Gold & Silver Market Analysis for Monday 29th November

Kinesis Money Macroeconomic Analysis

The markets are experiencing a rebound after the sell-off on Friday, as the South-African variant seems to pose a lesser risk than what was initially feared. In fact, investors do not appear worried, considering the virus is contagious and spreading fast. Vaccinations appear to be working in the fight against this variant, protecting individuals against severe symptoms.

Before diving into an analysis of the week ahead, we must unpack the events seen last Friday on the financial markets. 

Renewed Uncertainty in the Market

It is common knowledge that investors don’t like uncertainty. In the last few months, the pandemic has seemingly appeared to be under control, with considerable progress made in many vaccine roll-outs. However, the news that arrived from South Africa meant renewed uncertainty for investors. Generating mass panic sales, the new variant triggered a proper sell-off on the global markets.

European indices lost between 4-6%, while oil posted an astonishing drop of -13%, losing around $10 per barrel for each consecutive day at this level. In a few words, the risk of further lockdowns shocked the markets, as investors were unable to predict and aptly prepare for the consequences of the new strain.

Only 60 hours later and the situation appears to be very different. As panicked market behaviour dies down, both stocks and oil are now on the road to recovering a part of Friday’s loss.

Understanding the Impact

The next few days will be crucial to understanding the projected impact of the new variant; the risk of further closures could place a renewed strain on economies around the world. The evolution of the pandemic will be strictly monitored by central banks and could have a significant impact on their future decisions. Indeed, further lockdowns would likely force the Federal Reserve to slow down the tapering process, to which other central banks may follow suit with their monetary policy. 

On a separate note, we should mention Christine Lagarde’s recent comment, in which she re-affirmed that the rise in inflation is ‘largely transitory’. 

Kinesis Money Gold Analysis

On Friday, gold jumped above $1,800, while global stocks posted their worst day in over a year and a half. This occurred before the gold price slowed down to reach the $1,790 mark. At the time of writing, the price of gold in dollars per gram is just below 58.

Bullion has started the new week with a decrease in volatility. Investors are looking for further news on the South African variant and its subsequent impact on the global economic situation. A rebound above $1,800 would be positive, opening a path for further recovery to the resistance level of $1,830-1,835. Alternatively, a decline below $1,780 would represent a signal of weakness, increasing the chances of new correction.

Kinesis Money Silver Analysis

In today’s early trading session, silver rebounded above $23.5 per ounce, with a significant gap-up. This means that, in the context of silver, the price of the precious metal has opened the trading session higher than yesterday’s price.

Despite this, the technical scenario remains moderately fragile. The zone of $23-23.2 represents crucial support when, on the other hand, a new fall below this area would act as a negative signal.

Bulls will only regain strength with a solid close – with good volume – above $23.75, while the following resistance level is firmly placed at $24.

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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.