Preparing for THE Bottom: Part 3 - Gold to Silver Ratio
Gold Forecast and News
Gold extends slide to fresh two-month low
After shedding some ground throughout the first half of the day, the US Dollar is back in fashion. XAU/USD trades at its lowest in two months in the $2,580 region and is technically poised to extend its slump.
Latest XAU/USD News
XAU/USD Technical Overview
XAU/USD trades at its lowest in two months in the $2,580 region and is technically poised to extend its slump. The daily chart shows the pair remains above 100 and 200 bullish moving averages, albeit the 20 Simple Moving Average (SMA) gains downward traction above the current level. Technical indicators, in the meantime, head firmly south within negative levels. The 100 SMA provides support at around $2,540.65.
In the near term, and according to the 4-hour chart, XAU/USD downward momentum remains strong. The intraday high was set below a firmly bearish 20 SMA, which extends its slope below the longer moving averages. Finally, technical indicators turned sharply lower after correcting oversold conditions, anticipating another leg south.
Support levels: 2,572.45 2,560.65, 2,545.20
Resistance levels: 2,600.10 2,612.60, 2,627.10
Fundamental Overview
After shedding some ground throughout the first half of the day, the US Dollar is back in fashion. The American currency trades with a firmer tone after Wall Street’s opening and the release of the United States (US) October Consumer Price Index (CPI), having reached fresh weekly highs against most major rivals. In the case of XAU/USD, the pair dipped below $2,600 but bounced back above it, currently struggling to extend its gains.
The US Bureau of Labor Statistics reported that the CPI rose at an annualized pace of 2.6% in October and was up by 0.2% on a monthly basis, matching expectations. The core annual figure printed at 3.3%, which was also in line with the forecast. The US Dollar ticked lower as an immediate reaction to the news but resumed its advance as US indexes quickly trimmed pre-opening gains.
At the time of writing, however, market participants are battling to establish a trend. The USD retains its strength, but the momentum eased, while US indexes pared the bleeding, with only the Nasdaq Composite trading in the red. The macroeconomic excitement will likely recede as the US has no other relevant figure to release for the rest of the week.
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 declined sharply as US yields surged on Trump victory Premium
Gold (XAU/USD) came under heavy selling pressure and slumped below $2,700 on Wednesday as US Treasury bond yields rallied on Donald Trump’s victory in the US presidential election.
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EUR/USD continues to grind out further losses
EUR/USD continued to drift into the basement on Wednesday, clipping into a 54-week low and settling within touch range of 1.0550. Fiber continues to shed weight on the charts as broader FX markets pivot full-bore into holding the Greenback.
GBP/USD sheds weight for a fourth straight day on Wednesday
GBP/USD eased further into the low end on Wednesday, trimming further south of the 200-day Exponential Moving Average in a one-sided bearish decline as the pair closes in the red for a fourth consecutive trading day.
USD/JPY pulls back from three-month peak after rise in Japanese factory-gate inflation
USD/JPY pulls back after the Japanese Yen strengthens following release of Japanese Producer Price Index for October. Higher prices could filter through into broader inflation and lead the BoJ to hike interest rates, strengthening JPY. The US Dollar remains underpinned by still-high US inflation data and expectations of US fiscal and trade policy.
Gold extends slide to fresh two-month low
After shedding some ground throughout the first half of the day, the US Dollar is back in fashion. XAU/USD trades at its lowest in two months in the $2,580 region and is technically poised to extend its slump.
WTI recovers to near $68.00, stronger US Dollar might cap its gains
West Texas Intermediate, the US crude oil benchmark, is trading to around $67.90 on Thursday. The WTI price recovers slightly amid the surprise on crude oil draw. However, the stronger US Dollar broadly might cap its gains.
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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.
