Gold Technical Report: The gold witnessed some profit booking to end the week on a weaker note. They have also witnessed the downfall earlier for the last 2 weeks. If prices do break above the main level of $1684, the medium-term trend will turn positive. Also at the same level is resistance as the current 50 DMA on Daily charts. The short-term Stochastics Oscillator is at 44 and the Relative Strength Index is at 42.
Silver Technical Report: The silver prices also posted a week closing last Friday in the footsteps of Gold. But managed to bounce back above 50 DMA at 19.04. The downside, major support is only at 18.00, crossing below which will change the medium-term trend into negative. On the upside, a crossing of 200 DMA at 21.54 will change the main trend to positive. The Short term Stochastics Oscillator is at 62 and the RSI momentum is near 50.
Fundamental Report: On Friday, BLS (Bureau of Labor Statistics) released the latest inflation report vis-à-vis the PCE index for September 2022. The report revealed what Americans already know, that the cost of goods and services remains exceedingly. According to the BEA, “The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased by 0.5 percent. Real DPI increased less than 0.1 percent in September and Real PCE increased 0.3 percent; goods increased 0.4 percent and services increased 0.3 percent.” The PCE remains elevated at 6.2% year-over-year the same as in the prior month (August). More so, the core PCE which excludes food and energy costs rose from 4.9% in August to 5.1% in September. In other words, after the Federal Reserve raised their benchmark rates by 25 basis points in March, 50 basis points in May, and 75 basis points in June, July, and September, meanwhile the core PCE which was at 4.9% in May, rose to 5% in June and is now at 5.1% in September. The only months in which the core PCE had any reduction were in July and August, and those reductions in inflation were short-lived as the core PCE was higher in September than any other month since May.
This will be the most recent data that the Federal Reserve will have on inflation and therefore will seal the fate of the Federal Reserve implementing a 75-basis points rate hike at next week’s FOMC meeting. It also increased the likelihood of the Federal Reserve raising rates by 75 basis points in December. According to the CME’s FedWatch tool, there is a 43.1% % probability that the Federal Reserve will raise its benchmark rate by 75 basis points in December, this is an increase from yesterday’s probability prediction of 34.1%. This would take the Feds benchmark rate to between 450 and 500 basis points by the end of 2022. However, today’s report came in below expectations predicted by Bloomberg News. Their survey predicted that the PCE Index would come in at a 6.3% rise in September year-over-year. The report sent a clear message; rate hikes enacted by the Federal Reserve this year have had profoundly little impact on the cost of goods and services and inflation continues to remain persistent at a 40-year high. The 3rd Q GDP revealed that our economy is once again growing and has not been severely hindered by the Federal Reserve’s interest rate hikes. The Federal Reserve will continue and maybe even increase the size of their rate hikes to a full 1%. The gold prices will remain volatile as we go into the FOMC meeting.