Gold & Silver Market Analysis for Monday 6th December

Kinesis Money Macroeconomic Analysis

The countdown is on, with only 9 days to go until the 15^th December, when the 2-day FOMC (Federal Open Market Committee) meeting will come to a close. 

There is a good chance that the chairman of the Federal Reserve, Jerome Powell, will announce an increase in the pace of tapering. 

In other words, the Fed could heavily reduce the purchasing of bonds, in preparation for a potential rise in interest rates within just a couple of months. 

In his last few speeches at the Washington Senate, Powell seemed more worried about inflation (which is no longer transitory by definition) than the new Omicron coronavirus variant. Of course, these worries may be reflected in the forthcoming decisions to be made by the Federal Reserve. 

On another note, it should be mentioned that non-farm payroll data published on Friday largely missed expectations. With an increase of 210, 000 units, this was less than half of the figure that was forecasted by analysts. 

This Friday, the core CPI (Consumer Price Index) will be revealed, which is a significant indicator for monitoring the effect of inflation. Certainly, the Fed will be taking note. 

This week on the agenda, decisions about interest rates will be made by the New Zealand Central Bank (expected to hold rates unchanged at 0.10%) and the Bank of Canada (where rates should remain steady at 0.25%). 

Kinesis Money Gold Analysis

The gold price closed last week with a rebound to $1,785. Bullion was elevated by a modest decrease of the US Dollar, and the decline of the Treasury Yields. Indeed, the 10-year note yield has fallen to 1.35%, following the labour data, which showed a weaker recovery than the forecasts. 

This morning, there has been a modest rebound of the US Dollar and Treasury yields, with gold down slightly by 0.2% in today’s early trading session. After the recent decline, bullion still seems to be placed in the trading range of $1,760-$1,800. 

Investors are facing a challenging scenario, with the uncertain evolution of Covid and a growing chance that the tapering process will accelerate. In addition, gold is still looking for a clear directionality.

Kinesis Money Silver Analysis

Silver remains weak, with the spot price well below $22.5 – clearly underperforming gold. The precious metal is just 1% above the first crucial support zone of $22-$22.1. 

A fall below this threshold would easily open space for a new test, like the one reached at the end of September (in the region of $21.4-$21.5). On the other hand, a positive signal can only come to fruition with a clear recovery and surpass of $23.

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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.