Gold & Silver Market Analysis for Friday 16th of July

Kinesis Gold Analysis

Bullion surpassed the resistance placed at $1,820, reaching a new 4-week high at $1,835. The greenback recovery, seen in the last few hours slightly curbed the rebound, without changing the main scenario. Indeed, despite this modest decline, the technical picture remains supportive, as bullion is holding above the key level of $1,820, confirming its positive momentum. Only a new descent below this zone could trigger some new correction, as the price will re-enter in the lateral channel $1,790 – 1,820.

Overall the inverse correlation between the US Dollar, US yields and gold is still one of the main topics on the table, even if gold has shown to be able to perform decently while the greenback is recovering, as in the last few hours.

From a fundamental point of view, the jump seen in the second part of this week should be seen as a market reaction to Jerome Powell’s speech, after he explained that the Federal Reserve will have no rush for reducing the current expansive monetary policy. Despite inflation growing and the economic recovery, the US Central bank will not immediately change its monetary policy, while a monetary stimulus is still needed, as the Federal Reserve will wait for “substantial further progress”. Overall, the markets interpreted this as a dovish speech and investors increased their long positions on gold.

Kinesis Silver Analysis

Silver price is traded in fractional loss, but it is holding above $26, while the scenario remains supportive. A clear break up of the resistance zone of 26.5 – 26.6 could open space for further rallies. Otherwise, prices could continue the slow dance in the lateral trading range of 26 – 26.5 as it happened in the last few days.

So far silver has not yet fully shown its bullish potential, but there are good chances of seeing new rallies to a new test with the two major resistances, placed at 28.3 (or better, in the area 28.2-28.5) and with the psychological threshold of $30.

Rising inflation, indeed, should not be seen as a major issue for silver. It is true that rising interest rates are generally not positive for gold and silver, but they are both protecting investors in inflations’ rushes.

We should also point out that gold is traded just 10% below its historical records – reached in summer 2020 at $2,070 per ounce – while silver is still almost 50% below its highest levels reached at $50 in the early 80s and in 2011 and this could increase space for further recoveries.

Carlo Alberto De Casa is Market Analyst for Kinesis. 

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 250-pages 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.