Preparing for THE Bottom: Part 3 - Gold to Silver Ratio
Gold Forecast and News
Gold eases toward $2,310 amid a better market mood
After falling to $2,310 in the early European session, Gold recovered to the $2,310 area in the second half of the day. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% and helps XAU/USD find support.
Latest XAU/USD News
XAU/USD Technical Overview
Technically, the daily chart for XAU/USD shows it keeps meeting sellers around a Fibonacci level, the 23.6% retracement of the April/May rally at $2,326.50. The next Fibonacci level and critical support comes at $2,260.80, a potential bearish target should Gold finally lose the $2,300 mark. In the mentioned chart, technical indicators remain within negative levels, with neutral-to-bearish slopes, reflecting the absence of buying interest. At the same time, a flat 20 Simple Moving Average offers dynamic resistance around $2,339,00, while the longer moving averages maintain their bullish slopes far below the current level.
In the near term, and according to the 4-hour chart, XAU/USD is neutral. Technical indicators head nowhere around their midlines, while the pair stands midway between a bullish 200 SMA and a bearish 100 SMA. At the same time, the pair hovers around a flat 20 SMA. Overall, the risk skews to the downside, although limited by absent US Dollar demand.
Support levels: 2,310.40 2,291.20 2,276.50
Resistance levels: 2,326.50 2,340.15 2,356.90
Fundamental Overview
Spot Gold retreated from the $2,330 price zone and trades in the red on Tuesday, although still confined to familiar levels. The slide can be attributed to a better market mood, as European indexes closed with substantial gains. The lack of momentum, however, resulted from United States (US) indexes consonsolidating around weekly highs yet showing little signs of life. Gains among US indexes are modest, as investors lack a clear directional catalyst.
The United States session included a speech from Federal Reserve (Fed) Minneapolis President Neel Kashkari, who said that the most likely scenario is that interest rates will stay on hold for an extended period. He also said that raising rates is not the most likely but cannot be ruled out. Finally, Kashkari said he would need to see multiple readings on easing inflation to be confident enough to cut rates. His dovish words came as no surprise and had a limited impact on financial markets.
Meanwhile, easing US government bond yields weigh on US Dollar demand. The 10-year Treasury note offers 4.43%, down 5 basis points on the day, while the 2-year note yields 4.80%, down 1 bps and further away from its recent peak above 5%.
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:
Gold: XAU/USD bears take action on mixed signals from US economy Premium
Gold (XAU/USD) price fell more than 2% for the second consecutive week, erased a small portion of its losses but finally came under renewed bearish pressure. The near-term technical outlook points to a loss of bullish momentum as the market focus shifts to Fedspeak.
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Editors' picks
EUR/USD meets a tough barrier around 1.0800
The resurgence of the bid bias in the Greenback weighed on the risk-linked assets and motivated EUR/USD to retreat to the 1.0750 region after another failed attempt to retest the 1.0800 zone.
GBP/USD range bound around 200-DMA, awaiting BoE’s decision
The Pound Sterling registers anemic losses against the US Dollar as traders brace for the Bank of England’s (BoE) monetary policy decision on Thursday. The pair remained within the 1.2529-1.2594 boundaries during the last few days, capped by key support and resistance levels. The GBP/USD trades at 1.2556, down 0.04%.
USD/JPY trades higher as USD finds its feet. Intervention still a threat
USD/JPY recovers after last week’s losses on possible intervention and weak US jobs data. Janet Yellen’s mild criticism of intervention may have helped the pair higher. Japanese currency officials continue to threaten intervention, filling the road higher with “potholes”.
Gold eases toward $2,310 amid a better market mood
After falling to $2,310 in the early European session, Gold recovered to the $2,310 area in the second half of the day. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% and helps XAU/USD find support.
WTI trades around $78.50 with a positive sentiment after Israel's strike on Rafah city
West Texas Intermediate crude Oil price hovers around $78.50 per barrel during the Asian trading hours on Tuesday. The Oil prices experienced a slight increase following Israel's strike on Rafah in Gaza.
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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.
