The Bank of Japan’s surprise decision to raise its benchmark interest rate cap to 0.50% from 0.25% sent waves through global financial markets. Since 2016, the Bank of Japan has set its target range for the 10-year Japanese government bond yield close to zero, with a cap of 0.25%. As other major central banks began raising interest rates this year, the BOJ kept its policy rate ceiling close to zero.
According to Portal News, “The Bank of Japan shocked markets on Tuesday with a surprise change in its bond yield control, allowing for a sharper rise in long-term interest rates, a move aimed at mitigating some of the costs of prolonged monetary stimulus… The central bank left its yield target unchanged unchanged and said it would sharply increase asset purchases, a sign the move was a fine-tuning of existing ultra-loose monetary policy rather than a easing back.
The BOJ’s move stunned financial markets around the world. The value of the Japanese yen rose dramatically to a four-month high against the US dollar, which in turn led to strong gains across the board in precious metals. Gold gained about 1.7%, silver 5.22%, palladium 3.79% and platinum 2.53%.
As of 4:15 p.m. EST Gold futures basis, the most active February 2023 contract is fixed at $1828.20 after accounting for a net gain of $30.50. Spot gold is up $31 and is currently fixed at $1818.40. Silver had the largest percentage gain of over 5%, with the most active March 2023 futures contract gaining $1.20 and fixing at $24.39.
Gains in precious metals were partially fueled by dollar weakness, but the vast majority of today’s moves were the result of strong buying in the markets.
Our technical studies show that gold futures support levels initially come in at $1795, which is the longest moving average used by market technicians. Followed by the 200-day MA, key support is found just below the 200-day SMA at $1785, which is also based on the 23.6% Fibonacci retracement. The Fibonacci retracement uses a record starting at $1619, the low two months ago, and ending at $1837, gold’s highest since August.
If you want more information, just use this link.
I wish you good business as always,
Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.