Gold Technical Report: Yesterday, Gold prices tanked down further, continuing downfall of earlier session as it opened below and could not cross above the 10 days EMA @ 1916. Now, next support is near 200 days EMA @ 1890 whereas resistance lies near the conjunction point of 50 days EMA and 100 days EMA near 1928 and then 1951 Horizontal TrendLine touchpoint. The short term Stochastics Oscillator is at 13 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 37 (it is considered overbought when above 70 and oversold when below 30).
Silver Technical Report: Silver prices also declined parallel for the third straight session. It has crossed below opened near crossing below the conjunction point of 50 days EMA and 100 days EMA near 23.48 and then 10 days EMA @ 23.18 and also 200 days EMA @ 23.04 in these 3 days. The Short term Stochastics Oscillator is at 34 and Relative Strength Index near 40.
Fundamental Report: Gold prices declined yesterday in a reaction to higher yields on US bonds and Dollar strength. Take Gold Lower. As long as the Federal Reserve maintains its extremely restrictive monetary policy of keeping interest rates at their elevated level gold will be pressured to trade lower or at best be range-bound. The dollar continues its strong and vibrant rally gaining 0.23% today taking the dollar index to 105.93. The rise in treasury yields as well as the dollar is predicated on the belief that the Federal Reserve will continue to keep current elevated rates for a longer time with a high likelihood of having one more rate hike of ¼% this year. The Fed is resolute in reducing inflation to its 2% target. Chairman Powell in his speech during last week’s press conference was adamant that the Fed will continue to maintain elevated rates for a longer time with a single-minded goal of taking inflation to its 2% target. 12 of the 19 voting members at last week’s FOMC meeting want to raise rates by ¼% this year, with the remaining 7 members voting to maintain Fed funds at their current level. As long as the Federal Reserve maintains its extremely restrictive monetary policy of keeping interest rates at their elevated level gold will be pressured to trade lower or at best be range-bound. Gold prices cannot gain traction as long as market participants believe that interest rates will continue to rise and remain elevated.