Gold & Silver Market Analysis for Monday 13th December

Kinesis Macroeconomic Analysis

Price growth continues to be exorbitant. US inflation jumped to its highest level in almost 40 years, with the data released on Friday. The Bureau of Labor Statistics attested that inflation had reached a rate of 6.8%, with solid growth in prices across the wide majority of sectors. 

It is still uncertain how the slow down of energy sector prices, such as the main oil benchmarks: WTI (West Texas Intermediate), Brent Crude and Natural gas, will impact the market, potentially curbing inflation and affecting prices in general.

It seems more evident that the Federal Reserve is worried about the ever-increasing, inflation rate. This has heightened the possibility of a faster tapering process – one of the main topics set for discussion in the Tue 14th-Wed 15th FOMC meeting.

Investors are awaiting the upcoming decisions of the US Central banks and their guidance for the next few months. Their actions will be pertinent during building expectations of an accelerated tapering process.

Kinesis Money Gold Analysis

The bullion price remains traded between $1,760 and $1,800, waiting for a clear directionality. Analysis, as discussed in previous reports, has not changed, with the price inserted in a lateral trading range and investors positioned in a “wait and see” mode. 

Now, there is a clear focus on the upcoming FOMC meeting. This anticipatory mode has also generated a low volatility scenario, but all this could change in the next few days.

With a focus on the gold price, it is now set for a decline, on an annual basis, for the first time in three years. Bullion has posted so far (YTD) a loss of around 6 percentage points. 

As in 2013, when the Federal Reserve announced the first tapering, the turmoil was much more significant, and bullion lost almost 30% on an annual basis. This time the precious metal has shown a solid resilience, despite being cast in a scenario that is not typically favourable. Certainly, this confirms investors are maintaining a keen interest in gold. 

Kinesis Money Silver Analysis

Last week, silver closed having had a few rebound attempts. The silver price has recovered the first key level of $22, even if the main scenario remains weak while bearish pressure is still dominant. Like gold, silver is currently in a “wait and see” mode and could find some directionality with the upcoming FOMC’s decisions. 

A clear recovery of $23 would represent a positive signal. On the other hand, a new fall below $22 would likely push silver to a new test, with the support zone of $21.5.

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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.