Preparing for THE Bottom: Part 3 - Gold to Silver Ratio
Gold Forecast and News
Gold price trades on a negative note, eyes on Fedspeak
Gold price trades on a negative note on Monday during the Asian session. The hawkish remarks from the Fed and growing speculation that the Fed might delay its easing plans have boosted the Greenback and dragged the USD-denominated gold lower.
Latest XAU/USD News
XAU/USD Technical Overview
The gold price edges lower on the day. Nonetheless, the bullish stance of the yellow metal remains intact as it holds above the key 100-day Exponential Moving Average (EMA) on the four-hour chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI) which stands in bullish territory around 63.50, suggesting the further upside looks favorable.
The first upside barrier for XAU/USD will emerge near a high of May 10, $2,378, en route to the $2,400 psychological level. A decisive break above this level could clear the path for a rally to the next major resistance near an all-time high near $2,432, and then the $2,500 figure.
On the downside, the key support level is seen near the confluence of the resistance-turned-support level and the 100-period EMA at $2,325. Further south, the next contention level is located near a low of May 2 at $2,281.
Fundamental Overview
Gold price (XAU/USD) trades on a negative note on Monday during the Asian session. The hawkish remarks from the Federal Reserve (Fed) and growing speculation that the Fed might delay its easing plans have boosted the Greenback and dragged the USD-denominated gold lower. However, signs of economic weakness and ongoing geopolitical tensions in the Middle East are likely to support precious metals in the near term.
Gold traders will keep an eye on the Fed’s Jefferson and Mester speeches on Monday. Later this week, the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales will be in the spotlight. In case of stronger-than-expected economic data, this might dampen the hope for a Fed rate cut and exert some selling pressure on the XAU/USD.
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: Bulls return and aim for record highs Premium
Spot Gold price (XAU/USD) heads into the weekly close posting solid gains and changing hands at around $2,360 a troy ounce. XAU/USD struggled for direction, spending most of the week hovering between $2,300 and $2,330.
Metals Big Picture
METALS BULLISH THEMES
METALS BEARISH THEMES
Latest XAU/USD Analysis
Editors' picks
EUR/USD holds steady above 1.0750 ahead of Fedspeak
EUR/USD fluctuates in a relatively tight channel above 1.0750 to start the new week. In the absence of high-tier data releases, investors will scrutinize comments from central bank officials. Later in the week, inflation data from the US could trigger a big reaction.
GBP/USD hovers above 1.2500, focus on UK labor data
GBP/USD struggles to gain traction and fluctuates slightly above 1.2500 in the European session on Monday. Ahead of Tuesday's labor market data from the UK and April inflation report from the US on Wednesday, investors will keep a close eye speeches from central bankers.
USD/JPY trades on a positive note above 155.80 on Fed’s hawkish comments
The USD/JPY pair trades on a stronger note near 155.85 during the Asian trading hours on Monday. The hawkish stance from the US Federal Reserve has provided some support to the Greenback in recent sessions.
Gold price trades on a negative note, eyes on Fedspeak
Gold price trades on a negative note on Monday during the Asian session. The hawkish remarks from the Fed and growing speculation that the Fed might delay its easing plans have boosted the Greenback and dragged the USD-denominated gold lower.
WTI edges lower to near $77.50 due to uncertainties surrounding Oil demand
WTI Oil price extended losses as Fed officials indicated higher interest rates for longer, which could dampen Oil demand. The crude Oil prices received pressure as China’s PPI marked the 19th consecutive month of deflation. Iraq's Oil minister Hayan Abdul Ghani committed to the voluntary Oil production cuts agreed upon by the OPEC.
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.
