Preparing for THE Bottom: Part 3 - Gold to Silver Ratio
Gold Forecast and News
Gold price traders await Powell's speech for rate cut cues
Gold price extends its sideways consolidative move during the Asian session on Wednesday as traders opted to wait for Fed Chair Jerome Powell's speech. Apart from this, the US NFP report on Friday might provide cues about the interest rate outlook in the US and provide a fresh impetus to the non-yielding XAU/USD.
Latest XAU/USD News
XAU/USD Technical Overview
From a technical point of view, the daily chart for XAU/USD shows the pair is pretty much unchanged from its opening and still confined to familiar levels. The Momentum indicator aims higher above its 100 level, but the Relative Strength Index (RSI) indicator heads nowhere at around 48. At the same time, the XAU/USD pair barely holds above a bearish 20 Simple Moving Average (SMA) while the 100 and 200 SMAs keep advancing below the current level, losing their former strength but still aiming north.
In the near term, and according to the 4-hour chart, XAU/USD offers a neutral-to-bearish stance. The pair keeps hovering around a directionless 20 SMA while midway between also flat 100 and 200 SMAs. Finally, technical indicators turned marginally lower right below their midlines, lacking strength enough to confirm another leg lower.
Support levels: 2,626.70 2,611.35 2,598.70
Resistance levels: 2,655.50 2,671.55 2,688.65
Fundamental Overview
The US Dollar (USD) gained upward traction during American trading hours after spending the first half of the day on the back foot amid a better market mood. XAU/USD retreats from an intraday high of $2,655.50 but retains the $2640 mark at the time of writing, as the USD benefits from a deteriorated market mood.
The market sentiment deteriorated following the release of the United States (US) Job Openings and Labor Turnover Survey (JOLTS) Job Openings report, showing the number of openings in the last business day of October stood at 7.74 million, according to the report released by the US Bureau of Labor Statistics (BLS). The reading was higher than the 7.37 million openings in September and beat the market expectation of 7.48 million.
Fresh geopolitical tensions in Asia also undermine the mood. South Korean President Yoon Suk Yeol declared martial law. The army closed the Parliament while representatives voted to block the president’s declaration. The SK Won plunged vs the USD, providing the latter with fresh impetus. News coming from France are no better. The minority government seems to be on the brink of collapse, as opposition lawmakers from the left and the far right vowed to topple Prime Minister Michel Barnier’s Cabinet, according to AP news.
Meanwhile, US indexes trade in the red. Asian and European equities advanced, limiting USD strength, but Wall Street could not follow the lead. Even further, US government bond yields are back on the rise, underpinning the American currency.
Other than that, investors await more US employment-related data scheduled throughout the week. The November ADP report on private job creation is expected to show that 150K new positions were created in the sector on Wednesday. The most relevant figures will be out on Friday when the US will release the Nonfarm Payrolls (NFP) report.
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: Easing geopolitical tensions trigger profit-taking Premium
Gold (XAU/USD) declined sharply on easing geopolitical concerns on Monday and spent the rest of the week trying to recover its losses. Employment-related macroeconomic data releases from the US could alter the expectations about the Federal Reserve’s policy decision in December and trigger the next big action in XAU/USD.
Metals Big Picture
METALS BULLISH THEMES
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Latest XAU/USD Analysis
Editors' picks
EUR/USD trapped below 1.0600
EUR/USD turned lower once again on Tuesday, grappling with the 1.0500 handle as Fiber flubs a bullish run at 1.0600. Several EU-centric datapoints are releasing on Wednesday, but most of the figures are final prints that are unlikely to move markets, and most investors are pivoting to face US NFP jobs data due at the end of the week.
GBP/USD trades below 1.2700 as focus shifts to Fedspeak
GBP/USD loses its recovery momentum and retreats to the 1.2650 area after rising toward 1.2700 earlier in the day. The US Dollar stays resilient against its rivals on upbeat JOLTS Job Openings data and makes it difficult for the pair to regain its traction as focus shifts to Fedspeak.
USD/JPY consolidates the uptick to near 150.10
USD/JPY is back below 150.00 in Wednesday's Asian session, struggling to extend the latest leg higher as bets for a December BoJ rate hike underpin the the Japanese Yen. However, the downside remains capped amid increased haven demand for the US Dollar on growing tariff war fears.
Gold price traders await Powell's speech for rate cut cues
Gold price extends its sideways consolidative move during the Asian session on Wednesday as traders opted to wait for Fed Chair Jerome Powell's speech. Apart from this, the US NFP report on Friday might provide cues about the interest rate outlook in the US and provide a fresh impetus to the non-yielding XAU/USD.
WTI lacks firm intraday direction, oscillates in a range below $68.00
West Texas Intermediate US Crude Oil prices struggle to gain any meaningful traction on Tuesday and oscillate in a range below the $68.00/barrel mark during the Asian session.
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.
