Preparing for THE Bottom: Part 3 - Gold to Silver Ratio
Gold Forecast and News
Gold extends daily recovery toward $2,350
Following Monday's decline, Gold stages a rebound toward $2,350 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% after April producer inflation data, allowing XAU/USD to hold its ground.
Latest XAU/USD News
XAU/USD Technical Overview
The gold price edges higher on the day. The yellow metal keeps the bullish vibe unchanged as XAU/USD remains above the key 100-day Exponential Moving Average (EMA) on the four-hour chart. The upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which is in the bullish zone at 52.70, indicating the support level is likely to hold rather than break.
A high of May 10 at $2,378 acts as an immediate resistance level for the precious metal. Extended gains will pave the way to the $2,400 psychological level. A break above this level will see a rally to an all-time high near $2,432, en route to the $2,500 round figure.
On the other hand, the crucial support level will emerge around the $2,325–$2,340 zone, portraying the confluence of the resistance-turned-support level and the 100-period EMA. The breach of this level will expose a low of May 2 at $2,281.
Fundamental Overview
The gold price (XAU/USD) rebounds despite the consolidation of the US Dollar (USD) on Tuesday. The upside of yellow metal might be limited as traders might wait on the sidelines ahead of key US inflation data this week. The higher-for-longer US rate mantra has exerted some selling pressure on the XAU/USD in recent sessions. However, the safe-haven flows due to escalating Middle East tensions might boost the gold price for the time being.
Investors will closely watch the key US economic data this week. The US Producer Price Index (PPI) for April is due on Tuesday, along with Fed Chair Jerome Powell's speech. The attention will shift to the US Consumer Price Index (CPI), due on Wednesday. These reports could offer insights into the timing of the Fed's initial rate adjustment. The hotter-than-expected inflation figures might dampen the prospect of a Fed rate cut, weighing on the precious metal. Higher interest rates may reduce overall investment demand for gold as they increase the opportunity cost associated with holding gold.
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.
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METALS BULLISH THEMES
METALS BEARISH THEMES
Latest XAU/USD Analysis
Editors' picks
EUR/USD climbs to fresh monthly high above 1.0800
EUR/USD gathered bullish momentum and advanced to its highest level in a month above 1.0800 in the American session on Tuesday. The renewed selling pressure surrounding the US Dollar ahead of Wednesday's key inflation data provides a boost to the pair.
GBP/USD rises toward 1.2600 on renewed USD weakness
After falling toward 1.2500 in the early American session, GBP/USD regained its traction and turned positive on the day above 1.2550. The US Dollar struggles to find demand following the producer inflation data and allows the pair to stretch higher.
USD/JPY advances to 156.50 ahead of US Inflation and Japan’s Q1 GDP
USD/JPY rises to 156.50 with eyes on crucial US inflation readings. Investors expect that the fed will start lowering interest rates from September. Japan’s Q1 GDP will indicate the economic strength.
Gold extends daily recovery toward $2,350
Following Monday's decline, Gold stages a rebound toward $2,350 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% after April producer inflation data, allowing XAU/USD to hold its ground.
Oil hovers around $79.50 amid concerns of supply disruptions following Canada’s wildfires
West Texas Intermediate crude Oil price trades around $79.50 per barrel during Tuesday's Asian session. These gains in Oil prices could be attributed to uncertainties surrounding crude Oil supply amid wildfires in remote western Canada.
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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.
