Gold & Silver Market Analysis for Friday 8th October

Kinesis Money Macroeconomic Analysis

The rally between oil and natural gas has been a trending subject over the past few days, with the benchmark of energy sector oil pricing now reaching a long term high.

Yesterday, the West Texas Intermediate (WTI crude oil) price rebounded above $79 dollars – after a slight fall to $75 just before – confirming investors have a clear appetite for this asset which is now being traded at 30% above its pre-covid levels.

The Natural Gas Futures price is still up 130% this year to date (YTD), despite experiencing a 15% decline from the peak of $6.50. This sharp appreciation is a sign that natural gas is becoming one of the most lucrative assets of 2021 so far.

Aside from the energy sector and the related inflation risk, investors’ focus is, once again, set on the reports that will reveal U.S. labour data.

In just a few hours the U.S. Nonfarm Payrolls will be released, with the expectation of data showing an increase in around half a million jobs. On Wednesday, the US ADP National Employment Report beat those expectations. 

These reports should have been good news for the price of the U.S. Dollar, adding more pressure on the Federal Reserve for a quick start to tapering. Consequently, the new declines in gold were to be expected, but this has not yet been the case. 

In fact, gold held above $1,750, while silver is still being traded in the region of $22.5 per ounce. The resilience of gold and silver could be seen as a positive signal, with buyers now showing a growing interest in the two metals. Albeit, this is occurring at a point when gold and silver are still looking for a clear directionality.

Kinesis Money Gold Analysis

Today, bullion is still traded above $1,750, despite the strength of the U.S. Dollar. From a technical point of view, as long as the price holds at this threshold, little volatility can be expected, while a fall below $1,750 could pull the price down to a new test in the region of $1,725 – 1,730.

A clear surpass of $1,770 would be a positive signal, opening space for new recoveries, but it seems clear that investors are watching on, waiting for the upcoming U.S. labour reports and the Federal Reserve’s next move.

Kinesis Money Silver Analysis

Silver has temporarily surpassed the resistance zone positioned at $22.6-22.7 per ounce, quickly jumping up by 1% to $22.80. Despite this positive signal, silver pricing didn’t hold out on its previous gains, promptly retracing back to $22.5, making a start in red during the final session of the week.

After weeks of a strong decline, momentum is slightly improving, however, it’s not yet possible to declare the current rebound as an inversion. In addition to this, the strength of the greenback is complicating the further recovery attempts of silver. A fall below $22.3 could open space for further declines, while a solid surpass of $22.7 will be a positive sign.

Carlo Alberto De Casa is Market Analyst for Kinesis Money.

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.