Gold & Silver Market Analysis for Wednesday 28th of July

Kinesis Macroeconomic Analysis

The long-awaited Federal Open Market Committee (FOMC) meeting has started and it will finish this evening, with the release of the minutes of the summit.

More clarity regarding the right timing for the start of the tapering process (which is the process of reducing liquidity in the system) will probably come only with the next meeting, in late September.

Despite this, investors are obviously waiting to read the minutes, trying to decode the wording used. Yes, it will probably be, once again, a matter of words.

It is extremely likely, that the FOMC will not yet see the “substantial further progress” recently requested by Jerome Powell, which would be the condition for starting the tapering. But any expressions, which would lead investors to think that the Federal Reserve could anticipate the tapering can further strengthen the greenback, adding pressure on equities. Vice versa, if Powell and its team of economists confirm the relatively dovish view of the last few weeks, the party on stocks could continue further.

In this environment, we have seen in the last few hours a moderate decline of the US dollar, with the dollar index in area 92.45, while the EUR/USD is traded just above 1.18

Kinesis Gold Analysis

Gold price steady just above $58 per gram (from Kinesis Exchange)

The Gold price remains steady and it is continuing once again the movement in the trading range of the last few days between $1,790 and $1,820.

We can observe the greenback slowdown, lifted by a few dollars gold price, while the price is struggling to find a clear direction, in a scenario with little volatility.

Most likely, the FOMC meeting would be a bullion market driver only if any dovish or hawkish surprise announcement will take place.

Vice versa, bullion could continue the consolidation phase, which can be seen as relatively positive for further recoveries in the medium term.

Kinesis Silver Price

The technical scenario for silver still appears fragile. The precious metal lost ground again on Tuesday, with a new fall below $25. The decline was even sharper than the previous one, with a bottom at $24,52 in the future. We will have a first positive signal with the recovery of the 25,5 zone, while only a clear surpass of $26 would show strength. Despite the weakness shown in the last few days, silver should find a significant support zone between $24 and $24,5, where buyers are expected to stop or at least curb the current bearish momentum.

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.