Gold & Silver Market Analysis for Friday 29th October

Kinesis Money Macroeconomic Analysis

The European Central Bank’s monthly meeting confirmed interest rates were unchanged and at a historical low, which was to be expected by the financial markets. Despite this, the Eurozone’s currency jumped up on the Forex markets. 

In fact, investors’ expectations regarding the ECB’s monetary policies are now more hawkish, already forecasting that the rates will hike in 2022.

Christine Lagarde, president of the European Central Bank, initially intended to be dovish. However, in response to the market reaction, her comments were certainly not as dovish as expected. At the very least, they were not forceful enough to convince investors that rates will remain steady next year. 

This is the one explanation for the quick rally of the Euro. Although, another factor that should also be considered is the US Gross Domestic Product (GDP: the value of all goods and services produced in the US) for the third quarter of 2021. 

This GDP announced at 2% did not reach the forecast, being well below the 2.7–2.8% prediction, which was another negative driver for the US Dollar. This can be seen through the dollar index, which has fallen from 93.8 to 93.2, before recovering in just the last few hours to 93.45.

This week will end with a focus on Germany’s GDP and, particularly, Eurozone inflation figures, with both figures set to be published this morning. This afternoon (13:30 UK time, 14:30 CET), Canada’s GDP will be released.

Next week, there will be plenty of events detailing the global macroeconomic situation, with the main focus on the United States. The Federal Open Market Committee, the Federal Reserve’s monetary committee, will have a crucial meeting on Nov 2nd-3rd. Next Wednesday, the US ADP (payroll data) will be released, while Friday the 5th will see the non-farm payrolls unveiled.

In addition, the UK will release the PMI (purchasing managers index), and the Bank of England will meet in the forthcoming week.

Kinesis Money Gold Analysis

The gold price is being traded just below $1,800, with a small decline from the closure of yesterday’s session. Volatility remains modest, showing that gold is in a consolidation phase, while bullion confirms the recovery signals seen during the last few weeks.

After the ECB meeting, investors’ attention is now focused on the upcoming Federal Reserve’s meeting next week (2-3 Nov) and the US labour data that will be announced.

The technical picture remains unchanged, with a first support zone placed at $1,770, while much higher volumes are located on the following key level of $1,745 – 1,750. A clear surpass of $1,820-1,830 will offer a positive signal, with space for further recoveries and a medium-term target of $1,900.

In a few words, gold is moving in a largely lateral channel between $1,750 and 1,830. A break-up or breakdown of one of these levels could offer a clear directional signal for bullion.

Kinesis Money Silver Analysis

The silver price is closing the month on a weaker note, as the spot price has fallen to the support zone of $24 again. After a couple of weeks of strong recovery, there is some pressure on silver. 

The next few days will be crucial to observe silver’s current movement, which is only a correction if the recent rebound is finalised. Technically, a clear fall below $23.8 could open space for new correction, while recovery of $24.3 will be a positive signal.

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.