Gold & Silver Market Analysis for Wednesday 1st December

Kinesis Money Macroeconomic Analysis

Today, investors are continuing to evaluate the projected danger of the new coronavirus variant and the potential consequences on the global economic situation. The rebound on Monday was followed by a decline on Tuesday, while today, has seen that the markets are back in green. 

Overall, the increased volatility in the financial markets is apparent. However, fears of another economic collapse, as seen in March 2020, quickly dissipated as the situation develops.

Despite the growing uncertainty, Jerome Powell did not act dovishly after his last speech. Unlike Christine Lagarde, he admitted that inflation is, in fact, not transitory – a rhetoric that has been largely supported by the central banks for months. 

In response, this could be an implicit signal that the tapering process is about to speed up in the next few months. This means that the first-rate hike could arrive sooner than expected, even if the Federal Reserve monitors the evolution of the pandemic closely.

Today’s economic calendar is extremely busy, with speeches from both Powell (speaking for the Federal Reserve) and Bailey (speaking for the Bank of England). In addition to this, the ADP non-farm employment change will be released.

After a recent price dip in oil categorisations: West Texas Intermediate (WTI) and Brent, investors will be carefully monitoring the US oil inventories, released today at 16:30 (European time).

Kinesis Money Gold Analysis

The gold price is gaining momentum in the risk-off mode now seen on the markets. There is increased volatility of the gold price, combined with markets now resting in red. The greenback rally has slowed down significantly, as the Euro/Dollar rebounded above 1.13. 

Despite this scenario – marked by a lesser appetite for risk – gold has not been able to surpass the $1,800 threshold. Yesterday, bullion fell from just above $1,800 to $1,770. In today’s early trading, it rebounded to $1,790. 

Investors are looking for some clarity about the developments in monetary policy to be adopted by the Federal Reserve. Of course, there is still tension surrounding the possibility of an increase in the pace of tapering.

From a technical point of view, there is clear support at the $1,770 mark, while the first two resistance zones are placed at $1,800 and $1,830.

Kinesis Money Silver Analysis

Silver continues to struggle, as the technical scenario remains fragile. The spot price fell yesterday below $23, which is around 10% less than the peak it reached in mid-November – at $25.5 per ounce.

There are now unforeseen risks coming from the new Omicron variant of Covid-19. These risks arrive in conjunction with hawkish expectations about the Fed’s next moves, which have both been a bearish trigger for silver.

In today’s early trading, there has been a modest rebound, with the spot price still toying with the level of $23. A clear surpass of this threshold could open space for further recoveries, with the first resistance zones placed at $23.3 and $23.7.

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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.