CelticGold Market Report 27th September 2015

2015-09-27  |  Gold & Financial News

Gold Technical Chart - 1 Year the yellow metal was the decision by the Federal Reserve to hold off on raising interest rates. 

After the Fed decision last week, Gold increased almost 2% over Thursday and Friday. Gold pushed up into the $1,150 range late this week but has since pulled back. The $1,160-70 level remains the next key area of resistance to move through.

Gold acted as a safe haven this past week as equity prices resumed there slump. So unless there is an outright crash, Gold could see additional safe haven demand if equity prices continue to move downward.

The continued high market volatility is a sign that traders and and investors are uncertain due to deflationary fears and a slowing global economy. The month of October is also historically not friendly to equity prices, so it should be another interesting month.

World Stocks Slide

We commented in an article recently how global markets are moving in tandem. Zero percent interest rates combined with excessive debt loads is a global phenomena. Virtually everywhere you look around the world market participants are concerned about slowing growth and when the next shock will hit the global economy. 

In the last 60 days the major global stock indexes have all been moving down together. 

China- the Shanghai Composite Index is down almost 40% from its peak earlier this year. The slowdown in China has been having a ripple effect across the global economy.

Germany- The German DAX is down more than 20% from its peak. On Thursday the DAX’s hit its lowest level of the year. The selloff may not be over as concerns over Volkswagen’s impact on the German economy grow. 

United States- The Dow Industrial Average is down more than 2000 points from its peak earlier this year. As we pointed out in a recent update, in August the Dow had its biggest three day point decline ever.

United Kingdom- The UK FTSE has fallen over 1,000 points and is down about 15% for the year. 

The story is similar when you look around the global landscape. Italy, France, Russia, Japan, and Brazil. In almost every region of the world stock prices have been lower in the last 60 days and in many cases much lower.

This is all a warning sign that all is not well with the global economy. Market participates are realizing that the Central Banks do not have the answer. Over the short term markets remain uncertain and unpredictable.

It is not yet clear whether this is a the start of the next cyclical uptrend for Gold and Silver. However, it is always best to be early to a trend than too late.

Market Update for Silver

Silver Technical Chart - 1 Year

Silver fell to $14.70 on Tuesday but was able to produce a strong rally on Thursday and closed the week at $15.13. The action in the global stock markets are likely going to dictate the short term direction of both Gold and Silver.

Should we see a sharp and persistent downturn in stocks next month it could produce a temporary downward spike in the metals. At times Gold and Silver have rallied while stocks have turned down. But if the stock markets in China, Europe or the US crash, then Gold and Silver could get caught in the downturn.

 So we”ll have to see how it all plays out.