Kinesis Gold Analysis
Things are changing quickly in financial markets and investors require nerves of steel. After creating a solid bullish set-up, gold experienced its worst day of the entire month, losing over $30.
From a technical point of view, it is not a tragedy, but bullion is – once again – back in the lateral channel between $1,790 and $1,820. We should point out that the precious metal has broken down the 200-day moving average (which is currently located at around $1,810).
The recent correction confirmed the importance of the $1,830 – 1,835 area, which is now the key level to surpass for starting a strong bullish movement, whereas a decline below $1,790 would represent a signal of weakness from both a technical and graphical point of view.
There are various reasons behind the decline seen earlier this week. Indeed, we have seen a recovery of the greenback, linked to rising yields of the U.S. treasury bonds, with the 10-year bond jumping from 1.32% to 1.37%, before slowing down in the early trading this morning. But there are also some rumours about the possibility of the beginning of tapering from the ECB, which are pressuring the gold price.
Indeed, the hawkish pressure from Northern European bankers is growing, as inflation is showing some recovery signals, which are also noticeable in Europe. Despite this, it does not seem too likely that Ms Lagarde will announce any changes in the bond purchases in tomorrow’s meeting.
Any hawkish statement from the ECB could push gold below the $1,790 mark, while a dovish ECB could lift up prices, giving new fuel to gold after the recent corrections.
Kinesis Silver Analysis
Silver recovery stopped sharply earlier this week. The precious metal was not able to surpass the resistance zone of $25 and the price declined to $24,4, following the weakness of gold and the rebound of the U.S. Dollar.
From a technical point of view, the positive trend is not compromised for definite, but it is now crucial that silver can hold above the dynamic and static resistance placed at $24.2 – 24,25. Analyzing the gold-silver ratio, we can see that in the last few days silver recovered, pulling down the ratio from 77 to 73.5 and confirming investors’ growing interest in the grey metal.
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.
