Macroeconomic and Gold & Silver Market Analysis for Wednesday 22nd September

Kinesis Money Macroeconomic Analysis

The FOMC two-day meeting will end today evening and will be followed by the official statement and by the usual press conference. In a few words, the wait is over and tonight we will learn the Federal Reserve’s decisions. Or maybe not, as there are good chances that the Fed will keep the wait, postponing the start of the tapering process once again. 

But what are the possible outcomes of the FOMC meeting?

Let us analyze them. The most dovish (and relatively unlikely) hypothesis, implies that the tapering might not be confirmed before the end of 2021. This would be a u-turn from what we heard at the Jackson Hole Symposium in August and does not seem justified by the good macroeconomic data of the last few weeks.

At the same time, the opposite (hawkish) scenario, with the immediate announcement of the start of the tapering,  is not seen as particularly likely, either.

Between these two options, we have an intermediate scenario, which is probably the most likely, with Jerome Powell reiterating that the Federal Reserve will start the tapering process later this year. This would mean that the tapering will begin in December (after being announced in the November meeting).

This meeting, apart from the date of the start of the tapering, is also important for the projections of inflation, economic growth and interest in 2022 and 2023. FOMC’s expectation regarding these indicators could tell us more about the next moves and about when investors should expect the first rate hike.

On the markets, the greenback remains strong, with the Dollar Index still above 93 points. Despite this, we have seen a rebound in stocks, in conjunction with a solid bullion recovery. 

Kinesis Money Gold Analysis

The price of the precious metal has shown interesting signals of recovery. The support zone of $1,750 was not violated by gold and the price managed to rebound by almost $30, approaching $1,780.

We can now observe a first key level at $1,760, followed by much more significant support at $1,748 – 1,750, where a bigger volume of buying orders should be placed. Of course, a new fall below this threshold would represent a negative signal, with stop loss and a new short position that could be triggered.

On the other side of the spectrum, a recovery of $1,790 would confirm the positive momentum, opening space for further climbs to $1,800 and 1,820. It is anyway clear that markets are waiting for the FOMC. Any dovish decision would open space for new rallies, while a hawkish surprise could curb the current rebound.

Kinesis Money Silver Analysis

There is life for silver also, as the price has extended its gains, jumping to $22,65. Despite this, we can still see the current movement as a rebound (+2.5% from the bottom reached earlier this week) and not yet as a proper inversion. 

Silver could offer a first positive signal above $23,1, while the trend could return positive with a solid surpass of the $24 mark. Despite the weakness shown in the short term, the fundamental basis for the medium and long term remains brighter, with growing demand from the industrial sector and positive expectations from the jewellery sector as well.

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.