Gold & Silver Market Analysis for Monday 11th October

Kinesis Money Macroeconomic Analysis

As the new week commences, US market recovery is showing some weakness. The nonfarm payrolls released on Friday were a disappointment for market analysts, revealing a minor growth of less than 200,000 in non-agriculture job positions. This was drastically lower than what was forecasted: an increase in around 500,000 units.

US unemployment is currently on the decline, experiencing an 18-month-low, as a result of many people exiting the job market. In a few words, US employment growth is slowing.

With only 3 weeks to go until the next Federal Open Market Committee (FOMC) meeting, there is added uncertainty about what the Federal Reserve’s next decision will be. It still seems likely that the US central bank will start the process of reducing liquidity in December, having previously announced this in November’s meeting.

However, there is still some doubt about how the pace of tapering will be carried out, especially if further macroeconomic data confirms it will slow down during post-pandemic recovery. Moreover, US bankers could be forced to postpone the first official interest rate until after the pandemic, which is now expected in the second half of 2022.

Despite the unfulfillment of expectations from US labour data, there have not been significant directional movements on the markets. The EUR/USD pair is still being traded below the 1.16 mark, in a trend that appears favourable to the greenback, while the oil benchmark for both WTI and Brent (the two main categories of crude oil) are gaining, and reaching new records. Gold reacted to the US Nonfarm payrolls with a spike to $1,780, before slowing down again to $1,760. Silver offered a positive signal consolidating above the $22.50 per ounce threshold and attacking the $22.7 resistance.

Kinesis Money Gold Analysis

Gold has started the new week with a modest decline, with the price traded in the $1,755 region. From a technical point of view, bullion is still looking for a clear directionality. Despite this, the price is holding above $1,750, a fact that could be considered as positive, or at least, as a consolidation.

Initially, the response of gold towards U.S. labour data was extremely positive before bearish factors reacted, pulling down the price to $1,760, showing that there is still some selling pressure on the markets.

Kinesis Money Silver Analysis

Little by little, silver is showing some interesting signals of recovery. On Friday, we saw a massive difference between gold and silver behaviour. In fact, the gold rebound vanished in a couple of hours, while silver managed to hold above $22.50 per ounce, attacking the $22.70 resistance and confirming investors’ growing interest.

From a technical point of view, a solid confirmation above $22.70 in the next few trading sessions will open space for new recoveries. It appears that the first target is placed at $23, but there could be significant space for further rallies to the $23.8 – $24 area. Just a few months before, silver was traded at $30 per ounce.

Carlo Alberto De Casa is Market Analyst for Kinesis Money.

He also writes as a technical analyst for the Italian newspaper La Stampa.

Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018.

This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.