Gold Technical Report: Gold prices tried to stabilize yesterday after a four days continuous streak of selling. The selling pressure that started at the start of this month when Gold shed almost 100 dollars in 2 consecutive days, continues to date. It’s also clear that the 10 DMA @1828 has crossed below the 50 DMA @1865. But since 50 DMA is trading over 200 DMA @1775, 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 15 and Relative Strength Index is at 31.
Silver Technical Report: The silver prices, continued to fall under selling pressure for the fourth consecutive day and traded below the 200 DMA @20.95. The medium-term trend can be considered up only if the prices move above 100 DMA @21.92. The Short term Stochastics Oscillator is at 11 and the RSI momentum is near 23.
Fundamental Report: Gold prices tested a two-month low on Monday, continuing the previous session’s sell-off that was fueled by stronger-than-expected U.S. inflation and consumer spending data. The reports stoked fears that the Federal Reserve would deliver more interest rate hikes for a longer period than previously anticipated to tame inflation. The SPDR Gold Shares ETF (GLD) settled at $168.37, down $1.20 or -0.71%. Recent economic data showed U.S. consumer spending shot up 1.8% last month, the largest increase since March 2021, while the personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 0.6% after gaining 0.2% in December. Cleveland Fed President Loretta Mester also contributed to the weakness when she said, “It’s going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%.” Currently, money markets expect the Fed’s target rate to peak at 5.408% in September from a current range of 4.50% to 4.75%. This is up from 4.88% on Jan. 31 and is the primary reason for gold’s current sell-off. This raises expectations that the Federal Reserve will raise rates by ¼% for the next three consecutive FOMC meetings. This also raises the expectations by market participants that the terminal fed funds rate will move to a higher target than 5.1%. Most importantly, this report confirms that components of inflation remain sticky or persistent. This is after an extremely hawkish monetary policy by the Federal Reserve has raised rates at the last eight consecutive FOMC meetings. The Fed raised its benchmark rate from near zero in March 2022 to 4.5% – 4.75% last month. It has also raised the probability of ½ a percent rate hike at the next FOMC meeting in March. According to the CME’s Fedwatch tool, there is a 27% probability of that outcome.