Kinesis Money Macroeconomic Analysis
The current financial situation has left investors with many questions to be answered. In order to summarise them, let’s consider the following:
- How far will the growth of inflation go?
- How long can a low-interest-rate environment continue
- How will the central banks respond to inflation?
- Is there a risk of massive corrections on the stock markets?
The answer to all these questions is intrinsically linked, due to the interplay between bonds, stocks, central banks and the inflation rate.
The growth in prices, and the prospect that they could spiral out of control, has been the main topic of conversations over the last couple of weeks. This was particularly the case after the US inflation jumped just above 6%.
The reaction witnessed on the stocks markets was moderate, with a modest decline, while the U.S. 10-year Treasuries and gold posted significant recoveries.
Analysing the scenario, the last few days in the macroeconomic calendar have been quiet. This week will end with a speech from Ms Lagarde at the 31st Frankfurt European Banking Congress, titled “From Recovery to Strength”.
Next week, the agenda is expected to be busy, with a focus on the first part of the week. On Thursday and Friday, trading hours will be reduced in the US, due to Thanksgiving.
The most important data to be released will be the GDP figure for the US. This will either confirm or deny the strength of financial recovery across the United States.
A weak figure, in conjunction with the growth of inflation of the last few months, could increase the risks of stagflation. Since the unemployment rate is well below the historical average in the majority of countries, there is a possibility that this could slow down the prospect of this scenario.
Kinesis Money Gold Analysis
The gold price remains strong, holding above $1,860. As mentioned in the previous analysis this week, the outlook started with a good chance at being transitory for gold, enabling the price to consolidate after the recent rallies.
This is exactly what has happened so far. In fact, bullion moved between $1,850 and 1,875, with a measured decrease in volatility.
Overall, this is a positive signal for bullion, with the major trend also appearing positive. The first key support is placed at $1,830 – as long as the price remains above this zone, the positive mode will remain unchanged.
Kinesis Money Silver Analysis
The bullish impulse seen for silver last week has temporarily slowed down, as the metal is now being traded just below $25. Silver is dancing with the support zone of $24.8-24.9, in a clear consolidation phase, as investors may be seeking a new market driver.
From a technical point of view, we can now see a support zone at $24.6 while the area of $24-24.1 would be the following key level. However, a clear surpass of the recent top of $24.4-$24.5 could mean that bulls have taken back the control, with space in this case for a quick rally to $24.9-25.
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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.
