Minneapolis Fed President, who experienced the 2008 financial crisis, now expresses worries about systemic risks and inflation as a U.S. monetary policymaker. If a more dovish approach is adopted later in the year, it would imply a potential easing of interest rates. Such a move would be seen as bullish for equities and reduce the attractiveness of holding gold compared to other riskier asset classes. Currently, the markets are pricing in a 42.7% chance of the Federal Reserve keeping rates unchanged in June.