Preparing for THE Bottom: Part 3 - Gold to Silver Ratio
Gold Forecast and News
Gold aims for $1821 and $1825 as next bullish targets
The Fed once again came to the rescue of the bulls, lifting gold price from around the key support around $1792 to take on the upside beyond the $1800 mark. So far this Thursday, gold price is extending the post-Fed rally towards the critical SMA200 one-day at $1821.
Latest XAU/USD News
XAU/USD Technical Overview
The Technical Confluences Detector shows that gold has recaptured critical resistance at $1815, which is the convergence of the Fibonacci 38.2% one-month, pivot point one-day R1 and Bollinger Band one-hour Upper. A firm break above the latter has opened gates towards $18211, the intersection of the SMA200 one-day and pivot point one-week R1.
If the buyers seize control above that barrier, then a test of the previous week’s high of $1825 could be in the offing. The next relevant upside target is envisioned at the Bollinger Band one-day Upper.
Fundamental Overview
Gold refreshed daily lows heading into the North American session, albeit quickly recovered a bit thereafter. Currently hovering around the $1,800 mark, the XAU/USD struggled to capitalize on its modest intraday gains to the $1,807 area and was capped by a combination of factors. The US dollar was back in demand amid a goodish pickup in the US Treasury bond yields, which, in turn, acted as a headwind for the non-yielding yellow metal.
The USD uptick could further be attributed to some repositioning trade ahead of the highly-anticipated FOMC monetary policy decision, scheduled to be announced later during the US session. Market players will look for clues on the timing of tapering amid surging inflation in the US. This will play a key role in influencing the near-term trajectory for the greenback and provided a fresh directional impetus to the dollar-denominated commodity.
Meanwhile, investors remain worried about the potential economic fallout from the spread of the highly contagious Delta variant of the coronavirus. This, to a larger extent, helped offset the negative factors and helped limit any meaningful slide for the traditional safe-haven gold. Investors also seemed reluctant heading into the FOMC event risk, warranting some caution before placing any aggressive directional bets.
SPECIAL WEEKLY FORECAST
Interested in weekly XAU/USD forecasts? Our experts make weekly updates forecasting the next possible moves of the gold-dollar pair. Here you can find the most recent forecast by our market experts:
XAU/USD bears await break below 100-day SMA at $1,796
Gold closed near the lower limit of the weekly channel. Additional losses are likely if XAU/USD breaks below the 100-day SMA. FOMC meeting and US Q2 GDP data highlight next week’s economic calendar.
Metals Big Picture
METALS BULLISH THEMES
METALS BEARISH THEMES
Latest XAU/USD Analysis
Editors' picks
EUR/USD refreshes daily high above 1.1850 ahead of EU data
EUR/USD is trading above 1.1850, as it continues to notch higher on Thursday. Dovish Fed downs the US Treasury yields alongside the US dollar. Rebound in Chinese stocks lifts overall market mood, weighing further on the safe-haven dollar. Eurozone data and US GDP in focus..........
GBP/USD renews monthly top above 1.3900 on softer USD, Brexit optimism
GBP/USD picks up bids to refresh multi-day high above 1.3900. US dollar tracks Treasury yields to the south amid Fed’s dovish tilt. EU softens legal threat over NI protocol on demand of UK’s Frost. UK scraps quarantine rules for fully vaccinated EU, US travelers.
USD/JPY consolidates below 110.00 ahead of US critical data
USD/JPY consolidates gains on Thursday in the initial trading session. Lower US Treasury yields undermine the demand for the US dollar. The yen remains unchanged after the BOJ summary of opinions suggests a longer accommodative monetary policy.
Gold aims for $1821 and $1825 as next bullish targets
The Fed once again came to the rescue of the bulls, lifting gold price from around the key support around $1792 to take on the upside beyond the $1800 mark. So far this Thursday, gold price is extending the post-Fed rally towards the critical SMA200 one-day at $1821.
WTI: Eases from three-week-old resistance line, 21-DMA
WTI oil prices seesaw around $72.00, down 0.15% intraday, during Thursday’s Asian session. The energy benchmark refreshed two-week top the previous day while posting a daily close beyond 21-DMA and 61.8% Fibonacci retracement (Fibo.) for the first time since July 14.
Majors
Cryptocurrencies
Signatures
XAU/USD YEARLY FORECAST
How could XAU/USD move this year? Our experts make a XAU/USD update forecasting the possible moves of the gold-dollar pair during the whole year. Don't miss our 2024 XAU/USD forecast!
2024 FORECAST FOR XAU/USD
In the XAU/USD Price Forecast 2024, our analyst, Eren Sengezer, notes that Gold carries its bullish potential into early 2024 on prospects of a looser Fed policy, lower US bond yields and a weaker USD. A downturn in the global economy, however, could weigh on demand and limit the precious metal’s gains. A lack of progress in the Fed’s efforts to lower inflation, on the other hand, could cause XAU/USD to turn south. Read more details about the forecast.
MOST INFLUENTIAL POLITICAL EVENTS IN 2024 FOR XAU/USD
The Russia-Ukraine conflict in 2022 and the Israel-Hamas dispute in 2023 underscored Gold's appeal as a safe-haven asset in uncertain times. Further escalation in the Middle East or a resurgence of the Russia-Ukraine conflict may push Gold prices higher.
A potential re-election of former President Donald Trump could involve a 10% tariff on foreign goods and a four-year plan to reduce essential Chinese imports. This could complicate the Federal Reserve's task of lowering inflation to the 2% target and strain relations with China, negatively affecting Gold's demand outlook.
Gold/Silver Ratio
This ratio normally goes well during risk aversion, while it falls off during times of risk-on. If this ratio is about to turn, or at key levels where it could turn, the
trader looks to the Equity indices if the risk has indeed been on and if it is about to turn as well.
When the ratio is rising, it means gold is outperforming silver, and when the line is falling, the first term is doing worse, i.e., silver is doing better. In other words, when the ratio is high, the general consensus is that silver is favored. Conversely, a low ratio tends to favor gold and may be a signal it’s a good time to buy the yellow metal. Despite the gold-to-silver ratio fluctuating so wildly, another way of using it is to switch holdings between silver and gold when the ratio swings to historically determined "extremes."
Read more about gold versus silver:
About Gold
XAU/USD, GOLD
In the Forex market, gold is a form of currency. The particularity of gold is that it can only be traded against United States dollars (USD). The internationally accepted code for gold is XAU. It is known to be a “safe-haven” asset, it is expected to increase its value in times of volatility and economic uncertainty.
The XAU/USD pair tells the trader how many US Dollar (the quote currency) are needed to purchase one Gold Ounce (the base currency). United States is the country that holds the biggest resources of gold in the world.
ORGANIZATIONS THAT INFLUENCE XAU/USD THE MOST
- WGC (World Gold Council), the market development organisation for the gold industry whose aim is to stimulate and sustain demand for that commodity.
- LBMA, London Bullion Market Association, whose members conduct trading in this wholesale over-the-counter market for the trading of gold and silver. It is loosely overseen by the Bank of England. Most of the members are major international banks or bullion dealers and refiners.
- COMEX (Commodity Exchange Inc.), the primary market for trading metals. The COMEX merged with the New York Mercantile exchange (NYMEX) in 1994 and became the division responsible for metals trading.
- Zurich Gold Pool founded in 1968 by the largest banks in Switzerland after the collapse of the London Gold Pool.
- CGSE, the Chinese Gold & Silver Exchange Society (see above the importance of China in terms of gold reserve).
PEOPLE THAT INFLUENCE XAU/USD THE MOST
- David Harquail, the World Gold Council’s Chairman
- Steven Mnuchin, US Treasury Secretary
- Xi Jinping, President of the People's Republic of China and General Secretary of the Communist Party of China
ECONOMIC DATA THAT INFLUENCE XAU/USD THE MOST
The main indicators that traders should watch to understand where gold is standing are:
- Demand vs Supply for the commodity
- Struggling markets or context of currency devaluation: gold is known to be a haven for investors in times of economic uncertainty or when any country sees its currency devaluing
- Practical applications: technology invents, jewellery use, etc
ASSETS THAT INFLUENCE XAU/USD THE MOST
- Currencies: USD and EUR. Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD.
- Commodities: Silver, the other most important precious metal commodity together with Gold.
- Bonds: Bund (the German word for "bond", a debt security issued by Germany's federal government) and T-Note (Treasury Note, a marketable U.S. government debt security)
- Indices: Hui (AMEX Gold BUGS), XAU (Philadelphia Gold and Silver Sector Index) and GDM (NYSE Arca Gold Miners Index) The most important stock exchanges are the New York Mercantile Exchange (COMEX), the Chicago Board of Trade, the Euronext/LIFFE, the London Bullion Market, the Tokyo Commodity Exchange, the Bolsa der Mercadorias e Futuros and the Korea Futures Exchange.
