Gold Technical Report: Gold prices are trying to stabilize for last 2 days after the heavy fall on Friday and also managed to close above 10 DMA @ 2016. The selloff started last week when the new highs around 2080 attracted profit booking. Both 10 DMA and 50 DMA @ 1962 are trading above 200 DMA @ 1817 hence, 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 43 (it is considered overbought when above 80 and oversold when below 20) and Relative Strength Index (RSI) is at 56 (it is considered overbought when above 70 and oversold when below 30) .
Silver Technical Report: The silver prices are keeping rangebound for last 2 trading sessions, after Friday’s bearish mood which reversed the earlier 3 days’ winning streak. It has a strong support near the common region around 23.73/23.36 of 50 DMA and 100 DMA respectively. The medium term trend looks bullish as both of these averages above 200 DMA @ 21.76. The Short term Stochastics Oscillator is at 63 and Relative Strength Index near 61.
Fundamental Report: Gold Investors are eagerly anticipating the release of the latest consumer and producer price index reports. The U.S. consumer price index (CPI) data is scheduled to be released on Wednesday at 12:30 GMT. Economists polled by Reuters are predicting a 5.5% year-on-year increase in core consumer prices for April. According to a Dow Jones survey, economists are expecting April’s CPI print to reflect a 0.4% increase on a month-over-month basis and 5% on a year-over-year basis. The upcoming data could offer fresh insights into the Federal Reserve’s next policy moves, particularly regarding interest rates. Fed Chairman Jerome Powell emphasized that their decision will be data-dependent during a post-meeting press conference last week. Following the Fed’s meeting, which resulted in a 25 basis point interest rate hike, the central bank hinted that its rate-hiking campaign may be coming to an end. Despite Powell’s assurance that rate cuts are unlikely to be announced soon, concerns about elevated rates dragging the U.S. economy into a recession have been raised. Currently, markets are pricing in an 83% chance of the U.S. central bank holding rates at their current level in June.
Investors are also keeping a watchful eye on developments related to the U.S. debt ceiling. On Tuesday, President Joe Biden and leading lawmakers agreed to initiate additional discussions. The purpose is to break a stalemate concerning raising the $31.4 trillion U.S. debt limit. The country may potentially face an unprecedented default in just three weeks due to this decision. Several factors will impact gold prices in the coming days. If U.S. inflation remains moderately controlled, the Federal Reserve may halt rate hikes, which could potentially weaken the dollar and bolster gold. However, if the upcoming inflation report indicates a high possibility of another Fed rate hike in June, gold prices could decline to the range of $1,956 – $1,923. Higher interest rates can reduce the appeal of non-yielding assets like gold, even though investors view it as an inflation hedge. Therefore, the direction of gold prices in the short-term will depend on the actions and decisions of the Federal Reserve, as well as the performance of the U.S. economy.