Kinesis Macro-Economic Analysis
The US Dollar is continuing to weaken, while gold surpassed the key resistance level of $1,820. This could be seen as a combination of the Federal Open Market Committee (FOMC) meeting outcome and US GDP Data.
Starting from the FOMC, Jerome Powell reassured the markets: “We’re not there. And we see ourselves as having some ground to cover to get there”. It seemed that Powell, once again, did his best to appear as dovish as possible. The tapering (which is the process of reducing liquidity in the system) is not yet on the cards.
Regardless of that, we should notice that the official statement of the FOMC was less dovish, pointing out that “The economy has made progress toward these goals”. The market reacted by buying and selling gold.
Yesterday US GDP data for Q2 were released below expectations. This means that the Federal Reserve would be in less of a rush to start the tapering, reinforcing Jerome Powell’s thesis that substantial progress is needed.
The reaction on the FOREX market was a continuation of the bearish greenback movement seen in the previous 24 hours, with the US Dollar slowing further down below 92, while EUR/USD is getting closer to 1.19.
Kinesis Gold and Silver Analysis
Fewer tapering expectations, combined with the US dollar decline, have pulled precious metals up. Both gold and silver had a second part of the week in green.
Gold price is getting closer to $59 per gram – Kinesis Exchange
As for gold, we have just seen the break up of the resistance level of $1,820, while gold has broken up the lateral channel between $1,790 and 1,820. Bullion continued its recovery up to $1,830, while the technical picture is continuing to improve.
After the fall seen earlier this week, silver recovered more than $1, coming back to the resistance of $25,5/25,6. A clear surpass of $26 would open space for further recoveries, while these rallies confirm the growing attention of investors for the whole precious metal sector.
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.