Gold & Silver Market Analysis for Monday 18th October

Kinesis Money Macroeconomic Analysis

Last week the majority of stock indices finished in green, confirming the 'risk-on’ mode seen in the last 18 months. This means that we are in phase where investors prefer buying riskier assets.

The main bullish market driver came from the US with data confirming that core retail sales had surpassed expectations. In fact, analysts forecasted a decline of 0.2% for September 2021, while the official data certified a growth of 0.7%. Moreover, data collected in August revealed an increase from 0.7% to 0.9%. 

When just two weeks remain until the next Federal Open Market Committee (FOMC) meeting, the majority of investors are now expecting a start to tapering by the end of the year, with an official announcement to come from the upcoming meeting (scheduled for the 2nd – 3rd November).

Analysing the economic calendar, the new week has started with China’s GDP below expectations. In the next few days, there will be some notable quarterly earnings to consider from companies like Tesla, Netflix and Intel. 

In Europe, the main ‘market mover’ seems to be the inflation report, which will reveal the price growth within the Eurozone and the possible time scale of tapering to be instigated by the ECB (European Central Bank). 

Kinesis Money Gold Analysis

At the moment, the gold price is being traded at around $1,765 dollars per ounce, after it was not able to hold out on previous gains. This was just after the rally it experienced in the middle of the week when its price jumped above $1,800.

Overall, in the last few trading sessions, we have seen increased volatility of the gold price, with a bullish acceleration on Wednesday, followed by a correction on Friday. The main catalyst behind this new decline was US macroeconomic data related to retail core sales, which was well above expectations. 

From a technical point of view, we have seen some interesting rebound signals, as buyers are showing strength every time the price gets closer to the support zone of $1,750 per ounce. 

Despite this, the rebound to $1,800 was perhaps too quick, causing sellers to add more pressure on gold. This quick bearish impulse was helped by the positive macroeconomic data which revamped a 'risk-on’ scenario on the markets. It should be pointed out that buyers reacted quickly, causing the price to hold above $1,760. 

Kinesis Money Silver Analysis

Like gold, silver prices also slowed down on Friday afternoon, after a week of gain. Despite the decline seen in the final part of last week, the main trend seems to be changing, as silver is still two dollars higher than the low it reached in the last few days of September.

In fact, the fall on Friday didn’t manage to break down the zone of $23 per ounce, with the price bouncing back above that pivotal level of $23.3.

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.