Kinesis Money – Macroeconomic Analysis
The devil is in the details and investors are paying massive attention to all macroeconomic data, trying to interpret the next steps of monetary policies of both the Federal Reserve and the European Central Bank (ECB). Inflation figures, in particular, are probably the most studied, as they hold the potential to be one of the main catalysts for pushing central banks to finally begin the so-called tapering (the process of reducing liquidity in the system).
Therefore, this week is offering an interesting series of data releases, including the inflation levels recorded last month in the U.S. and in Europe.
Particularly, inflation in the U.S. could be a significant market driver. The Federal Open Market Committees of the Fed (FOMC) will be meeting on the 21-22 September and further inflation rallies could push them to start the tapering procedure. Despite this, there are still good chances that the FOMC will wait at least to the following meeting before announcing the start of the process.
Any dovish decision could weaken the U.S. Dollar, while the earlier tapering start may strengthen the greenback. These movements could as well impact gold and silver, typically (but not always) inversely related to the U.S. Dollar and the American interest rates.
Kinesis Money – Gold Analysis
The U.S Dollar started this week in green. This is probably the main reason that it’s moderately pulling gold down, with the bullion price touching the support zone of $1,790 once again.
It is now clear that the gold rally has found a solid obstacle with the resistances placed at $1,820 and $1,835. Only a clear surpass of these thresholds could open further space for a new gain.
Technically, the main trend is still supportive, but the rebound we have seen over the past few weeks seems to be losing its momentum, as inflation pressure is growing and more investors are expecting the Fed to increase its activity relatively soon.
We shouldn’t forget about the risks coming from the Covid-19 Delta variant, which could force central banks to be more cautious with tapering, which could in return lift gold above $1,800 again.
Kinesis Money – Silver Analysis
The current silver price remains weak, being unable to show any solid signal of recovery and, overall, underperforming gold.
Both technical and graphical scenarios in the short term remain dangerous, without showing any significant rebounding impulse. Therefore, silver is traded below $24, looking for new bullish market drivers which are currently not showing up.
We should point out that the long term scenario could be much more entertaining, as there are interesting positive fundamental drivers, including the growing demand from the industrial sector.
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.