Gold Technical Report: Gold prices retraced yesterday after a strong up move a day before. After crossing above the 200 DMA at 1787 and the crucial 1800 mark the rally was looking promising but fizzled out on profit booking. The Medium term support stands at 50 DMA @1718 below which the trend may turn bearish. The short-term Stochastics Oscillator is at 57 and the Relative Strength Index is at 59.
Silver Technical Report: The silver prices, unlike gold prices managed to stay in the green yesterday. The prices continue to trade above 200 DMA @21.20. On the downside, major support is only at 50 DMA @20.65, crossing below which may change the medium-term trend into negative. The Short term Stochastics Oscillator is at 70 and the RSI momentum is near 62.
Fundamental Report: As expected, the Fed announced its decision to raise its benchmark rate by 50 bps. This takes the central bank’s “Fed funds” rate to between 425 – 450 bps (4 ¼% – 4 ½%). However, it was Chairman Powell’s comments regarding his policy outlook during the press conference that garnered the most attention. Market participants and analysts were looking for insight into the forward guidance of the Federal Reserve as it pertains to their monetary policy, inflation, and future rate hikes. Which revealed that the Federal Reserve will continue its policy of monetary tightening by continuing to raise rates in 2023. The Federal Reserve released a statement as well as its summary of economic projections for 2023 through 2025 after today’s FOMC meeting. One component of their economic projections was the most current “dot plot” which reveals assessments made by each Fed official. When the Fed is fully staffed the dot plot will contain 19 individual projections.
Chairman Powell also acknowledged that the last two CPI reports were promising but incomplete. “Data we have received so far on inflation for October and November do show a welcome reduction in price pressures; need substantially more evidence though to be confident inflation coming down.” He also said that “recent data gives us greater confidence in our forecast.” His statements supported the Federal Reserve’s resolve and commitment to keep interest rates at their current level and higher until the Fed reaches its inflation target of 2%. Addressing the possibility of a recession he simply said “no one knows if we are going to have a recession or not.” It was clear that Chairman Powell’s statements today delivered a hard-hitting truth to Americans that inflation will remain persistent for longer than anticipated and interest rates will follow the same course.