Kinesis Macroeconomic Analysis
The new trading week hasn’t brought about a change to the prevailing narrative with equities across the world, again looking filled with red. The main driver remains the changing economic environment, as central banks tighten their belts after years of doling out free money.
While this generosity was vital in keeping economies supported during the COVID-induced lockdowns, one of the negative side effects has been the creation of a highly inflationary environment, as economies motor up again.
It is worth noting that, while inflation feels as though it has been the subject of market commentary forever, it will start to unwind as the year on year comparisons come against months when economies were open, rather than some of the lockdown comparisons currently being expressed.
The Federal Reserve will be the main focus of attention this week with the US central bank reporting its latest interest rate decision on Wednesday. The current expectation is that the Fed will hold off hiking rates for another month yet and keep things unchanged at 0.25%.
However, with other central banks already nudging their rates higher, it is more a matter of when the Fed will follow suit rather than if. It’s interesting to note that earlier that same day the US’ neighbour, Canada, will announce its own rate, with the forecast predicting a 25 basis points increase to 0.5%.
Signs that economies are healing have already been illustrated this morning with Germany’s PMI rising back above the key 50 mark to 52.2, far surpassing expectations. However, this was offset by slightly disappointing figures from the EU and France that while both showing continued growth, came in below estimates.
Kinesis Gold Price Analysis
After briefly smarting into action in the middle of last week, gold has returned to its preferred, more ambulatory mode and is drifting along in its new elevated range of $1,835-$1,845 an ounce. The negative start to the trading week on equities has seen gold find support and the metal is pushing up towards the upper end of that range.
It will be interesting to see whether the sell-off on bitcoin and other cryptocurrencies proves beneficial to gold. The exit from risk-related assets typically benefits gold, but so far it seems the crypto investors haven’t flooded to gold with this more traditional of assets lacking appeal for this new wave of investors.
Kinesis Silver Price Analysis
Continuing the recent theme of silver and gold losing their correlation, silver is little changed so far today, while gold is gaining. Last week saw silver smash through the $24 an ounce mark so, after such sharp gains, it is unsurprising to see that fury of activity pause for breath.
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Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
