Kinesis Gold Analysis
The gold price is continuing its dance again, with the resistance level of $1,790.
Despite some “risk-off” bites on the markets, bullion was hit by the strength of the US Dollar in the first part of the week. Moreover, after the massive rebound seen in the last few days, some investors started taking profits.
Today, the price is continuing its recovery, while the momentum for gold still appears positive.
From a technical point of view, we can find a first support zone placed at $1,760. As mentioned, the precious metal is now challenging the following key level: the $1,790 area. A clear surpass of this mark will put gold back in the former trading range of $1,790 – 1,820, which contained prices for weeks earlier in July.
From a macroeconomic perspective, we are expecting a few interesting reports today, which could potentially impact the gold price in some ways. Earlier this morning we received UK inflation data, which grew less than expected. Additionally, the EU inflation data will be released later today, while this evening Federal Open Market Committee (FOMC) minutes will be revealed.
Investors are looking for any signal which can help them to understand the precise timing of tapering from central banks. And gold is ready to celebrate any dovish sentiment.
Kinesis Silver Analysis
Silver is trying to rebound, even if the price remains below yesterday’s high. Only a clear surpass of $24 would open space for new recoveries, while a fall below $23.4 could be seen as a signal of weakness. Overall, silver remains much weaker if compared to gold.
In the last 30 days, gold lost 0,5%, while silver declined by over 5 percentage points. In order to understand this concept better, we can simply analyze the gold-silver ratio, which means the proportional relationship between the spot price of the two metals.
This ratio is obtained simply by dividing the price of gold by the price of silver and is telling us how many silver ounces are needed for buying one ounce of the yellow metal. In June this ratio was between 67 and 69, before jumping to 71 – 72 in July and further accelerating to 75 in the first part of August. In other words, to buy one ounce of gold, two months ago we needed 67-69 ounces of silver, now around 75.
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.