Gold & Silver Market Analysis for Friday 10th December

Kinesis Money Macroeconomic & Gold Analysis

In the first part of November, bullion jumped above $1,850. Once the markets understood the heightened chance of an accelerated tapering process, bullion sharply declined below $1,800. 

The bearish pressure we have witnessed found a strong obstacle with the support zone of $1,760. This led to the gold price enacting a lateral movement and generating a lateral channel between $1,760 and $1,790. Here, the lower volatility and movements are compressed between the support of $1,750 – $1,760 and the resistance of $1,790 – $1,800.

It is clear that investors are looking for new catalysts, which could drive the price up or down, offering a more precise directionality. In a few words, the limbo of a “wait and see” mode has begun, with only five days to go until the Federal Open Market Committee (FOMC) meeting on the 14^th-15^th December. Investors are curious to discover if the Federal Reserve will change the current pace of tapering, increasing its speed – or not.

Last week, the hawkish rhetoric of Jerome Powell, aimed towards the Senate banking committee, pushed traders to the conclusion that there is a decent chance of an increased tapering process. However, as there is also the new Covid variant to consider now, the scenario remains unclear. As a result of this, many countries, including the UK, have put in place new restrictions to mitigate the spread of the virus. 

Moreover, the last US nonfarm payrolls missed expectations, showing some fragility in the economic recovery after the pandemic. In this scenario, the greenback remains strong, with the trading pair EUR/USD still maintaining 1.13. Meanwhile, WTI and Brent are still up 5% compared to last week, currently being exchanged at $71 and $74 per barrel, respectively.

The situation deserves a final note to summarise the scenario on the market. Later today, the US core Consumer Price Index (CPI) will be released, within the context of analysts having forecasted the 0.5% price growth in the month of November. Any figure above this threshold could force the Fed to act with urgency, thereby accelerating the tapering process. However, if price growth slows down the rally seen in the last few months, the US central bank may be more patient with its monetary policy.

Kinesis Money Silver Analysis

The silver price has fallen below the support zone of $22, confirming the strength of sellers seen in the last few weeks. Moreover, the precious metal continues to underperform in comparison with gold – which remained more or less stable, with a slight fractional loss yesterday.

Early trading this morning confirmed this trend, with silver reaching a new 2-month low at $21.85. Despite the optimal fundamentals, bearish momentum remains dominant. After silver lost its hold on the $22 mark, the first support zone is now placed at $21.4 – $21.5 – the low it reached on 29-30 September.

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Carlo Alberto De Casa is an external 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.