Kinesis Macroeconomic Analysis
Markets are a sea of red this Friday, after the sell-off triggered by a plunge on the Nasdaq earlier in the week looks set to continue for another day yet. This volte-face comes amid concerns that stocks reliant on growth, such as tech companies, will struggle this year as central banks around the world turn off the money taps and increase interest rates.
A sign of this changing outlook was provided by Netflix’s results late on Thursday, with shares sinking more than 20% after the company forecast slowing subscriber growth. This negative reaction came despite the figures for the final quarter generally beating estimates, illustrating neatly that for tech stocks it is all about continued future growth.
After a volatile few days on the markets, today could prove more consolidatory with no significant macro announcements scheduled for today. Any sharp moves are more likely to come from the geopolitical side, with worrying signs that Russia may be poised to invade Ukraine despite efforts from the US and the UK to calm tensions.
Gold Price Analysis
After spending much of 2022 drifting in a range between $1,800-$1,820 an ounce, gold sprung into life on the back of the plunging Nasdaq and broader drop on equities earlier in the week. With gold proving popular from its age-old role as a safe haven asset, its price jumped up to nearer $1,840, before falling back so far today.
It will be interesting to see gold’s next step as investors continue to weigh up the contrasting factors of a declining stock market that would typically be supportive of gold, versus an environment where rising interest rates are expected, which would typically be negative for the non-yield bearing gold.
In dollars per gram, gold broke through $59 earlier in the week but is now drifting once again, this time between $59.20 and $59.40.
Silver Price Analysis
Silver’s dramatic week, in which it barged past $23 an ounce before rushing on past $24 and onwards, looks set to end on a calmer note. Interestingly, however, those spectacular gains look to be held onto with the metal holding comfortably above $24.
If today is an opportunity for markets to pause for breath, it will be worth following silver closely next week. With the metal not just mirroring gold’s moves, investors are seeing a different set of fundamentals driving it. As such the gold/silver ratio will be worth monitoring to see if silver has the energy left to shrink that ratio further yet.
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