Kinesis Macroeconomic Analysis
Is negative news capable of pulling up the financial market? Although it seems like a paradox, it is exactly what we have often seen in the last few months. Fear of Covid-19 and then subsequent waves of fear of its variants, forced the Federal Reserve to be extremely dovish.
In the last few days, we heard the rumours about the Federal Reserve concerns that the spread of Delta Variant could decrease the speed of the economic recovery. These rumours sparked new doubts in regard to an early start of the U.S. Central Bank tapering.
All this negative news has resulted, once again, in a new record high on stocks, paradoxically celebrating a negative economic situation. However, the consequences of these rumours are equally interesting for many other financial assets.
On the Forex currency markets, for example, we have seen a decline of the U.S. Dollar, while the whole precious metal sector rebounded.
Kinesis Gold Analysis
The prospect of an unexpectedly expedited tapering from the Federal reserve, impacted gold in the last few weeks, generating a sell-off on the price.
More recently, things have taken another turn, gaining a strong positive momentum on gold. The price of gold rebounded, surpassing $1,750 in just a couple of hours, and shortly after, reached the key resistance of $1790 – in these last few days. This occurred just before it reached a top of $1,812 on the futures contract, while the spot price was traded just a few dollars below.
Bullion is therefore once again inserted in the lateral trading range between $1,790 and $1,820 and a clear surpass of one of these levels could trigger new directional movement.
In early trading today gold is slightly declining. We can see this as a consolidation after the long rally, but also in part related to the modest recovery shown by the greenback.
We should remember that the next catalyst for gold (and more in general, for financial markets) will definitely be the Jackson Hole symposium. Investors are awaiting Jerome Powell’s speech, to learn more about the expected timing of the tapering.
Kinesis Silver Analysis
In the last few days, silver slightly recovered momentum, surpassing the first resistance zone of $23,5. Despite this, the precious metal was not able to reach the next key level of $24. A clear surpass of the $24 threshold – ideally supported by high trading volume – could indicate a return of bullish momentum.
Silver is recovering, when compared to gold, with a ratio between these two metals placed in the region of 76. In other words, roughly 76 ounces of silver would be needed to purchase one ounce of gold.
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.