Gold & Silver Market Analysis for Wednesday 11th of August
Carlo Alberto De Casa
Kinesis Gold Price Analysis
The volatility on gold is slowing down, while the price seems to be finding an equilibrium after the double sell-off seen on Friday and Monday.
The strength of the US Dollar and the Federal Reserve’s tapering plans remain the main drivers on the markets.
From a technical point of view, the short-term scenario remains fragile, as gold was unable to recover and surpass the resistance zone of £$1,750-1,760. At the same time, we should note that the zone between $1,700 and $1,720 seems to be relatively solid support. Just a few dollars below, at $1,677, we can find the minimum reached by gold on Sunday night.
All these three levels seem to be relatively interesting support zones for bullion.
Gold price $/gram from Kinesis Exchange
Vice versa, a clear surpass of $1,760 would show some strength, with a potential target to the former resistance zone of $1,790.
Why has the price of bullion declined in the last few days?
After a few weeks of low volatility in a lateral trading range between $1,790 and $1,820, bullion suddenly plummeted to $1,677, only to recover to $1,730 shortly after.
What were the reasons behind this sharp fall?
Bullion has been hit by a mix of bearish market drivers, which had resulted in strengthening the US dollar and pushing forward the Federal Reserve’s tapering plans.
In just a few days, we heard various hawkish comments from Federal Reserve officials. Thomas Barking, Richmond Fed President, noted that substantial progress has been made, and the tapering time is coming.
Raphael Bostic, his colleague from the Federal Bureau of Atlanta was even more specific, saying that he would expect the reduction of stimulus starting in the final quarter of this year. Moreover, the recent US ADP National Employment report showed a certain solidity of the economic recovery, as nonfarm payroll exceeded analysts’ expectations. This optimism was also confirmed by the number of new job openings, which has reached an all-time high of just above 10 million, on the last business day of June.
Kinesis Silver Analysis
The silver price is continuing to underperform compared to gold, showing further fragility in the short term.
Indeed, gold has dropped -4% over the past week, while silver has lost more than 8% of its value. In the last few days, silver has fallen to $23,3 and it is struggling to rebound solidly. The bearish drivers are similar to the ones affecting gold price and can be summarized with the strength of the greenback and the US tapering plans.
Despite this in the medium and long term silver has good chances to reverse the bearish momentum shortly.
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 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.