Kinesis Money – Macroeconomic Analysis
The current week has had plenty of market drivers. Particularly, yesterday we had both the European Central bank (ECB) meeting and the weekly US Initial Jobless Claim.
During the ECB meeting, Madame Lagarde declared reducing PEPP, the Pandemic Emergency Purchase Programme. She then followed with a careful explanation – in an excellent communication effort – that the ECB is not starting tapering, but is only recalibrating the amount of purchases of bonds.
The economy is recovering quickly and the ECB is forecasting the Eurozone will return to pre-pandemic levels at the end of the year.
In the US, the jobless claims hit the lowest level since early 2020, achieving a new post-pandemic low. At the same time, the Dow Jones Index declined, losing more than 150 points (-0,43%). This reaction could appear surprising for a non-expert: how can the market fall in response to positive macroeconomic data?
The answer is relatively simple. From one side, the U.S. strong data reduced fears of a slow-down of the labour market. Meanwhile, this means that the Federal Reserve could expedite reducing the current accommodative monetary policy. To summarize; investors are once again betting on the starting of the tapering date. Indeed, the Fed should start to reduce the liquidity in the system in the final months of 2021. But when exactly, is still a mystery.
Kinesis Money – Gold Analysis
The gold price is currently traded just above the psychological threshold of $1,800. Despite yesterday’s market movers, gold had a relatively quiet trading session, moving within an under $20 range (less than 1%).
From a technical perspective, we have seen a decline earlier this week, as the barrier placed at $1,820 – 1,830 curbed gold recovery.
Bullion still appears to be placed in the lateral trading range between $1,790 and $1,820. Only a clear surpass of $1,820 first and $1,835 later could open space for new significant rallies, while bullion is experiencing a phase of laterality.
Kinesis Money – Silver Analysis
Silver seems to be short of energy as the recovery we have seen last week is now losing its strength. Despite today’s rebound, the price of the precious metal is showing a weekly decline of 2%.
Investors are still looking for a clear directionality of silver, which seems currently placed in a lateral scenario. In short, the decline seen in August could be over, but we are not yet seeing a clear bullish trend and the price continues to dance between $24 and $25.
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.