Gold & Silver Market Analysis for Friday 15th October

Glory for Gold and Silver – A Rebound for Precious Metals

In the last few weeks, investors’ attention has focused on the energy sector, with a rally for natural gas, as well as WTI and Brent (the two main benchmarks for crude oil pricing). Finally, this week saw some significant positive movements from both gold and silver, with an improved technical outlook on these two precious metals.

In fact, a decline in the return on US treasury yields and the consequent slowdown of the greenback was enough to generate a quick rebound for gold and silver.

Earlier this week the US inflation rate was released, 5.4%, which was 0.1% per cent above what was to be expected. However, instead of investors selling their gold and silver as we approach the beginning of the tapering from the Federal Reserve, they decided to buy precious metals as a hedge against inflation. 

In other words, the potential announcement of the beginning of tapering (the process of reducing the liquidity in the system) seems to have already been fully, or at least partly, priced by the markets.

Kinesis Money Gold Analysis

The gold price has broken up the resistance zone of $1,770, jumping to $1,800. As previous analysis reported, the technical scenario is improving and this rally confirms this hypothesis.

Bullion has now returned in the former lateral channel between $1,790 and $1,820, with the price now stalling between $1,790 and 1,800. A clear surpass of the psychological threshold of $1,800 could pull up the price to $1,820 and eventually to $1,835, which are the next targets in the case of further recoveries.

Concerning the price of gold per gram, it’s worth analysing the above chart: the outlook is clearly improving, as bullion climbed to $58, before slowing down to $57.7 earlier this morning. If the price could surpass $58.2, there could be space for a new recovery to $59 dollars per gram, while a fall below $57.2 could give new strength to sellers.

Kinesis Money Silver Analysis

The price of silver continues to consolidate after yesterday’s rally and this can be understood as a positive signal.

Finally, the rebound is on the way to becoming a proper inversion. It is true that the price of silver recovered more than two dollars (around 10%) from the low it reached just two weeks ago.

From a technical perspective, as was forecasted in our recent analyses, the clear surpass of $22.7 first, and now $23, has opened space for further recoveries.

It seems that investors realised – suddenly – that silver was relatively cheap, while the fundamentals are positive. Indeed, silver’s physical demand is expected to remain solid in the next few years, mostly thanks to the demand triggered by the production of electric cars and photovoltaic technology.

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.