Daily Gold Newsletter Archives

Posted on April 12, 2024April 12, 2024 by Richard

Gold – All Time Highs!

Commentary for Friday, April 12, 2024 (www.golddealer.com) – Today gold closed up $1.40 at $2356.20, and silver closed up $0.08 at $28.26. You would not think now is the time for the price of gold to become unstable, but reading the tea leaves correctly always requires a bit of wisdom and good fortune. Gold soared on the open, reaching $2430.00 and dropped just as quickly, reaching $2350.00 in a flash, before recovering to almost unchanged on the day. Too much bullishness and the fresh talk of only one rate cut this year has created an unstable market. It will be interesting to see if the bulls can stabilize pricing and recover next week. This latest oversize drop was large enough to cool this market down, allowing time for consolidation. Still, today was likely not the end of higher highs for the metals. There is more than enough bullish sentiment to go around for the longer term. It is unlikely, however, that we will see significant selling in gold or silver bullion even with this latest turbulence. There are too many reasons which support higher prices in the longer term. Last Friday gold closed at $2325.70 / silver at $27.40 on the week gold was higher by $30.50 and silver was down $0.86.

Please note that FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.

Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on a new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.

On Monday gold dipped on the open but recovered and finished the day in the green. I would not necessarily call this a slow start, but it was a bit on the tepid side when compared to last Friday when gold made all time new highs and finished the day up $36.90! The number of traders looking for price consolidation at these lofty levels is growing. But with hedge funds and central banks buying gold I don’t see much downside. Unless the Fed gets nervous and decides it needs higher interest rates to overpower rising inflation.

Ernest Hoffman (Kitco) “Gold appears overbought and due for an imminent correction, while silver is seeing support from both the investment community and industrial demand, according to precious metals analysts at Heraeus. In the company’s latest report, the analysts noted that gold prices are continuing to rise despite the fact that rate cut expectations have been moderating. “The gold price has risen by 12.6% year-to-date, and this is without the aid of a Fed monetary policy pivot, a markedly weaker dollar, or a meaningful resurgence in institutional investment demand via ETFs,” they wrote. “This may leave the door open to a move even higher later in the year when the Fed finally decides to drop interest rates, which in all likelihood will weaken the US dollar.” They pointed out that gold prices have appreciated by nearly 4.7% in the last two weeks, even as Fed speakers have been working overtime to talk down frothy markets. “Although Jerome Powell’s words in a speech last week maintained the same message of data dependency and a cautious approach to making cuts to interest rates, swaps markets are still pricing in three cuts to the Federal Funds Rate by year-end (down from six at the start of the year), with a cumulative interest rate reduction of ~75 bp,” they said.”

Reuters (Ashitha Shivaprasad) – Central bank demand propels safe-haven gold to record peak – “Gold prices hit a record high for a seventh straight session on Monday, fueled by central bank purchases and geopolitical tensions, while strong economic data failed to dull bullion’s allure. Spot gold was steady at $2,330.83 per ounce, as of 9:45 a.m. ET (1345 GMT), after hitting a record high of $2,353.79 earlier in the session. U.S. gold futures gained 0.3% to $2,350.80. China’s central bank added 160,000 troy ounces of gold to its reserves in March, it said. Turkey, India, Kazakhstan, and some eastern European countries have also been buying gold this year. “The market is pricing rate cuts by June despite strong economic data. But, if we continue to see strong data, which indicates that Federal Reserve is in no hurry to cut rates, then gold will not be able to sustain the gains,” said Bart Melek, head of commodity strategies at TD Securities. “Central bank buying and geopolitical tensions are other supportive elements,” Melek added. Traders are pricing in a 52% prospect of a first 25 basis point cut in June, CME Group data showed. However, data on Friday showed U.S. job growth blew past expectations in March, calling into question the timing of rate cuts. Lower interest rates reduce the opportunity cost of holding bullion. COMEX gold speculators raised their net long positions by 20,493 contracts to 178,213 in the week ended April 2, data showed on Friday. pot silver was up 0.4% at $27.59, its highest in nearly three years. With the latest move up in prices, there is upside potential for silver, UBS analysts said in a note, projecting their forecast endpoint at $32/oz. India’s silver imports hit a record high in February, as lower duties encouraged large purchases from the United Arab Emirates, officials told Reuters. Platinum rose 3.2% at $956.60 and palladium firmed 3.9% at $1,042.52.”

On the day gold closed up $6.00 at $2331.70, and silver closed up $0.31 at $27.71.

On Tuesday the price of gold was again aggressive, challenging $2364.00 on two occasions in the early trade but both attempts were sold suggesting a continued test of overhead resistance. On the day gold managed to finish in the green and the aftermarket was higher by another $10.00. It is true that there are some now looking for profit taking. Which makes sense considering that gold is up by $150.00 this past month and more than $300.00 year over year. This “profit taking scenario” will likely grow in popularity as prices move higher, but the basic underpinnings of this market remain solid and upbeat. We saw mild selling across our trading desk today but buyers still outnumber sellers by a wide margin – another plus for the bulls.

Reuters (Ashitha Shivaprasad) – Gold hits record high on buying momentum, geopolitical risks – “Gold extended its record run on Tuesday fueled by buying momentum and geopolitical risks, while the spotlight shifted to the Federal Reserve’s policy meeting minutes and U.S. inflation data for insights into U.S. rate cut timeline. Spot gold was up 0.8% at $2,357.19 per ounce by 9:36 a.m. ET (1336 GMT) after hitting a record high of $2,365.09. U.S. gold futures gained 1.1% to $2,376.00. “Technical buying momentum will continue in the gold market unless the CPI data comes out much hotter-than-expected. A cooler inflation report could take prices to $2,400,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. The U.S. central bank’s policy meeting minutes and U.S. Consumer Price Index (CPI) data are due on Wednesday. Bullion is considered a hedge against inflation and geopolitical uncertainties, but higher interest rates tend to dull the appeal of holding the non-yielding asset. “The fundamentals underpinning the current rally include growing geopolitical risk, steady central bank buying and resilient demand for jewelry and bars and coins,” the World Gold Council said in a note. “With the prospect of lower interest rates ahead, the suggestion is that (gold exchange-traded-funds) ETFs have missed the rally and are now under-allocated.” CME Group data showed that the market is pricing in a 53% chance of a rate cut in June. “Despite my long-term bullish outlook on gold, given the current conditions, I anticipate a bearish reversal, perhaps even a minor one,” said Fawad Razaqzada, market analyst at City Index in a note. Spot silver rose 1.7% to $28.29 per ounce, its highest level since June 2021. Platinum firmed 3% to $986.75 and palladium rose 2.9% to $1,073.39. “Given the lack of production discipline, we are particularly concerned about palladium, which will likely continue to underperform platinum whose demand is less exposed to the auto industry,” BofA analysts wrote in a note.”

On the day gold closed up $11.80 at $2343.50, and silver closed up $0.18 at $27.89.

On Wednesday the price of gold dipped on the open and remained defensive all day after CPI inflation numbers came in hot, the idea here being that the much talked about bullish notion that interest rates will heading lower sooner than later, now looks like a busted flush. Still, recent higher highs in gold prices are extraordinary and while insiders’ figure that consolidation must be in the cards somewhere the idea that $2400.00 gold may be right around the corner is becoming more common with a larger, worldwide audience. Why? World debt continues to grow at alarming rates, safe haven demand has reinvented itself, even at these lofty levels. And what other asset class can protect least a portion of your wealth from obtrusive government intervention. I have used this reasoning before but I’m afraid that safe haven physical bullion gold and silver is becoming more and more important to a wider audience.

Reuters (Ashitha Shivaprasad) – Gold slips from record levels after hot US inflation data – “Gold prices slipped from record-high levels on Wednesday as the U.S. dollar and Treasury yields firmed after a stronger-than-expected inflation print softened expectations of an early U.S. rate cut. Spot gold fell 0.6% to $2,338.19 per ounce, as of 8:58 a.m. ET (1258 GMT). U.S. gold futures lost 0.1% to $2,360.7. The U.S. dollar index rose 0.5% and U.S. Treasury yields spiked after the data, making non-yielding bullion less attractive. A Labor Department report showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected by economists polled by Reuters. Gold prices stumbled with the stronger-than-expected CPI data contributing to expectations of later and fewer cuts by the Fed, said Tai Wong, a New York-based independent metals trader. “However, let’s wait and see; as gold has been resilient in the face of strong data during this remarkable run,” Wong added. Despite being known as an inflation hedge, bullion’s appeal tends to fade in an elevated interest rate environment. Bullion prices hit a record high of $2,365.09 on Tuesday. HSBC said in a note that it expects to see a wide trading range of $1,975-$2,500 for gold prices in 2024. “Escalating geopolitical risks significantly bolster gold as hot and cold conflicts, and a record number of elections this year, keep the risk thermometer high,” the note added. The Shanghai Futures Exchange on Wednesday said it will impose trading limits on its gold contracts, following a sharp price rally. Strong buying from Chinese households is “due to the lack of alternative options that (these) households have for investment at the moment with the property sector in crisis and the stock market in the doldrums,” said Kieran Tompkins, commodities economist at Capital Economics. Spot silver fell 0.5% to $28.01 per ounce, after hitting a near three-year high on Tuesday. Platinum edged 1% lower to $969.05 and palladium fell 1.9% to $1,071.75.”

On the day gold closed down $13.90 at $2329.60, and silver closed up $0.07 at $27.96.

On Thursday the price of gold dipped in the early morning trade to $2325.00 and then reversed direction and climbed to highs on the day as softer inflation numbers increase rate cut chances, Middle East tension escalation boosts safe haven demand and interest rates moved lower. I would feel more comfortable with these higher prices if gold consolidated for a time, but all things considered this trade is upbeat and the number of bears looking for a seismic shift in the solid bullish sentiment continues to decrease. My usual wisdom is worth repeating when gold prices get crazy…this always brings out telemarketing hustlers with bad intensions. When buying gold or silver bullion, choose coins or bars with low premiums. Avoid anything else.

Reuters (Ashitha Shivaprasad) – Gold edges higher after softer US PPI data – “Gold prices firmed on Thursday after softer-than-expected U.S. producer prices data boosted hopes for U.S. rate cuts this year, while persistent geopolitical concerns added to the metal’s shine. Spot gold rose 0.6% at $2,346.23 per ounce, as of 1347 GMT. On Tuesday, bullion prices hit an all-time high for an eighth straight session. U.S. gold futures was up 0.6% at $2,362.20. Helping bullion, the U.S. dollar and Treasury yields ticked lower after the data. A Labor Department report showed the Producer Price Index (PPI) rose 0.2% month-on-month in March, compared with a 0.3% increase expected by economists polled by Reuters. “The PPI data came a bit cooler than expected and this keeps alive the hopes of possible rate cuts by year-end – as a result gold is up,” said David Meger, director of metals trading at High Ridge Futures. “Central bank buying and geopolitical uncertainty continue to be the pillars of support for the gold market,” Meger added. The Fed could start interest-rate cuts as early as its late-July meeting, traders bet, after the inflation data. Gold is traditionally known as an inflation hedge but higher interest rates reduce the allure of holding non-yielding gold. Meanwhile, data on Wednesday showed that showed U.S. consumer prices increased more than expected in March. “For the next leg higher (in prices), we still need to see a return of gold exchange-traded-fund (ETF) demand and that requires the Fed indicating a rate cut,” said UBS analyst Giovanni Staunovo. Spot silver edged 0.6% higher to $28.14 per ounce. Platinum rose 2.2% to $981.10 and palladium lost 0.5% to $1,045.75. Elsewhere, diversified miner Sibanye Stillwater said it could cut over 4,000 jobs as it restructures its South African gold operation. It has already cut about 2,000 jobs at its platinum group metal (PGM) operations.”

On the day gold closed up $25.20 at $2354.80, and silver closed up $0.22 at $28.18.

On Friday the price of gold initially reached new highs, further encouraging the bullish scenario and then, out of nowhere reversed direction, and finished the day only mildly in the green. Of course, this has even veteran traders scratching their heads. But this turn of events is a good reminder to everyone that it does not pay to completely rely on the general trend or the latest technical picture when it comes to the metals. They, even in the best of times, have always been subject to violent changes in direction. It is probably a good bet to say that 10 years from now even these prices will seem cheap. But keeping your seat belt secured makes good sense in the meantime. The phones across our trading desk are quiet, what a change from yesterday when you could not get into the parking lot. How aggressively investors buy this dip will give veteran traders a better idea of where we are in this latest pricing cycle.

Reuters (Ashitha Shivaprasad) – Gold scales record peak as geopolitical risks boost appeal – “Gold prices hit a record peak on Friday as investors rushed to safe-haven investments amid Middle East tensions and Chinese economic challenges. Spot gold was up 1% at $2,397.84 per ounce as of 9:29 a.m. ET (1329 GMT) after hitting a record high of $2,400.35. Prices were up nearly 3% for the week. U.S. gold futures gained 1.8% to $2,414.80. “The positive factors for gold outweigh the negative. The heightened tensions in Middle East is the main driver for gold’s recent surge,” said Chris Gaffney, president of world markets at EverBank. The United States expects an attack by Iran against Israel but one that would not be big enough to draw Washington into war, a U.S. official said on Thursday. “Gold continues to go from strength to strength as we are witnessing fear of missing out on clear display,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note. “Fear of missing an ongoing rally creates a strong buy-on-dip mentality, in the process reducing the risk of recently established longs being challenged.” Elsewhere, Thursday’s U.S. Producer Price Index (PPI) came in softer than expected, a day after March’s hot Consumer Price Index (CPI). “Gold has pushed back against some data that should have typically been negative. It will be somewhat healthy to see a correction in the bulls market, but the trend will continue to be positive,” Gaffney added. Bullion also got a boost from data that showed China’s exports contracted sharply in March while imports unexpectedly shrank. On the physical side, China’s physical gold premiums rose this week, driven by strong demand to shore up a depreciating yuan while soaring prices dulled activity in India. Spot silver rose 3% to $29.33 per ounce, its highest level since early 2021. Platinum rose 2% to $999.00 and palladium firmed 3% to $1,077.50.”

On the day gold closed up $1.40 at $2356.20 and silver closed up $0.08 at $28.26.

Platinum closed up $14.40 at $990.50, and palladium closed up $18.80 at $1057.70.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the strong overall near-term technical advantage. A seven-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $2,500.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at today’s contract high of $2,418.20 and then at $2,435.00. First support is seen at the overnight low of $2,388.60 and then at $2,350.00. The silver bulls have the strong overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at $27.00. First resistance is seen at the overnight high of $29.315 and then at $29.50. Next support is seen at the overnight low of $28.485 and then at $28.00.”

Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special favor – talk to Harry or Eric or Ken Slater. We are now back to our traditional business model. Thank you for your patience. Blessings. Richard Schwary

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Posted on April 5, 2024 by Richard

Gold – Another Amazing Week

Commentary for Friday, April 5, 2024 – Today gold closed up $36.90 at $2325.70, and silver closed up $0.26 at $27.40. The price of gold soared four of the five days this week making new highs on Friday. This jump has caught everyone by surprise because the price of gold faded on Thursday of this week as traders tested recent highs and found momentum and enthusiasm lacking. The jump in gold prices today may have been the result of comments by Fed’s Barkin: “That’s a quite strong jobs report” (Reuters). Still there are some who believe this market requires caution because recent gains have been based on the possibility of lower interest rates sometime this year. If the Fed turns hawkish, for whatever reason, the price of gold will pay the price. Being over-cautious here is a mistake because it is increasingly clear that higher prices for gold are becoming the norm. And they could easily move higher in a world of rising debt and geo-political tension. Last Thursday gold closed at $2217.40 / silver at $24.80 (Closed Good Friday) on the week gold was higher by $108.30 and silver was higher by $2.60.

On Monday the price of gold moved above $2260.00 on the open but the rally was sold, and gold turned choppy settling around $2230.00 reacting to mild inflation numbers even as the Dollar Index moved to 105.00 which were highs on the week. So, there are the usual crosswinds holding the price of gold in check but at the same time the bulls continue smiling as gold holds solid ground at the upper end of this latest run and managed to finish this day in the green. The commentary about higher prices in gold is almost universally bullish this morning. The hedge funds and central banks are buying, the public is buying, other countries are buying. All this happiness should be enjoyed with a bit of caution. The price of gold is higher by $130.00 this past month and $250.00 year over year. All of this is pinned in place because traders expect lower interest rates. If the Fed again turns hawkish it could be a rough ride. That being said this market remains optimistic and there are reasons to expect even higher prices in the longer term.

Reuters (Anjana Anil) – Gold pares gains as higher US dollar, bond yields weigh – “Gold prices pared gains on Monday as the dollar and bond yields rose, after the bullion surged to a fresh record high on growing expectation that the Federal Reserve could deliver first interest rate cut in June. Spot gold was up 0.2% at $2,236.55 per ounce as of 10:15 a.m. EDT (1415 GMT) after hitting an all-time high of $2,265.49 earlier in the session. U.S. gold futures climbed 0.8% to $2,256.90. “The view out there is that the Fed will likely start cutting rates significantly before the time we reach the 2% (inflation) target based on what we’ve seen on the PCE data,” said Bart Melek, head of commodity strategies at TD Securities. Data on Friday showed U.S. prices moderated in February, keeping a June interest rate cut from the Fed on the table. Fed Chair Jerome Powell said February’s inflation data was “more along the lines of what we want to see.” Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion. Traders are currently pricing in around 63% chance that the U.S. central bank will be cutting rates in June, according to CME FedWatch tool. However, the dollar rose 0.4% to a more than six-week peak against rivals, making gold more expensive for other currency holders, while yields on 10-year Treasury notes also climbed. “(Fed officials) will probably caution the market that they don’t necessarily have to get aggressive on cuts. There’s no guarantee that the U.S. Central bank will start cutting rates, and I think they’ll make that quite apparent and that may cause some reversals here,” Melek added. Bullion prices have also hit record highs in other currencies, including the euro, the yuan, Japanese Yen, Indian rupee and the British pound sterling.”

On the day gold closed up $19.10 at $2236.50, and silver closed up $0.15 at $24.95.

On Tuesday the price of gold continued higher, reaching another record close ($2261.00) and seemed to have plenty of gas in the tank, closing up another $20.00 in the aftermarket. Unlike yesterday the dollar was mildly weaker, which supported this push to higher ground as gold finished a second day this week nicely in the green. Which is extraordinary when you consider that higher gold prices have stymied the important physical demand in India. These higher prices are also the result of a momentum play created by a strong technical picture. And increased safe haven demand as aggressive Israeli air strikes in Gaza escalate Middle East tension.

Reuters (Polina Devitt) – Gold hits fresh record high with support from momentum-following funds – “Gold prices rose to a fresh record high on Tuesday as demand from momentum-following funds offset a strong U.S. dollar and the possibility of higher-for-longer U.S. rates. Spot gold was up 0.5% to $2,262.51 per ounce by 1055 GMT, after hitting an all-time high of $2,266.59. The bullion has been hitting fresh record highs for three sessions in a row. “An underlying bid from retail and central banks is being joined by momentum-following speculators who have extended their already elevated longs following the break above $2,200,” said Ole Hansen at Saxo Bank. “In addition, there is no doubt that geopolitical tensions have added an additional layer of support.” The bullion rose by 9.3% in March, which was its biggest monthly growth since July 2020, amid persistent safe-haven demand and central bank purchases. China’s central bank has been adding gold to its reserves for 16 months in a row. Gold kept rising on Tuesday despite a strong U.S. dollar after Monday’s data showed U.S. manufacturing grew for the first time in 1-1/2 years in March. Traders pared bets of a June interest rate cut to 56% after the data, according to the CME Group’s FedWatch Tool. “What makes the gold rally so unusual is that is occurring despite significant traditional headwinds with the U.S. dollar rising, treasury yields rising, the likelihood of higher for longer U.S. rates increasing,” said independent analyst Ross Norman. “Furthermore, we are moving into a slack period for seasonal demand. You could not imagine a more inauspicious backdrop.” Amid high prices, European physical investors are selling metal wholesale back to their dealers and Indian demand has cratered, he added. Meanwhile, support from gold extended to other precious metals. Spot silver rose 2.3% to $25.66 per ounce, platinum added 1.8% to $918.10 and palladium climbed 3.0% to $1,026.”

On the day gold closed up $24.50 at $2261.00, and silver closed up $0.85 at $25.80.

On Wednesday the price of gold again confounded the experts as it flirted with $2300.00! Encouraged by a weaker dollar and continued worries on the geopolitical front. I think however this latest push to record highs in gold needs a bit of time to at least consolidate, if not weaken given that analysts are talking about the “too much, too soon” scenario. And with gold higher by $175.00 this past month a round of profit taking may be in the offing. Still, geopolitical concerns underpin recent price gains. Chief Powell’s comments today did not change the policy line as the Fed wants lower inflation numbers before easing interest rates sometime this year. So, the FOMC leaves the door open to options depending on how the economy settles. And while expectations of lower interest rates takes center stage, higher gold remains in the cards. A great short squeeze pop in silver today up $1.15! Higher prices expected with this break to the upside!

Reuters (Brijesh Patel) – Gold hits pause after record run on safe-haven inflows – “Gold took a breather after notching another record high on Wednesday as growing tensions in the Middle East and U.S. interest rate cut hopes continued to push investors to the safe-haven asset. Spot gold was down 0.3% at $2,272.79 per ounce, as of 1211 GMT after hitting a record high of $2,288.09 earlier in the session. Analysts attributed the slight pullback to an uptick in U.S. yields. “The most important factor pushing gold prices higher is the bullish market mood… the narrative seems to center very strongly around central bank buying,” said Julius Baer analyst Carsten Menke. “We remain rather cautious on gold and believe there is more downside than upside to prices from current levels. That said, we also acknowledge that near-term price risks are skewed to the upside, considering the bullish market mood.” Strong central bank buying and safe-haven inflows amid escalating geopolitical risks have fueled the 10% gain in bullion so far this year. “It seems as if gold turns every market development into a price increase,” said Alexander Zumpfe, a precious metals trader at Heraeus. Federal Reserve policymakers on Tuesday said they think it would be “reasonable” to cut U.S. rates three times this year, even as stronger economic data recently has sown doubts about that outcome. “The U.S. economy is surprising with its strong performance, which would make a first interest rate cut in June less likely and thus weigh on the gold price – but the precious metal is holding its value,” Zumpfe said. Investors now await remarks from Fed Chair Jerome Powell later in the day for clues on when the central bank will deliver its first rate cut. Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding the non-yielding bullion.”

On the day gold closed up $33.40 at $2294.40, and silver closed up $1.15 at $26.95.

On Thursday gold was again choppy, moving between $2297.00 and $2282.00, seeing some light technical selling but still closing only mildly in the red. Today’s trade was really a test of possible higher highs in both gold and silver. A test which did not gather much enthusiasm for either metal considering the fireworks earlier in the week. Expect a settling in prices as traders look to next week for information which will create enough buzz to tip this balance.

Reuters (Brijesh Patel) – Gold powers to new high above $2,300/oz on rate cut optimism – “Gold prices hit a new record high on Thursday, breaking above the $2,300 per ounce mark, boosted by prospects for lower U.S. interest rates this year after Fed Chair Jerome Powell said upbeat economic data had not changed the overall picture for monetary policy. Spot gold was down 0.5% at $2,287.88 per ounce, as of 1230 GMT, taking a breather after hitting a record high of $2,304.09 earlier in the session. “There is big demand coming from Asia, particularly from China and solid demand from central banks. We have geopolitical risks and expectations around central banks cutting rates. All these factors are lifting gold prices higher,” Carlo Alberto De Casa, a market analyst at Kinesis Money, said. Fed officials, including Chair Jerome Powell, on Wednesday continued focusing on the need for more debate and data before U.S. interest rates are cut, a move financial markets expect to occur in June. Traders are currently pricing in about 59% chance that the Fed will cut rates in June, according to the CME FedWatch tool. Gold, which pays no interest, benefits when interest rates fall as this reduces the opportunity cost of holding bullion. Focus now shifts to U.S. non-farm payrolls for March due on Friday that could shed more light on the timing of the Fed’s first rate cut. Strong central bank buying and safe-haven inflows amid growing geopolitical tensions have boosted demand for gold, helping to drive the price up more than 25% since October. “Gold’s blistering rally may have further room to run in the medium term,” Singaporean bank OCBC said in a note. “Historical evidence since 2001 showed that gold strengthened when Fed rate hike cycle ended and continued to extend its bullish run when Fed rate cut cycle gets underway. That said, we caution for the risk of a pullback.” Spot silver fell 0.8% to $26.99 per ounce after hitting its highest since June 2021. Platinum rose 0.1% to $937.85 and palladium was steady at $1,013.48.”

On the day gold closed down $5.60 at $2288.80, and silver closed up $0.19 at $27.14.

On Friday the price of gold again surprised even insiders as it roared to new all-time highs. This unexpected ending for this week may have been the result of a hot jobs report, increased safe haven demand because of Middle East troubles, momentum created by a surprisingly strong technical picture or Bank of America’s latest call that gold is on track to hit $2400.00 this year and is less dependent on Fed rate cuts. Take your pick in this tricky market but today’s finish should cement the idea that gold is an undervalued asset when compared to any other asset class. And those investors who have been sidelined because of these higher prices risk missing another chance to secure some financial protection outside the traditional banking system. A good bet is to insure all your eggs are not in one basket, just in case something goes wrong.

Reuters (Polina Devitt) – Gold bulls eye more record highs despite lightning gains – “An upgraded gold price forecast for 2024 from Nicky Shiels, head of metals strategy at Swiss gold refinery MKS PAMP, drew an unexpected follow-up question this week from market participants. The enquiry was: “Will or can gold ‘go cocoa’?” Cocoa prices have more than doubled since the start of 2024 due to poor harvests in Ivory Coast and Ghana. Meanwhile, spot gold , a much more global and liquid market, hit record highs on five previous trading sessions as investors jumped in looking for exposure to the metal used to preserve wealth. Gold’s record high at $2,305.04 an ounce hit on Thursday amounts to a gain of 12% since the start of the year. “There is almost zero probability gold can replicate those gains in that amount of time,” Shiels said. While cocoa price growth is driven by supply shortage, the gold market is protected by significant stocks held by individuals and reserves of central banks, which own one-fifth of all the gold ever mined. “One cannot de-stock chocolate bars at the same rate as one can de-stock gold bars,” she said. Her forecast for the 2024 average gold price was raised by $150 to $2,200 an ounce. However, while the market may not exactly “go cocoa”, analysts retain a bullish tone even as technically the market feels ripe for hefty falls due to it being overbought. “It is hard to say where values are going to top out as there are no resistance “signposts” on the charts,” said Marex analyst, Edward Meir. Gold’s April rally came on top of its 9.3% jump in March, the strongest since July 2020, which unfolded despite traditional macro headwinds such as a strong dollar and elevated U.S. real interest rates. Over-the-counter and futures gold markets have been buoyant, with an estimated 40% rise in trading volumes, said Johan Palmberg, senior quantitative analyst at the World Gold Council. “And there is outsized activity in the gold options market, in comparison with the likes of equities and bonds, which implies that the current interest is specifically in gold.” Further out, many analysts expect gold to test new highs once the U.S. Federal Reserve starts cutting key rates triggering demand from investors sitting on the sidelines such as holders of physically-backed gold exchange traded funds (ETFs). “We had previously proposed a $2,400 per ounce price estimate if the Fed cut rates in the first quarter of 2024; we commit to that estimate for this year, even if rate cuts come later,” analysts at BofA said.

On the day gold closed up $36.90 at $2325.70 and silver closed up $0.26 at $27.40.

Platinum closed down $11.30 at $928.50, and palladium closed down $33.90 at $995.40.

FXEmpire (Vladimir Zernov) Gold, Silver, Platinum Forecasts – Gold Climbed Above $2300 Amid Rising Tensions In The Middle East – “Gold tests new highs amid rising demand for safe-haven assets. Gold traders stay focused on rising tensions in the Middle East. Gold has recently settled above the resistance at $2295 – $2305 and is ready to test new highs. Silver is moving higher as traders focus on the strong rally in gold markets. Gold/silver ratio stays below the 85 level, which is bullish for silver. From the technical point of view, silver is moving towards the nearest resistance at $27.75 – $28.00. Platinum pulled back after an unsuccessful attempt to settle above the resistance at $925 – $935. If platinum settles below the $925 level, it will head towards the support at $880 – $890.”

Posted on March 28, 2024March 28, 2024 by Richard

Gold – Optimistic!

Commentary for Thursday, March 28, 2024 (www.golddealer.com) – Today gold closed up $26.80 at $2217.40, and silver closed up $0.17 at $24.80. This has been another great week for metals. Higher prices, more positive buzz and larger physical buy orders suggest an optimistic outlook. And perhaps even higher prices over the longer term. Of course, this optimism is fueled by the notion that interest rates are heading lower by the summer months. Fed Governor Waller throws up a cautionary flag claiming that economic data may delay or reduce the number of rate cuts. Still, this is a great time for reflection on how physical ownership of gold and silver bullion keeps everyone honest in this upside down world of unfunded debt and government intervention. We are closed tomorrow, March 29^th – Good Friday. The commodity and stock markets are also closed. Last Friday gold closed at $2158.10 / silver at $24.69 – on the week gold was higher by $59.30 and silver was higher by $0.11.

On Monday the price of gold moved through $2178.00 in the early trade as the US dollar loses steam and gold’s technical picture gathers attention. The expectation of lower interest rates is an old bullish adage, but the theory still underpins this rising market. As does the possibility of a “soft” economic landing. These optimistic views make for an upbeat gold trade.

Pricing will likely remain steady and quiet, as this trading week ends on Thursday. The US markets are closed on Good Friday. Traders typically pack up and leave early for the long weekend. The phone is not exactly ringing off the hook to buy gold at these levels. The public is not selling much but remains watchful of economic changes which might slow our economy and prompt a hawkish Fed response. The fact that gold held early gains on the close is always a plus.

Reuters (Sherin Elizabeth Varghese) – Gold firms as traders position for US data – “Gold prices firmed on Monday as investors positioned for key economic data and comments from Federal Reserve officials this week for further clues on the timing of interest rate cuts signaled by the U.S. central bank. Spot gold was up 0.5% at $2,175.21 per ounce, as of 1306 GMT, while silver rose 0.5% to $24.78. The weekly initial jobless claims print due on Thursday, followed by the U.S. core personal consumption expenditure (PCE) price index data on Friday. The PCE data is the Fed’s preferred inflation gauge and any market reaction to it will be seen only next week on account of the Good Friday holiday. “Higher-than-expected PCE figures may prompt spot gold to pare some of its month-to-date gains,” said Han Tan, chief market analyst at Exinity Group. Tan said elevated gold prices reflected expectations that Fed rate cuts were just around the corner. “Furthermore, as Fed Chair Powell himself stated last week, a sudden and unexpected deterioration in the US jobs market may jolt the Fed into a more aggressive policy easing cycle, which in turn would be a boon for gold bugs.” Gold prices hit record peaks last week after Powell said the U.S. central bank is still likely to reduce rates by three-quarters of a percentage point by the end of 2024. A slew of Fed officials are expected to speak this week. Traders are pricing in a 73% probability of a June rate cut, according to the CME FedWatch Tool, up from 60% before the Fed’s March policy meet held last week. Among autocatalysts, platinum gained 1.8% to $909.70 and palladium climbed 3.6% to $1,020.45. Demand for palladium from the auto industry will be supported for longer after last week’s new U.S. emissions law changes, which will effectively allow for more catalyzed car sales in coming years, analysts at Heraeus said.”

On the day gold closed up $16.70 at $2174.80, and silver closed up $0.06 at $24.75.

On Tuesday the price of gold challenged $2200.00, but traders aggressively sold the rally, and, on the day, gold finished almost unchanged. It was interesting that consumer confidence is moving lower, given the relative optimism regarding the US economy. The last time I went shopping you had to fight for a parking space. Food and gas prices continue to move higher which may be the reason that the US consumer is not happy.

Our walk in trade is buying gold and silver bullion as optimism is on the rise, which encourages higher levels. A slightly weaker dollar today supports recent gains in gold. But you could make the case that the dollar is overbought. And will eventually weaken relative to the 3 month chart.

This would coincide with the bullish lower interest rate theory. If correct, the optimistic view would be that the price of gold may attempt all-time highs by June of this year.

Reuters (Polina Devitt) – Gold firms on weaker dollar, focus on US inflation data – “Gold prices rose on Tuesday supported by a weaker dollar as investor focus turns to U.S. inflation data due later this week, which could shed more light on the timing of the Federal Reserve’s first interest rate cut this year. Spot gold rose 0.9% to $2,191.71 per ounce by 1315 GMT. Gold hit a record high of $2,222.39 last week after Fed policymakers indicated they still expected to reduce interest rates by three-quarters of a percentage point by end-2024 despite recent high inflation readings. “Unless there is significant news that indicates a speeding up of rate cuts, gold is unlikely to hit a new record high before Easter,” said Nitesh Shah, commodity strategist at WisdomTree. “However, we expect new records to be broken by the end of the year,” he said. According to WisdomTree, gold prices may top $2,350 in the first quarter of 2025. Traders are pricing in a 64% probability that the Fed will begin cutting rates in June, according to the CME Group’s FedWatch Tool. The dollar index , meanwhile, slipped 0.1% against its rivals, making gold less expensive for other currency holders. Focus is now on U.S. core personal consumption expenditure price index data due on Friday. Gold prices are also supported by elevated physical demand from Chinese households amid some concerns about the prospects for the country’s real estate and stock market. This helped offset softening demand from price-sensitive Indian buyers. Purchases by central banks, which are less price sensitive than retail consumers, also remain strong, providing further support to the metal. China’s central bank has been the most active buyer since late 2022. “The motivating factor for their gold purchases is diversification away from the G7 currencies, after these currencies were weaponized in 2022 following the Russia-Ukraine war,” Shah said. Spot silver rose 0.3% to $24.75, both platinum and palladium added 0.7% – to $908.90 and $1,011.99 respectively.”

On the day gold closed up $0.80 at $2175.60, and silver closed down $0.27 at $24.48.

On Wednesday the price of gold was again off to a good start, challenging $2200.00 in early trading before turning choppy and finishing the day in the green. The bulls are looking for even higher prices and a positive technical picture encourages momentum play.

There is talk that these higher prices in gold has created a faltering gold market in India, and indeed it has. India represents a large sector of the physical market and has always been very price conscious. Yet patient, so waiting for an expected turnaround from their viewpoint is typical. But I think this delay will dimmish considerably as India realizes that a Fed rate cut in a few months is expected and lower interest rates usually mean higher gold prices.

FXEmpire (Vladimir Zernov) – “Gold tests resistance at $2190 – $2200 as Treasury yields pull back. Demand from central banks stays strong, and gold has a good chance to climb above the $2200 level.” I can’t remember a time when the stage was set so nicely for higher gold prices. The fogginess of rising interest rates, usually a big downer for gold, has moved to the sidelines. The dovish turn in Fed policy has obviously created fresh excitement. While it’s a good idea to remind yourself that sentiment is transitory. Even here, higher prices are the popular opinion. Good show as our English friends are fond of saying. Yes, good show indeed!

Reuters (Kavya Balaraman and Anjana Anil) – Gold climbs as investors look ahead to key US inflation data – “Gold prices gained on Wednesday as investors awaited U.S. inflation data that could cast further light on the Federal Reserve’s policy path. Spot gold was up 0.6% at $2,191.88 per ounce as of 09:53 a.m. EDT (1353 GMT). U.S. gold futures rose 0.6% to $2,190.50. On investors’ radar is the U.S. Core Personal Consumption Expenditures Price Index (PCE) data for February, due on Friday. The index rose 0.3% in January. “We’ll have to see whether or not U.S. inflation here domestically is soft enough to provide this clear path to lower rates in the coming months,” said Alex Turro, senior market strategist at RJO Futures. He expects range-bound price action for the session as investors come into the sidelines ahead of the report. Gold hit a record high last week after the U.S. central bank’s policymakers indicated they still expect to reduce interest rates by three-quarters of a percentage point by end-2024, despite recent high inflation readings. Traders now see a 70% chance of a June rate cut by the Fed. Lower interest rates reduce the opportunity cost of holding bullion. “Central banks continue to report ongoing gold purchases, driven by their desire to diversify their currency reserves. This is offsetting the weakness from investment demand, which focuses more on U.S. rate-cut expectations,” said UBS analyst Giovanni Staunovo. Meanwhile, India’s gold imports are set to plunge by more than 90% in March from the previous month as banks cut imports after record-high prices hit demand.

On the day gold closed up $15.00 at $2190.60, and silver closed up $0.15 at $24.63.

On Thursday gold moved higher, encouraged by a solid technical and economic picture. I would suggest that because the price of gold is higher by a whopping $157.00 this past month traders will be looking for profit-taking. The long Easter weekend begins today because of Good Friday. Look for some settling next week but there is more than enough good news for the bulls to hold this trading range, plus or minus $100.00. I don’t believe there is much downside with our solid economic numbers. It would take a real pessimist to rain on this latest bullish run in gold.

Reuters (Kavya Balaraman and Anjana Anil) – Gold rises towards best month in more than a year, US data in focus – “Gold prices climbed on Thursday and were set to log their best month in over a year, bolstered by strong safe-haven demand, U.S. interest rate cut expectations and central bank buying. Spot gold gained 0.5% to $2,204.99 per ounce as of 10:20 a.m. EDT (1420 GMT), eyeing its best month since November 2022 gaining around 8% so far, and a second straight quarterly rise. U.S. gold futures edged 0.7% higher to $2,204.80. Gold hit a record high last week after the U.S. Federal Reserve anticipated three rate cuts in 2024. Traders are currently pricing in a 64% chance of a June rate cut, according to CME’s FedWatch tool. “More signs of cooling price pressures may reinforce expectations around the Fed cutting rates – ultimately boosting appetite for gold. However, a sticky report will likely drag the precious metal lower,” said FXTM senior research analyst Lukman Otunuga. The U.S. core personal consumption expenditure (PCE) price index report is due on Friday, which could help investors gauge the Fed’s policy stance. However, Fed Governor Christopher Waller indicated on Wednesday that recent economic data could warrant a delay or reduction in the number of interest rate cuts. Silver fell 0.2% to $24.60 per ounce, platinum rose 1.6% to $907.80 and palladium added 3.1% to $1,014.17. All three metals were bound for monthly gains.

On the day gold closed up $26.80 at $2217.40, and silver closed up $0.17 at $24.80.

Platinum closed up $11.80 at $907.70, and palladium closed up $30.50 at $1009.50.

On Friday we are closed for Good Friday. The commodity markets are also closed.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the contract high of $2,246.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $2,170.80. First resistance is seen at the overnight high of $2,234.40 and then at the contract high of $2,246.60. First support is seen at the overnight low of $2,207.50 and then at $2,200.00. The silver bulls have the overall near-term technical advantage but have faded recently. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at last week’s high of $25.975. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $25.055 and then at $25.50. Next support is seen at this week’s low of $24.445 and then at $24.22.

Posted on March 22, 2024March 22, 2024 by Richard

Gold – The Fed Turns Dovish

Commentary for Friday, March 22, 2024 (www.golddealer.com) – Today gold closed down $24.30 at $2158.10, and silver closed down $0.16 at $24.69. This is a great week to realize that the Fed’s monetary policy remains complex and full of contradictions. Early weekly gains in gold have turned into a profit taking round on Friday as gold dipped into the red. A counterintuitive move considering the proposed FOMC plan to reduce interest rates. The Dollar Index moved to weekly highs, ignoring Chief Powell’s dovish turn – another illogical problem. Still, it is difficult to imagine that the price of gold in the coming decade will not be substantially higher as world debt expands. In the meantime, keep your seat belts fastened, and look for more turbulence. Last Friday gold closed at $2157.30 / silver at $25.20 – on the week gold was up $0.80 and silver was down $0.51 – virtually unchanged on the week – another puzzle.

On Monday the price of gold held the upper end of its current range and finished mildly in the green on the day as traders consider this week’s FOMC meeting. The confab begins on Tuesday and ends Wednesday with comments from Chief Powell after the domestic markets close. This could be an important meeting, if Jerome hints at shifts in the Fed’s rate policy. Traders do not expect anything substantial, which will likely keep the price of gold steady through Friday.

The Dollar Index is looking at weekly highs (103.50) which suggests that the FOMC may not be lowering interest rates in the near future. I believe this has become the dominant theory of late, subject to change, depending on the travails of the US economy.

But for now, Wall Street seems to be able to work out inequities within the business system even as interest rates remain elevated, and the business system works out new forms of financing.

You could make a reasonable case that zero interest rates through the pandemic years did create independent financial bubbles. But nothing that rocks the boat from a liquidity standpoint. If the Fed suspected trouble on this front it would already be increasing bank reserve requirements.

The key here is that the Fed keeps the system liquid, which they have done nicely despite the naysayers. It is worth noting however that the price of gold remains elevated because the “fear factor” is still a real part of gold’s price equation. Which speaks volumes as to why everyone should own physical bullion outside the normal banking system. The “just in case” scenario.

There is not much on the horizon, including the Chief’s comments this week which might drastically change this picture. But there are enough complex problems in place to anchor prices. For gold to move materially higher the Fed must lower interest rates. But the oddsmakers claim that the chances of a rate cut perhaps as early as the summer months have dropped to 56%.

On the day gold up $3.40 at $2160.70, and silver closed down $0.11 at $25.09.

On Tuesday the price of gold, silver, platinum, and palladium ticked mildly lower in the early domestic market as traders braced for the next insight into what the Fed may have in mind relative to interest rates. I think it is typical that traders question the basic bullish scenario before the release of any fresh information from the FOMC, because of these continued higher interest rates. That reasonable caution is why you are seeing the dip in all prices this morning. But a couple things to keep in mind. Gold and silver are still holding up nicely around recent highs, all things considered. That ability to recover after price dips has been consistent of late and is a positive sign of stability suggesting higher prices in the longer term.

As far as platinum and palladium are concerned, common sense suggests that there is little downside in this market because prices have been disseminated. And as PMG commentary continues negative, I would play the contrarian side of this market. Contrarian theory suggests that it’s a pretty safe bet that most sellers have already sold.

Now consider that relative to gold there is very little platinum or palladium bullion available. Both these metals are considerably rarer and cheaper than gold. We believe there may be considerable upside in both metals for the patient investor.

Reuters (Anjana Anil) – Gold loses footing as US dollar bumps higher; Fed in focus – “Gold prices retreated on Tuesday, hurt by a strengthening U.S. dollar, while investors geared up for the Federal Reserve’s interest rate stance from Chair Jerome Powell’s speech at the conclusion of the central bank’s policy meeting on Wednesday. Spot gold fell 0.4% to $2,151.69 per ounce as of 10:15 a.m. EDT (1415 GMT), hovering near its lowest levels in a week hit on Monday. U.S. gold futures eased 0.4% to $2,154.60. The dollar gained 0.5% and hit a more than two-week high, making gold more expensive for overseas buyers. Gold is seeing “some exhaustion to the upside as the positions moved swiftly over the past week or two and now it’s taking a bit of a breather as the Fed pricing comes off a bit,” said Ryan McKay, commodity strategist at TD Securities. “For now we’re not expecting a rally anytime soon. But at the same time, we’re not expecting a big sell off either because the physical markets remain strong and positioning is still fairly bullish.” Gold prices hit a record peak of $2,194.99 per ounce on March 8, but prices dipped nearly 1% last week after the release of hotter-than-expected February U.S. consumer prices and producer prices reduced hopes of early Fed rate cuts due to the threat of persistent inflation. Higher inflation prompts the Fed to keep interest rates elevated, weighing on non-yielding gold. Although the Fed is widely expected to hold rates steady at the end of its two-day monetary policy meeting on Wednesday, the market is awaiting comments from Powell on updated interest rate projections due on the same day. The Bank of Japan (BOJ) ended its eight years of negative interest rates and other remnants of its unorthodox policy. Spot silver fell 0.9% to $24.78 per ounce, platinum lost 2% to $894.90, palladium slipped 5% to $983.72.”

On the day gold closed down $4.40 at $2156.30, and silver closed down $0.13 at $24.96.

On Wednesday the price of gold was choppy between $2162.00 and $2148.00 in the early trade as the markets awaits fresh FOMC comments. A great deal is being made of this latest Powell commentary, but I don’t believe this will change the growing feeling that the Fed will not lower interest rates. That being the most popular hawkish theory before Powell upset the apple cart after the markets were closed today. But we have been in this position before and have learned that the bulls and bears have switched positions many times in the recent past.

Chief Powell did his best to turn this market on its head today when he suggested 3 quarter point cuts by the end of 2024. This may not seem like much, but it strongly suggests that the Fed has turned to the dovish side. Which will encourage higher prices down the road. The aftermarket in gold was higher by $50.00 today, because of his dovish comments.

CNBC (Jeff Cox) – “The Federal Reserve on Wednesday held interest rates steady as expected and signaled it still plans multiple cuts before the end of the year. Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%, where it has held since July 2023. Along with the decision, Fed officials penciled in three quarter-percentage point cuts by the end of 2024, which would be the first reductions since the early days of the Covid pandemic in March 2020. The current federal funds rate level is the highest in more than 23 years. The rate sets what banks charge each other for overnight lending but feeds through to many forms of consumer debt. The outlook for three cuts came from the Fed’s “dot plot,” a closely watched matrix of anonymous projections from the 19 officials who comprise the FOMC. The chart provides no indication for the timing of the moves. The plot indicated three cuts in 2025 – one fewer than the last time the grid was updated in December. The committee sees three more reductions in 2026 and then two more in the future until the fed funds rate settles in around 2.6%, near what policymakers estimate to be the “neutral rate” that is neither stimulative nor restrictive. The grid is part of the Fed’s Summary of Economic Projections, which also provides estimates for gross domestic product, inflation and unemployment. The dot assortment skewed somewhat hawkish from December in terms of deviations from the median, but not enough to change this year’s projections. Officials sharply accelerated their projections for GDP growth this year and now see the economy running at a 2.1% annualized rate, up from the 1.4% estimate in December. The unemployment rate forecast moved slightly lower from the previous estimate to 4%, while the projection for core inflation as measured by personal consumption expenditures rose to 2.6%, up 0.2 percentage point from before but slightly below the most recent level of 2.8%. The unemployment rate for February was 3.9%. The outlook for GDP also rose incrementally for the next two years. Core PCE inflation is expected to get back to target by 2026, same as in December. The FOMC’s post-meeting statement was almost identical to the one delivered at its last meeting in January save for an upgrade on its job growth assessment to “strong” from the January characterization that gains had “moderated.” The decision to stand pat on rates was approved unanimously. Markets had been watching closely for clues about where the Fed would go from here with monetary policy. Earlier this year, traders in the fed funds futures market had strongly priced in a likelihood that the central bank would start cutting at this week’s meeting and continue doing so until it had totaled as many as seven decreases by the end of the year. However, recent developments have changed that outlook dramatically. Higher than expected inflation data to start 2024 triggered caution from top Fed officials, and the January FOMC meeting concluded with the central bank saying it needed more evidence that prices were decelerating before it would gain “greater confidence” on inflation and start cutting. Statements from Chair Jerome Powell and other policymakers since then added to the sentiment of a patient, data-driven approach, and markets have had to reprice. Powell and his cohorts have indicated that with the economy still growing at a healthy pace and unemployment below 4%, they can take a more measured approach when loosening monetary policy. The expectation heading into this week’s meeting is for the first cut to happen in June and two more to follow, bringing markets and Fed officials back into alignment. Beyond that, markets also were looking for some direction on the Fed’s balance sheet reduction program. In a process that began in June 2022, the central bank is allowing up to $60 billion a month in maturing proceeds from Treasurys plus up to $35 billion in mortgage-backed securities to roll off each month rather than be reinvested. The process is often referred to as “quantitative tightening” and has resulted in about a $1.4 trillion drawdown in the Fed’s holdings. However, there was no immediate information provided about changes in QT, though Powell has indicated several times that the matter was to be discussed at this meeting. More insight could be forthcoming from Powell’s post-meeting news conference and the release of meeting minutes in three weeks.”

FXEmpire (James Hyerczyk) – Market Braces for Impact as Fed Rate Projections Loom – “Gold prices remained relatively static as traders anticipated the upcoming U.S. Federal Reserve policy announcement and comments from Fed Chair Jerome Powell. The market is focused on the Federal Open Market Committee’s statement at 18:00 GMT and Powell’s press conference at 18:30 GMT. With rates likely to stay unchanged, attention is on the Fed’s economic and rate projections for the year. Factors Influencing Gold Prices – The possibility that the Fed might not indicate as many rate cuts as expected could impact gold prices. If Powell’s remarks are less dovish than hoped, gold could see a decline, falling to a range between $2089.77 and $2064.87. However, gold continues to find support due to a general increase in commodity prices. Recent U.S. consumer and producer price index reports showed higher-than-anticipated figures, suggesting less aggressive rate cuts. The CPI rose by 0.4% monthly and 3.2% annually, with core CPI also exceeding predictions. Energy and goods prices largely drove these increases, evidenced by a 2.3% rise in energy costs and a 1.2% surge in goods prices in the producer price index. Economic Indicators and Market Expectations – Retail sales growth and a slight decrease in jobless claims also factor into market predictions. Despite these developments, U.S. Treasury yields dipped as investors awaited the Fed’s interest rate decision and future monetary policy guidance. The dollar’s strength remained consistent, reaching a two-week high, which affects gold prices negatively as it becomes more expensive for holders of other currencies. The Fed’s stance and Powell’s statements are key focal points, with the market now pricing in a lower likelihood of rate cuts, down to 73 basis points from an earlier expectation of 150. Market Forecast – Short-term, gold market trends appear cautious. The Fed’s stance on rate cuts, influenced by recent economic data, suggests a bearish outlook for gold. If the Fed indicates fewer rate cuts, we could see a further dip in gold prices. However, the ongoing support from broader commodity trends provides a buffer, suggesting potential for rebound if global economic indicators shift favorably. Traders should watch for the Fed’s comments for cues on gold’s near-term direction. Technical Analysis – XAU/USD is in a strong uptrend, based on the intermediate trend indicator, the 50-day moving average at $2061.84 and the long-term trend, the 200-day moving average at $1980.845. However, it remains vulnerable to a near-term retracement of the rally from February 14 to March 8. This makes the retracement zone at $2089.77 to $2064.87 a major downside target. A trade through $2195.235 will signal a resumption of the uptrend.”

On the day gold closed up $1.60 at $2157.90, and silver closed down $0.03 at $24.93.

On Thursday gold moved to $2210.00 before traders sold this latest rally and gold reversed direction looking at $2175.00. This back and forth combination was the combination of crosswinds including yesterday’s strong aftermarket, technical follow through, a surprisingly strong dollar, and a short-covering rally. A kind of mixed bag, in that Powell’s dovish interest rate talk helped the bulls, but the stronger dollar capped this price move early in the session.

Still, the gold bulls are smiling because Powell recreated the notion that the Fed would lower interest rates before the end of the year. The selloff this morning is good for the market as it allows gold to settle and reassess these latest changes.

I would not get carried away here, the bullish news is good, but the proposed 3 quarter point cuts still leaves an interest rate with teeth. Which is the reason the Fed chose these smaller cuts. The interest rate, after these small cuts, is still relatively large and will continue to slow the economy. This provides the FOMC with the option of raising rates if inflation does not continue to cool. Chief Powell is a master at covering his bets because the inflation outcome remains uncertain.

Reuters (Sherin Elizbeth Varghese) – Gold hits fifth record high in March on Fed rate-cut view – “Gold prices on Thursday hit record peaks for the fifth time this month after the U.S. Federal Reserve anticipated three rate cuts in 2024 despite high inflation. Spot gold was up 0.8% at $2,202.39 per ounce at 1318 GMT after hitting an all-time high of $2,222.39 earlier in the session. U.S. gold futures rose 2% to $2,204.50. “The rally was started by yesterday’s Federal Reserve comments, basically confirming their intention to eventually start cutting U.S. interest rates,” Julius Baer analyst Carsten Menke said. “The mood in the gold futures market is very bullish. So your hedge funds or any other short-term traders or trend followers are positioned for higher prices, and I think this is the segment that is in the driving seat while the physical gold market is rather soft.” Despite high inflation readings, Fed chair Jerome Powell said the U.S. central bank is still likely to reduce interest rates by three-quarters of a percentage point by the end of 2024, but that it also depends on further economic data. Fed funds futures traders are pricing in a more than 70% probability the Fed will begin cutting rates in June, up from 60% before the rate decision, according to the CME Group’s FedWatch Tool. “The geopolitical instability and expectations of dollar devaluing in the run up to the end of the year is also being priced into the into the value of gold at the moment,” said Ricardo Evangelista, senior analyst at ActivTrades. The dollar slipped to a one-week low against its rivals, while U.S. 10-year Treasury yields also dipped. Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making dollar-priced bullion more appealing for other currency holders. Spot silver fell 1.3% to $25.28 per ounce, but hit its highest in over three months earlier in the session. Platinum rose 1.2% to $918.35 and palladium gained 0.2% to $1,023.02.”

On the day gold closed up $24.50 at $2182.40, and silver closed down $0.08 at $24.85.

On Friday gold moved nicely higher on the open ($2178.00) but quickly reversed direction, finally finishing solidly in the red. Which should not be surprising considering the growing strength of the dollar. This is a fine example of the growing potential for volatility. Insiders here will not take much for granted, the price of gold could pitch one way or the other. But I don’t think it has any chance of falling out of bed. It is still too early in this decoupling game.

Look for a “middle ground” as the world sorts out its geopolitical problems and gold bullion becomes even more important as a strategic financial planning tool. As far as immediate upside I remain sanguine. But suggest that pricing in the physical market remains a bit of an enigma relative to its all-time high. The 1980 peak price for gold adjusted for inflation would be $2700.00. Which means that even with all the recent fireworks our shiny friend is still $500.00 below the 1980 peak in relative terms.

FXEmpire (James Hyerczyk) – Gold Prices Forecast: Lower Amid Strong Dollar, but Weekly Gain in Sight – “Friday’s Price Action – Gold prices experienced a decline on Friday, influenced by a strengthening dollar. Despite this dip, gold remained on track for a weekly gain. This upward trend was primarily driven by the Federal Reserve’s consistent stance on interest rate cuts projected for 2024, enhancing gold’s allure as an investment. At 09:52 GMT, XAU/USD is trading $2166.605, down $14.755 or -0.68%. The Impact of a Strong Dollar – The dollar reached a three-week peak, marking its second consecutive week of gains. This surge in the dollar’s value rendered gold, priced in dollars, costlier for holders of other currencies. The anticipated rate cuts generally support gold prices, providing a stabilizing base for the precious metal. However, gold currently shows signs of being overbought, suggesting a potential near-term decline. The $2,146 level emerges as a crucial support point to watch for a potential change in trend. Thursday’s High and Fed Influence – On Thursday, gold prices soared to a record high, following indications from Fed policymakers of an expected rate reduction totaling three-quarters of a percentage point by the end of 2024, despite recent high inflation. Fed Chair Jerome Powell highlighted that these inflation figures do not alter the broader trend of gradually subsiding U.S. price pressures. The prospect of falling interest rates enhances gold’s attractiveness, as it bears no interest, thus lowering the opportunity cost of holding it. Futures traders are currently betting on a 74% likelihood of the Fed initiating rate cuts as early as June. Thursday Recap and Gold Outlook – Thursday saw a slight easing in gold prices, temporarily halting a significant rally boosted by Powell’s hints at upcoming rate cuts. The dollar’s rebound also played a role in correcting gold prices, as it became more expensive for international buyers. Despite these adjustments, the overall sentiment for gold remains bullish, supported by factors such as potential interest rate cuts and central bank buying. The futures market for gold is predominantly bullish, driven by short-term traders and trend followers, while the physical gold market remains relatively subdued. Market Forecast – Looking ahead, gold presents an appealing trade for 2024, especially as a hedge in equity portfolios. The combination of anticipated lower interest rates on alternative assets and strong interest from central banks and hedge funds positions gold for further price increases. Despite the current overbought conditions, the long-term outlook for gold is bullish, with expectations of higher prices driven by a confluence of supportive monetary policies and market sentiment. Technical Analysis – XAU/USD is edging lower for a second session after hitting a record high on Thursday. The current closing price reversal top chart pattern suggests the selling may be greater than the buying at current price levels. Friday’s weakness has confirmed the potentially bearish chart pattern. This could fuel the start of a 2 to 3 day correction. The short-term trend will turn down on a trade through $2146.15. If this creates enough downside momentum then look for a pullback into the retracement zone at $2103.61 to $2075.45.”

On the day gold closed down $24.30 at $2158.10, and silver closed down $0.16 at $24.69.

Platinum closed down $14.60 at $896.10, and palladium closed down $20.60 at $992.80.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls still have the solid overall near-term technical advantage but appear to have run out of gas for the near term. A four-week-old uptrend is still in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the record high of $2,225.30. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $2,149.20. First resistance is seen at the overnight high of $2,188.00 and then at $2,200.00. First support is seen at the overnight low of the overnight low of $2,163.80 and then at $2,149.20. The silver bulls have the solid overall near-term technical advantage but have also run out of gas. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at the December high of $26.575. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at $25.00 and then at $25.50. Next support is seen at the overnight low of $24.58 and then at $24.22.

Posted on March 15, 2024 by Richard

Gold – Raising or Lowering?

Commentary for Friday, March 15, 2024 (www.golddealer.com) – Today gold closed down $5.70 at $2157.30, and silver closed up $0.33 at $25.20. As is typical these days, the gold bulls and gold bears have delt with cross winds all week. The bulls will have to turn logic on its head, believing this recent top is only a good start and higher prices are a sure bet down the road. The bears face a very different kind of scenario. According to insiders, the much talked about, and still expected lowering of interest rates is the primary reason gold has made new highs. This unexpected imbalance is already factored into these higher prices but is now a busted flush. The reason being that inflation this time around turned out to be surprisingly “sticky”. Higher interest rates are now the new normal and will eventually push the price of gold lower. Another interesting horse in the race is the US 10 Year Treasury Note. In the past 6 months interest rates have consolidated around 4%, not bullish or bearish, suggesting solid stability. In which case the price of gold may become very boring. Last Friday gold closed at $2178.60 / silver at $24.34 – on the week gold was down $21.30 and silver was down $21.30.

On Monday gold opened choppy but steady, trading between $2175.00 and $2183.00 and it closed just mildly in the green by the end of the day. This may suggest gold is taking a breather… which is good. Price consolidation in this area would help the bullish scenario. Keep in mind that Chief Powell has only turned dovish when he acts on his most recent comments that inflation is not far from where it needs to be before the central bank starts cutting interest rates.

Setting up the possibility of rate cuts and reducing rates are different animals. The Chief was vague relative to FOMC timing because this gives the Fed room to correct imbalance in the process. I remain optimistic about higher prices in gold, but future price increases may be less dramatic as the physical market returns to the basics like lower interest rates. Physical demand from the private sector will increase and central banks worldwide will stabilize prices.

FXEmpire (James Hyerczyk) – Gold Prices Forecast: CPI Data to Determine Upcoming Trends – “Early Uncertainty Ahead of CPI Report – Gold prices are at a crossroads on Monday, influenced by recent U.S. labor market data and Federal Reserve member statements, especially Chairman Powell. The upcoming Consumer Price Index (CPI) data is pivotal in shaping market expectations and the short-term direction of gold prices. Gold’s Reaction to Labor Market and Fed Comments – After achieving a peak of $2,195.235 on Friday, gold prices have stabilized. This rally was fueled by signs of a slowing U.S. labor market, coupled with dovish remarks from the Federal Reserve. Concurrently, the dollar index is hovering near a two-month low, further impacting gold’s value. Increased Trader Interest in Gold – The Commitment of Traders report shows a notable shift in market sentiment. There’s been a significant jump in net-long positions in gold, with an increase of 63,018 contracts to 131,060 as of March 5. This marks the most substantial weekly rise in 3.5 years, highlighting gold’s current desirability and discouraging short selling. CPI Data’s Influence – Tuesday’s CPI data release is expected to be a critical driver for gold this week. A lower CPI figure could fuel arguments for an earlier Fed rate cut, enhancing gold’s attractiveness. Market forecasts currently indicate a high likelihood of three to four U.S. rate cuts starting as early as June. Rate Cut Expectations Boosting Gold – The probability of a Fed rate cut by June stands at 73%, as per the CME Group’s FedWatch Tool. Lower rates typically increase the allure of non-yielding assets like gold. Fed Chair Jerome Powell’s recent testimony has added weight to these expectations. Market Forecast – Considering the market’s strong interest in gold and the anticipation of Fed rate cuts, a bullish outlook for gold is likely in the short term. The CPI data’s outcome will be crucial in confirming this trend, with lower rates potentially propelling gold prices higher. Technical Analysis – Gold is slightly higher on Monday, but inside Friday’s range, which usually indicates investor indecision and impending volatlity. A trade through $2154.06 will be the first sign of weakness. This move will form a minor top at $2195.235. This will break the pattern of seven consecutive higher-highs and higher-lows. A trade through the top will signal a resumption of the uptrend. The best sign of a major top will be a closing price reversal top chart pattern. If there are signs of a top then the first target zone will be $2089.77 to $2064.87. This is followed by the 50-day moving average at $2044.75.”

On the day gold closed up $3.90 at $2182.50, and silver closed up $0.17 at $24.51.

On Tuesday the price of gold weakened as today’s hot inflation numbers suggest that the Fed will remain hawkish relative to its interest rate policy. This of course encourages the bearish gold scenario, but I would not become too concerned for two reasons. The first reason is that in typical fashion traders bought this dip, always a plus for gold. The second is that today’s inflation data is only a “snapshot” of an uncertain picture. You can expect inflation numbers to change sides, turning bullish or bearish a few more times before the Fed picture is clear.

In the meantime, expect volatility but not enough to change the big picture. Which is higher prices over the longer time frame. Ignore this short term noise and ask yourself this question. What forms of wealth can produce cash money on demand? Of course there are other choices, but none are as simple, private, and straightforward as gold bullion in your own position. The plus being that anyone can enjoy these advantages outside the traditional banking system, and away from intrusive government intervention.

Reuters (Ashitha Shivaprasad) – “Gold under pressure from Fed rate cut doubts after inflation data – “Gold prices remained under pressure on Tuesday, dropping as much as 1% at one point, after a hot U.S. inflation report dimmed prospects of the Federal Reserve cutting interest rates soon. Spot gold fell 0.9% to $2,163.69 per ounce as of 9:22 a.m. ET (1322 GMT), retreating from a record high of $2,194.99 reached on Friday. U.S. gold futures also dipped 0.9% to $2,169.40. U.S. consumer prices increased solidly in February, suggesting some stickiness in inflation. Data showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in February. Annually, it increased 3.2%, above the 3.1% forecast. “CPI comes in a bit sweaty but the market was expecting a high print so the initial reaction was a bit muted, but prices have been volatile since,” said Tai Wong, a New York-based independent metals trader. He said gold bulls would still look for reasons to drive it higher. “Now focus will shift to next week’s Fed meeting where there will be an updated dot plot,” Wong said, referring to central bankers’ interest rate forecasts. The market is still pricing an around 70% chance of a U.S. rate cut by June, according to the CME FedWatch tool. Low interest rates help gold prices as they reduce the opportunity cost of holding the precious metal that earns no interest. “We do not expect a pronounced cycle of interest rate cuts in the U.S., given persistent inflation risks, we believe that the further upside potential for gold is limited in the medium to long term,” Commerzbank said. Spot platinum fell 1.9% to $915.35 per ounce, palladium lost 1.3% to $1,017.25. UBS in a note said that it expects palladium to stay oversupplied over the coming years, as demand for autocatalysts, which account for about 90% of the metal’s use, keeps declining. Silver shed 0.9% to $24.19.”

On the day gold closed down $22.10 at $2160.40, and silver closed down $0.32 at $24.19.

On Wednesday the price of gold bounced higher and by the close gold had recovered most of yesterday’s loss. This market remains in a weird kind of transitory mode because sentiment can and usually does shift quickly. If, on any given trading day the interest rate outlook is hawkish, gold will move lower. On the other hand, if Powell or one of his lieutenants seem a bit dovish traders turn bullish, and gold moves higher. Today you have a combination of a technical bounce higher and renewed hope that we will see a rate cut by the summer months.

This day to day indecision makes planning difficult but the latest numbers from our trading desk indicate that the public is again interested and buying. With so much government fumbling, coupled with the rising debt worldwide many now realize that trying to time rate cuts is problematical. Loose ends within the Fed are scary enough as insiders are already buying bullion at these higher levels. But I’m surprised that this group of first responders has not grown much larger because the possibility of a government mistake continues to grow.

Reuters (Sherin Elizabeth Varghese) – Gold firms as June rate cut bets still intact – “March 13 (Reuters) – Gold prices edged higher on Wednesday after dropping more than 1% in the previous session, as investors digested hotter-than-expected U.S. inflation data and still banked on a Federal Reserve interest rate cut in June. Spot gold edged up 0.4% to $2,164.69 per ounce, as of 1212 GMT. Bullion posted its worst single-day drop since Feb. 13 on Tuesday. U.S. gold futures rose 0.2% to $2,170.00. “The market driver behind the decline of gold is quite clear as the U.S. CPI numbers came in higher than expected,” said Carlo Alberto De Casa, a market analyst at Kinesis Money. “It’s just a psychological correction after a long strike of positive days and markets are realizing that the Fed will not cut rates too quickly.” Bullion slumped 1.1% on Tuesday as data indicated that U.S. consumer prices rose sharply in February, above expectations, indicating some stickiness in inflation. Higher-than-expected inflation means that the Fed will be under more pressure to keep interest rates higher for longer, weighing on non-yielding assets such as gold. However, Fed policymakers are still seen starting rate cuts in June. Traders now see about a 65% chance of a June cut, slightly lower than the 72% seen before the data, according to the CME Group’s FedWatch Tool. “While physical gold demand has been holding up well since 2021, a sharp price rally is likely to temper discretionary gold buying in 2024,” analysts at ANZ Research said in a note. Focus now shifts to U.S. retail sales, the producer price index, and the weekly initial jobless claims print, due on Thursday, which will provide further updates on the status of the U.S. economy. Spot platinum rose 1.2% to $935.25 per ounce, palladium gained 2.8% to $1,070.25 and silver was up 0.7% to $24.33.”

On the day gold closed up $15.00 at $2175.40, and silver closed up $0.77 at $24.96.

On Thursday the price of gold dipped on the open, moving to session lows of $2160.00 as traders once again became defensive as the Dollar Index pushed to weekly highs (103.25). The spot price of gold continues to consolidate around $2161.00 which suggests that investors may be having second thoughts about the still popular notion that the Fed will soon turn very dovish. An alternative view, however, may be that interest rates are already high enough to tame inflation, but the FOMC needs more time for them to accomplish the task.

These two opposing views have been around for some time but continue to switch sides as to which is the most popular. This is the reason gold continues to move up and down relative to interest rate expectation. The plus at this point is that even with these crosswinds, gold is trading above $2100.00, supported by safe haven demand, rising debt worldwide and central bank inflows. It is hard to believe that considering the awful state of world politics and a challenge to dollar hegemony already in the making that gold will not be much higher in the coming decade.

Reuters (Anjana Anil) – Gold retreats as dollar, yields firm on higher US inflation data – “Gold slid on Thursday after a larger than expected rise in February’s U.S. producer price index (PPI) cooled expectations of early rate cuts by the Federal Reserve, boosting Treasury yields and the dollar. Spot gold was down 0.6% at $2,161.10 per ounce as of 10:03 a.m. EDT (1403 GMT), moving away from a record peak of $2,194.99 hit on March 8. U.S. gold futures also dipped 0.7% to $2,166.60. The dollar gained 0.3% against its rivals, making gold less attractive for other currency holders, while benchmark U.S. 10-year note yields rose to a more than one-week high. “I expect to see continued pressure (on gold), with all of the data showing the U.S. economy is strong, the labor market still strong,” said Chris Gaffney, president of world markets at EverBank. “It really makes investors question just how quickly the Fed’s going to decide to start cutting (rates).” U.S. producer prices increased more than expected in February amid a surge in the cost of goods like gasoline and food, which could fan fears that inflation is picking up again. Higher inflation adds pressure on the Fed to keep interest rates elevated, weighing on non-yielding assets such as gold. However, traders continue to bet on interest rate cuts in June, pricing in about a 64% chance compared to 72% before the CPI data earlier this week, according to the CME Group’s FedWatch Tool. The Fed is expected to hold rates steady at its policy meeting next week, but the focus will be on the “dot plot” projections. “Gold is an uncertainty hedge, an inflation hedge with higher inflation and more uncertainty. I think that provides a good floor for precious metals pricing,” Gaffney added. Spot platinum fell 1.1% to $928.15 per ounce, while palladium rose 1.3% to $1,072.56. Silver slipped 0.3% to $24.97, after hitting a more than three-month high earlier in the session.”

On the day gold closed down $12.40 at $1263.00, and silver closed down $0.09 at $24.87.

On Friday gold was indecisive, trading between $2172.00 and $2156.00 while ignoring the latest University of Michigan Consumer Sentiment Index, fresh problems in the Middle East, and Reuters comments that peak interest rates boost US demand for riskier form of corporate debt. Which might suggest the latest economic projections have again created a tempest in a teapot or colloquially speaking – a great commotion over unimportant matters.

That being said Neils Christensen (Kitco) offers a very bullish option from Florian Grummes. “The gold market continues to consolidate after hitting record highs, and while the price has room to fall further, one market strategist said that the precious metal is ultimately headed higher. In his latest market commentary, Florian Grummes, Managing Director at Midas Touch Consulting, said that gold’s rally above $2,200 an ounce has definitively ended a 13-year correction and consolidation phase as prices traded repeatedly between $1,900 and $2,075 an ounce. “Regardless of short-term pullbacks or interim consolidations, this likely signifies only the beginning of the next major uptrend in the precious metals sector,” he wrote. Although there is a risk that gold prices fall back to the initial breakout area around $2,075, Grummes said that he ultimately sees an initial price target at $2,535 an ounce. However, he added that these corrections should be considered a buying opportunity. Grummes said he expects gold to hit his target within three months. Currently, the market appears to be holding initial support above $2,150 an ounce, which was the level that triggered significant selling in early December. April gold futures last traded at $2,166.20 an ounce, down 0.66% on the day. “It can be assumed that after the two-and-a-half-month consolidation, the ongoing rally is unlikely to end after just three weeks. In case of doubt, the new uptrend may continue swiftly but with volatility,” he said. One reason why Grummes is optimistic that a correction will be short-lived is because of how little attention gold’s breakout rally has received from generalist investors and mainstream media. “The sentiment in the gold market is still neutral and does not pose an obstacle to higher prices for the time being,” he said. Grummes added that with growing risks in overheated equity markets, and potential economic uncertainty, it’s only a matter of time before investors start paying attention to gold as a safe-haven asset. Of course, it’s not all investors who ignore precious metals. While Western investors continue to pile into the “Magnificant 7” tech stocks, investors in Asian have been busy buying gold. Grummes said that he expects Chinese investors to continue to buy gold as it follows the example set by the government. The People’s Bank of China has increased its gold reserves for 16 months straight, buying 12 tonnes of the precious metal last month. “China dominates the physical gold market through strong demand from the central bank and the buying frenzy at the beginning of the Year of the Dragon. Through arbitrage trading, the paper gold market in the West is increasingly under pressure,” said Grummes. “Overall, the macroeconomic environment remains highly favorable for the gold price.”

FXEmpire (Christoher Lewis) – Gold Continues to Consolidate – “The gold market has continued to consolidate during the trading session on Friday as we are near the highs and simply grinding away. This is a sign that the market is trying to work off the froth. Gold Markets Technical Analysis – The gold market initially did rally during the trading session on Friday, but it looks like the $2,175 level is starting to cause a little bit of a headache for traders, and I think that might end up being the main story here. After all, we have a situation where gold has gotten a little stretched. So, a little bit of a pullback wouldn’t necessarily be the biggest surprise. Ultimately though, I think you’ve got to look at this through the prism of a market that once it does pull back, you have to be thinking of it as a buying opportunity. After all gold has been strong for quite some time and there are a lot of fundamental reasons to think that continues. That’s not to say that we can’t pull back towards the $2,075 level, an area that was previous resistance. And I think a lot of people would be very interested in buying due to the fact that there’s a lot of market memory there. That being said, be cautious. I wouldn’t get overly exposed at this point, but I’m certainly not looking to short gold anytime soon. With that, I am just waiting for the pullback to bounce in and then to get involved. If we can break above the recent highs, that would also be a very strong sign, obviously. And at that point in time, I think you have to look at it through the prism of a market that will eventually go looking maybe as high as $2,500. That’s obviously a longer term projection, but it is something that could happen. So with that, I like the idea of owning gold. I don’t want to short the gold market regardless, even if you told me we were going to pull back, I wouldn’t be inclined to do so. Now it just comes down to whether or not we go sideways and work off some of the excess froth or if we pull back and try to find and create more value. Silver Price Forecast – The silver market has rallied again during the trading session on Friday as Wall Street dumps stocks early in the day. You can see we continue to see a lot of upward pressure in general, and I do think at this point you have to look at Silver as likely to go running towards the $26 level. That being said, I think you’ve got a situation where short-term pull backs continue to be thought of as buying opportunities if you get them. The $24.50 level underneath should be a support level that I think a lot of people will be paying attention to, especially after that massive candlestick on Wednesday. All things being equal, I do think this is a situation where you’re just looking for value and trying to take advantage of it. Now, the question is, can we break above $26? I don’t know because silver has a hard time following gold once we get parabolic. This is mainly because there have been multiple scandals, like JPMorgan Chase, of rigging in the silver market, and there’s no sign that that’s stopped. The CFTC has fined them millions of dollars multiple times, but considering how much they make doing it, they will continue to do it. So therefore, I think 26, maybe $26.50 is about as good as it gets, but that doesn’t mean you can’t make money along the way. You just simply take short-term pullbacks and use them to your advantage. From a longer term perspective though, I still like gold better than silver, mainly because silver is so volatile. It’s also an industrial metal, so it does behave a little bit on the fickle side occasionally. But as things stand right now, it is moving lockstep with gold. It continues to pay attention to lower interest rates around the world coming, and possibly an economic growth situation where it spurs demand later this year. We’ll see. But when you look at the longer term charge, $26 is very tough to crack.”

On the day gold closed down $5.70 at $2157.30, and silver closed up $0.33 at $25.20.

Platinum closed up $7.80 at $941.20, and palladium closed up $11.70 at $1083.50.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage. A steep four-week-old uptrend is in place on the daily bar chart. A bullish pennant pattern has also formed on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,250.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,100.00. First resistance is seen at Thursday’s high of $2,181.30 and then at $2,190.80. First support is seen at the overnight low of $2,164.40 and then at this week’s low of $2,156.20. The silver bulls have the firm overall near-term technical advantage. Prices hit a three-month high overnight. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at the December high of $26.575. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at $25.50 and then at $26.00. Next support is seen at $25.00 and then at $24.50.”

Posted on March 8, 2024 by Richard

Gold – A Remarkable Week

Commentary for Friday, March 8, 2024 (www.golddealer.com) – Today gold closed up $20.60 at $2178.60, and silver closed down $0.03 at $24.34. The gold bulls have reasons to smile this week, beginning with a solid technical picture being that prices have risen 5 trading days in a row! And while I’m usually the first to throw up a caution flag when gold prices surge, this time around this enthusiasm seems well placed. Fed Chief Jerome Powell shared his thoughts this week concerning interest rates, and in each case a bit of optimism tempered his hawkish nature. When the dust settled the bulls believed that interest rates would begin to move lower this year, helping Wall Street and Main Street get a better night’s sleep. Only time will tell if this week becomes that “watershed bullish moment” but it’s not too much to say that the gold market is a lighter trade with developing opportunities. Last Friday gold closed at $2089.90 / silver at $23.15 – on the week gold was higher by $88.70 and silver was higher by $1.19.

On Monday it looked like last Friday’s Happy Surprise carried over into the Monday trade as prices moved from $2085.00 through $2115.00! This provides both gold and silver with a strong technical picture and sets the stage for an attempt at all-time highs. With this latest surge in prices analysts must believe that the primary reason the metals are trending higher is that the Fed is seriously considering lowering interest rates. The US dollar is lower from recent highs on the monthly chart, but this is only a sideshow. The possibility of lower rates is the main driver.

Increased safe haven demand because of a problematic Middle East or any number of other global problems helps create tension. And this move does reinforce the notion that physical gold is always a good idea, regardless of price because it helps balance a dicey investment culture.

I would however like to see some solid consolidation at these prices to balance the overall picture. This would avoid the “too much, too soon” scenario. Yes, these higher prices suggest that the Fed will turn dovish, but it may not. If the Fed remains hawkish, gold will see increasing overhead resistance. But true believers see little downside considering the bigger picture.

There are some traders who remain suspicious of this rally. It could be seeing some sort of short squeeze covering. This group must be in the minority, but they could be right.

This jump in prices has everyone’s attention so get ready for stories of $3000.00 or $4000.00 gold. Ignore this rhetoric, the public is not standing in line to buy or sell bullion. And the phones are not ringing off the hook. If they were, you could not get a parking space, like in the old days.

Reuters (Polina Devitt) – London gold price benchmark hits all-time high, LBMA says – “London’s gold price benchmark hit an all-time high of $2,098.05 per troy ounce at an afternoon auction on Monday, surpassing the previous record of $2,078.40 set on Dec. 28, the London Bullion Market Association (LBMA) said. LBMA is a leading trade body that certifies gold refiners, allowing them access to London’s bullion market, the world’s largest. The LBMA Gold Price is the global benchmark price for unallocated gold delivered in London. “Yet again gold reinforces its diversification appeal with the new high reached today,” Ruth Crowell, LMBA chief executive, said in a statement. In the spot market, gold prices were anchored near a two-month peak on Monday, following last week’s tepid U.S. economic data, which solidified bets for the Federal Reserve’s first interest rate cut of the year in June. Gold scaled a record peak of $2,135.40 in early December. The precious metal has so far outperformed initial expectations this year. Reuters’ January poll of analysts expected gold to average $2,053.50 per ounce in 2024. The LBMA’s 2024 forecast survey saw it at $2,059. “Given gold moved into overbought territory on this rally, a correction lower is possible. A reversion to the previous upward trend would return gold to around $2,050 per ounce,” analysts at Heraeus said in a note.”

On the day gold closed up $30.80 at $2117.70, and silver closed up $0.63 at $23.78.

On Tuesday the price of gold moved to highs on the day ($2138.00) before turning choppy, but still finished nicely in the green. If gold can hold the pricing area above $2100.00 it would be seen as another plus for the developing bullish scenario. While gold did finish in the green today the aftermarket showed weakness as traders sold the initial rally. This may not be a big deal, but it could suggest that the present rally is now in overbought territory.

Fed Chairman Powell will address Congress on Wednesday and Thursday of this week. Everyone will be looking for hints as to the Fed’s next interest rate move. And the monthly US employment report is out on Friday. Any of these events could also dampen the recent excitement. But clearly gold and silver have been exceptional performers since the surprising jump in prices last Friday. That being said, caution may reward the patient. Gold is up $92.00 this past month, and $270.00 this past year, and traders are already preparing for profit taking.

Reuters (Anjana Anil) – Mounting US rate cut bets push gold to record highs – “Gold struck a record high on Tuesday, moving further above $2,100 per ounce in a rally sparked by growing bets for a U.S. interest rate cut in June, with safe haven demand from war in the Middle East also tipping the scales in bullion’s favor. Spot gold gained 0.6% to $2,127.99 per ounce as of 1409 GMT, having scaled a record $2,141.59 earlier. U.S. gold futures firmed 0.5% to $2,135.80. Bullion last hit a historic peak in December at $2,135.40. “We wouldn’t be surprised if gold gives back some of these gains as the Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher,” said Nitesh Shah, commodity strategist at WisdomTree. “Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold.” The Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday will be closely watched for more clarity on U.S. interest rate path. The next major U.S. economic release will be February’s employment report due on Friday. Traders currently see a 68% chance that the Fed will start cutting rates by June, according to the CME FedWatch tool. The non-yielding metal is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making gold costlier for buyers with other currencies. Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over $300 dollars since the start of the Israel-Hamas war. Hamas negotiators will remain in Cairo for another day at the request of mediators, keeping ceasefire talks going after two days with no breakthrough, an official from the militant group said. Spot platinum fell 1.8% to $881.01 per ounce, and palladium dropped 2.2% to $938.81.”

On the day gold closed up $15.80 at $2133.50, and silver closed down $0.02 at $23.76.

On Wednesday the price of gold was strong again, flirting with $2150.00 on the open before settling off highs but nicely in the green. The Labor Department published its monthly Job Openings and Labor Turnover Survey (JOLTS) which points to a stable economy, giving Powell more options as to what the Fed might have in mind in the short term.

Powell’s testimony to Congress today was straightforward. CNBC – “I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting” to cut rates, Powell said. The Fed Chair said earlier in a press conference that rate cuts would likely begin at some point this year.” At the present time, traders are expecting a rate cut by June, so this part of the puzzle remains consistent. Still, the Chief’s comments must have struck a dovish chord or gold would not have moved nicely today. Personally, I believe that some sort of consolidation at this point would better serve the bullish scenario if you were looking for higher prices in the longer term. And this price consolidation should not surprise anyone, traders have already begun to talk about the “too much, too soon” possibility. In the meantime, gold ETFs are being restocked – a plus. And while gold demand in India was off 3% last year Reuters expects this important driver to more than recover in 2024. Another plus for gold.

Reuters (Sherin Elizabeth Varghese) – Gold holds near all-time-high levels ahead of Fed testimony – “Gold prices gained on Wednesday to trade near previous session’s record highs as markets expect Federal Reserve Chair Jerome Powell’s testimony later in the day to reveal clues on a potential June rate cut. Spot gold gained 0.3% to $2,132.80 per ounce, as of 1249 GMT after hitting a historic high of $2,141.59 per ounce in the prior session. U.S. gold futures were steady at $2,141.60. Bullion has powered to record highs in other major currencies as well. Increasing expectations of interest rate cuts, which boost the appeal of non-yielding bullion, following weaker U.S. economic data recently, and fears of an imminent correction in stock markets have led to strong demand for alternative asset classes such as bitcoin and gold, said Commerzbank analyst Carsten Fritsch. Along with the bullion, the world’s largest cryptocurrency, bitcoin also touched a record high on Tuesday before retreating sharply. Tuesday’s rally pushed spot gold’s 14-day relative strength index to 78, much above the ‘overbought’ levels at 70. “We think the gold price has run too far in the short term and expect a correction. U.S. labor market data on Friday could put a damper on rate cut hopes,” Fritsch said. Traders see a 72% chance for a June Fed rate cut. Investors’ focus is also on Powell’s first day of semi-annual congressional testimony on the state of the U.S. economy amidst an environment of elevated interest rates. “We expect Powell to suggest that rate cuts may be delayed but likely to start in 2024,” UBS said in a note. “With a mid-year Fed rate cut as our base case, we forecast spot gold will rise to $2,250/oz by end-2024 alongside central bank buying, demand from China, and an expected revival in demand for gold exchange-traded funds.” In other metals, spot silver rose 0.4% to $23.77. Platinum was up 0.8% to $888.00 per ounce, and palladium gained more than 1% to $958.05.”

On the day gold closed up $16.80 at $2150.30, and silver closed up $0.51 at $24.27.

On Thursday the price of gold was choppy in the early trade, trading between $2148.00 and $2160.00, which might suggest that prices are beginning to settle down from earlier gains this week. Chief Powell’s talk with a Senate Panel today did not seem to create crosswinds in pricing so he hit the mark in that the Chief was not too hawkish or too dovish. Still, analysts continue to speculate about FOMC interest rate intentions. The uncertainty of the FOMC’s next move will likely keep recent gains intact but I think traders are optimistic over higher prices in the longer term. I also do not think these markets will become volatile, but they may turn very boring, when compared to all the fireworks we enjoyed last week and this week.

Reuters (Ashitha Shivaprasad) Gold surge could dull India wedding season demand; China outlook robust – “A surge in global gold prices to record highs could dampen consumption during the wedding season in India, but top buyer China will see robust safe-haven demand this year, analysts and traders said. China and India together account for more than half of total global gold demand. Benchmark spot prices hit a record high $2,164.09 on Thursday, driven mostly by bets for U.S. monetary easing, which increases investors’ appetite for the zero-yield paper gold as opposed to competing assets such as Treasury bonds and the dollar. In India, the world’s second-largest gold consumer and a major importer, domestic prices rose to a record 65,587 rupees per 10 grams. The rise in prices led to a drop in demand which prompted dealers to offer discounts of about $14 an ounce over official domestic prices – inclusive of 15% import and 3% sales levies – versus last week’s $1 premiums. “Consumers can’t wrap their heads around current price levels. If prices stay this high, it’s going to affect demand during the ongoing wedding season,” said Prithviraj Kothari, president of the India Bullion and Jewelers Association Ltd. “There’s no reason for banks and refiners to import. March imports would be negligible,” Kothari said. Gold is an intrinsic part of Indian weddings and the summer wedding season is currently underway. “Scrap supplies are increasing. Consumers who need to buy are exchanging old jewelry for new,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji. In China, dealers cut premiums to $25-$36 over benchmark prices versus $36-$48 last week, but traders said overall demand should be robust in 2024. “While the price spike has driven some selling, demand will be up after some time as people get used to these levels,” especially on safe-haven demand, said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. Asian buyers are known to be price-sensitive, but that might change, said Ross Norman, an independent analyst based in London. “The mindset changes, and as the market goes higher, it almost validates the reason you’re buying,” Norman said. Analysts said the surge in gold prices could also attract some new investor interest in other regions. A sustained rally could revive buying activity in Germany, a key retail hub for coins and bars, said Alexander Zumpfe, senior precious metals trader at Heraeus.”

On the day gold closed up $7.70 at $2158.00, and silver closed up $0.10 at $24.37.

On Friday gold challenged $2190.00 highs on the day and created a little bit of well-deserved buzz in the process. Across our trading desk we have seen surprisingly little selling at these record levels, a plus for the physical market. And we have seen a few large buyers return, which is always good news. The best news however is that the public seems a bit underwhelmed, which is interesting when you consider that gold is higher by $125.80 this month and $345.30 this past year. With those kinds of numbers expect settling. But you never know, this market has created legitimate momentum: “Bitcoin replacing gold in portfolios? Not so fast, says JP Morgan.”

Reuters (Anjana Anil) – Gold marches higher as US jobs data boosts bets of early rate cut – “Gold prices surged to a fresh record high on Friday as data showing a rise in the U.S. unemployment rate boosted expectations that the Federal Reserve could begin cutting interest rates soon. Spot gold rose 0.7% to $2,173.49 per ounce by 10:42 a.m. ET (1542 GMT), while U.S. gold futures added 0.7% to $2,180.50. Bullion was on track to post its biggest weekly percentage increase since mid-October. Gold reached an all-time high of $2,185.19 after a report showed a rise in the U.S. unemployment rate and a moderation in wage gains despite job growth acceleration in February. “We still believe the same underlying premise remains, which is the combination of the expectation that the Fed is still going to cut rates later this year and dollar weakness,” said David Meger, director of metals trading at High Ridge Futures. The dollar index was 0.3% lower, making gold cheaper for overseas buyers, while the yield on the 10-year U.S. Treasury fell to a more than one-month low. Traders boosted bets the Fed could start cutting interest rates in May to around 30% after the jobs report, although June remained the mostly likely scenario at 80%. Gold began its record run on Tuesday when it surpassed its December peak, primarily aided by growing indications of cooling price pressures and its traditional safe-haven cachet. Low interest rates are supportive for gold prices as they reduce the opportunity cost of holding bullion. “This (jobs) report will be seen as one that keeps the Fed on course for June. Gold prices will continue to trend higher overall, though a short consolidation may be necessary,” said Tai Wong, a New York-based independent metals trader. Spot silver eased 0.3% to $24.25, while platinum was down 0.5% to $913.95 per ounce, and palladium lost 0.6% to $1,027.25. All were set for weekly gains.”

On the day gold closed up $20.60 at $2178.60, and silver closed down $0.03 at $24.34.

Platinum closed down $8.10 at $912.00, and palladium closed down $15.00 at $1016.00.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage and have momentum. A steep three-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,250.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,100.00. First resistance is seen at today’s high of $2,190.80 and then at $2,200.00. First support is seen at the overnight low of $2,161.20 and then at $2,150.00. The silver bulls have the overall near-term technical advantage and have momentum. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at today’s high of $24.85 and then at $25.00. Next support is seen at today’s low of $24.47 and then at Thursday’s low of $24.22.”

Risk Disclosure – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisors. The precious metal and rare coin markets are random and highly volatile so they may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.

Posted on March 1, 2024 by Richard

Gold – A Bullish Friday

Commentary for Friday, March 1, 2024 (www.golddealer.com) – Today gold closed up $41.20 at $2086.90, and silver closed up $0.48 at $23.15 . While gold opened choppy today it quickly moved past 4 week highs, surprising even insiders with higher prices and increased enthusiasm. This latest move is a big deal in that it blows out any remaining short play which began to cloud the bullish scenario when gold broke below $2000.00 in February. It also carried weight because breaking above $2050.00 opens the technical door to even higher prices. The spike in crude oil above $80.00 makes the bulls smile because it suggests rising inflation numbers. I would not get carried away here however because the mix of plus and minus factors affecting gold and silver prices is complicated. But I do enjoy calling today Bullish Friday because the focus on the metals is moving in a positive direction. Last Friday gold closed at $2038.60 / silver at $22.97 – on the week gold was higher by $48.30 and silver was higher by $0.18.

On Monday the price of gold developed a mild downward trend, as pricing moved between $2036.00 and $2026.00, so this still looks like a quiet market, perhaps a carryover from last week. To keep things in perspective, it’s helpful to realize that 2023 was a solid year for gold being up 13%. While 2024 is just beginning, gold is having a rather cool start relative to last year. Which should not surprise us as higher interest rates and technical overhead resistance cap prices and enthusiasm. Still, it is a plus that gold is still trading above $2000.00. It is worth remembering that Wall Street has already factored in the “good news” about possible lower rates. If that scenario does not work, the resultant fear factor would create higher gold prices.

Christopher Lewis (FXEmpire) – Gold Continues to Look For Buyers on Dips – “Gold markets have drifted lower early during the trading session on Monday, as we continue to see a bit of uncertain movement in the short term. The gold market did very little during the trading session on Monday as we don’t have much in the way of economic data to move the markets. With that being said, the market is basically hanging around the $2,030 level and trying to determine its next big move. The 50 day EMA underneath continues to offer short-term support, but if we can break down below there, then it opens up the possibility of a move down to the $2,000 level. The $2,000 level is the beginning of a significant support level that extends down to the $1,980 level. Keep in mind that gold is going to be paying attention to a lot of different things at the same time, not the least of which, of course, would be Federal Reserve expectations. Federal Reserve and Economic Data – The focus of market participants is currently on the Federal Reserve’s impending interest rate decisions, highlighted by the upcoming release of the personal consumption expenditures price index. The market is reacting to recent economic indicators, especially the consumer and producer price indices, which have reported higher than expected figures, leading to concerns about the persistence of high interest rates and their impact on gold. Geopolitical Context and Safe-Haven Demand – The ongoing geopolitical tensions in the Middle East have bolstered gold’s appeal as a safe-haven asset. The conflict has led to a significant increase in gold prices, as it is traditionally seen as a secure investment during times of global instability. Influence of Treasury Yields and the Dollar – The downward movement in U.S. Treasury yields and a softer dollar are factors currently supporting gold prices. These economic elements are pivotal in influencing the attractiveness of non-yielding assets like gold within the investor community. Short-Term Outlook – In the short term, the outlook for gold is trending towards a bearish bias. The anticipation of delayed rate cuts by the Federal Reserve, along with strong economic data, suggests a potential decrease in the desirability of gold as a non-yielding asset. Investors and traders in the gold market should closely monitor upcoming economic data releases, including GDP figures and the core PCE price index, as these will play a significant role in determining the direction of gold prices in the coming weeks.”

On the day gold closed down $10.10 at $2028.50, and silver closed down $0.45 at $22.52.

On Tuesday the price of gold continued choppy moving between $2038.00 and $2030.00 managing to finish in the green just slightly on the close. Traders believe that gold will continue to hold steady but are suspicious of Fed intentions. Any fresh news would attract a great deal of attention, but for now this trade feels boring.

It’s easy to make a case for higher gold prices in the longer term. The short term, however, is problematic because interest rates, the main variable, remain uncertain.

And if the day to day price swings in gold continue to be small there is danger of consumer complacency. Gold yawned as the Consumer Confidence Index for February weakened. Ordinarily this type of negative economic data would create at least the expectation of rising prices. But in this case, it failed even to even heat up the buzz machine.

The good news is that each time gold or silver moves reasonably lower, fresh money eventually takes advantage of lower bullion prices. These are mostly long term players which are committed to the longer term. The average order size, however, has seen a modest decline since late 2023, suggesting that investors may be taking advantage of higher interest rate opportunities.

Reuters (Ashitha Shivaprasad) – Gold holds firm as investors look to inflation data – “Gold prices moved up on Tuesday as the U.S. dollar and Treasury yields lacked momentum, while investors await key inflation reading and comments from Federal Reserve officials this week. The dollar index was subdued, and benchmark 10-year Treasury yield slipped, making bullion more attractive for overseas buyers. “A slight uptick in inflation data will pressure the gold market but it is well supported at the $2,000 level by central bank buying. It is unlikely Fed officials will change their stance until more data,” said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago. “Gold will have a record run in the fourth quarter when rate cuts materialize.” At least 10 Fed officials are due to speak this week, while the core personal consumption expenditures price index, the Fed’s preferred inflation gauge, is due on Thursday. Recent comments from Fed policymakers suggested that the U.S. central bank is in no rush to cut rates. Prices are also supported as China’s middle-class attempts “to preserve their dwindling fortunes caused by the property market crisis and a prolonged stock market sell-off”, Ole Hansen, Saxo Bank’s head of commodity strategy, wrote in a note. China’s net gold imports via Hong Kong in January hit the highest since mid-2018, official data showed. Spot platinum climbed 1.4% to $892.05 per ounce but was down more than 9% so far this year. Palladium rose 1.1% to $961.51 and was down 12% for the year. “The low price level of platinum and palladium is already leaving its mark on producers of platinum group metals who are likely to reduce their production in response. This should help to stabilize prices,” Commerzbank wrote in a note. Silver rose 0.6% to $22.65.”

On the day gold closed up $5.50 at $2034.00, and silver closed unchanged at $22.52.

On Wednesday the price of gold continued to trade within a narrow range, waiting for fresh information which might signal a broader change in direction. Nevertheless, this remains a quiet market as gold finished the day almost unchanged. Business across our trading desk remains steady with long term customers. And we have seen a few large gold bullion buyers return just recently. Not like the old days but still an encouraging sign.

The silver bullion market for us has only seen light selling, which is also a plus. I’m surprised that the potential of much higher silver prices has not created more fireworks with the investing public. This could be just a pause in their enthusiasm curve as recent price dips in silver has created buying caution. Generally, the public is patient when it comes to silver bullion so waiting for a better price is part of the dynamic. But there are insiders who believe that this lack of further downside points to a significant bottom in silver prices. So, there is solid potential for increased interest once all the players are sure current price levels are stable.

Reuters (Ashitha Shivaprasad) – Gold holds ground as traders buckle in for Fed cues – “Gold prices ticked up on Wednesday as traders strapped in for key economic data and comments from U.S. central bank officials on the timeline of interest rate cuts. “The Fed is in the driver’s seat for the gold market. We can see all-time highs in prices when they say something more concise on when the rate cuts are coming,” said Bob Haberkorn, senior market strategist at RJO Futures. “Gold is having a quiet session ahead of tomorrow’s data. We need to see significantly better data that shows inflation is cooling for prices to move above the $2,050 mark.” Data on Wednesday showed the U.S. economy grew at a solid clip in the fourth quarter amid strong consumer spending but appeared to have lost some speed early in the new year. Market focus is on the Federal Reserve’s preferred gauge of inflation – the core personal consumption expenditures (PCE) price index due on Thursday. Recent Fed commentary and hot inflation data has pushed bets of Fed’s first rate cut to June, compared to March at the start of the year. Higher rates tend to discourage investment in non-yielding bullion. Fed Governor Michelle Bowman on Tuesday signaled she is in no rush to cut rates, particularly given upside risks to inflation. “Signs of a weaker economy would be expected to support gold as they imply greater pressure on central banks to cut interest rates,” Frank Watson, market analyst at Kinesis Money, said in a note. Spot platinum fell 0.9% to $880.55 per ounce, palladium dropped 2.6% to $912.25. Citi Research in a note said it considers any resultant price rallies as opportunities for producers to build up hedging positions and for speculators to open fresh short positions, as palladium’s long-term demand outlook remains very negative.”

On the day gold closed down $1.00 at $2033.00, and silver closed down $0.11 at $22.41.

On Thursday the price of gold dipped mildly on the open but reversed direction and moved to session highs of $2050.00, and finally closed just mildly in the green. This bit of happiness was helped along as the US labor market and Personal Consumption Expenditures (PCE), combined with a weaker dollar to encourage the bullish scenario. There are some who believe that investors have been looking for a reason to buy this market, and the above factors fit the bill.

Still, the $2050.00 overheard resistance for gold has proven to be daunting as traders have sold rallies testing this ceiling three times in the past 3 months. Any break above $2050.00 would obviously further encourage the bulls. It is unlikely in my mind that the FOMC will lower interest rates this year, but if they did all-time highs in gold becomes a possibility.

Reuters (Ashitha Shivaprasad) – Gold hits 1-month high as dollar dips after U.S. PCE data – “Gold scaled a one-month high on Thursday as the dollar slipped after inflation data came in line with expectations, with traders’ attention turning to further commentary from Federal Reserve officials for cues on interest rate cuts. “Gold bulls just needed an excuse to buy, and they found it,” with the data only on consensus after recent strong inflation readings, said Tai Wong, a New York-based independent metals analyst, adding gold could face technical resistance around $2,065. Data showed the U.S. personal consumption expenditures price index rose by 0.3% in January, while the core PCE price index gained 0.4%, pressuring the dollar, which makes gold cheaper for investors holding other currencies. “However, the Fed’s preferred gauge of inflation running at 0.4% for the month won’t bring a rate cut any closer than June,” Wong added. Although gold is traditionally considered an inflation hedge, higher interest rates to rein in the elevated prices discourage investment in bullion since it pays no interest. Markets are currently pricing in a 62% chance of a Fed rate cut in June, the CME FedWatch Tool showed. Earlier this week Fed officials said the door is opening for rate cuts, which could likely arrive later this year. “The steady stream of Fed speak has noted that there’s no rush in lowering rates and that news is priced into the market,” said David Meger, director of metals trading at High Ridge Futures. “If there is a potential change that would allude to the idea of lowering interest rates even a smidgen sooner, it will be positive for gold.”

On the day gold closed up $12.70 at $2045.70, and silver closed up $0.26 at $22.67.

On Friday gold opened around $2040.00 and moved through $2090.00, reinforcing its technical picture. I would claim this latest surprise is more a combination of momentum play from yesterday’s higher prices and short covering. Outside developments like crude oil moving past $80.00 set the stage for higher inflation. This from OilPrice.com will also underpin further safe demand over rising tension within the Ukraine. “NATO Raises Rhetoric as Russia Inches Forward in Ukraine – NATO has, for all intents and purposes, given Kyiv the green light to target anything within Russia’s borders, with Secretary General Jens Stoltenburg telling RFE/RL that Kyiv would be within its defensive rights to strike military targets outside of Ukraine. The problem with that, of course, is that these strikes on Russia would likely be accomplished with Western (and primarily U.S.) weapons— which would amount to more than a NATO green light. That would be a Western attack, by proxy, for which Putin has threatened significant escalation. At the same time, France’s Macron is being rather provocative (as is his nature) with statements to the effect that European nations are prepared to send troops to Ukraine (even though his fellow Europeans have not agreed to this). Macron likes to be dramatic, and this was a great opportunity for him, prompting a backlash from Washington and other European capitals (though Slovakia also said that the EU and NATO were considering troops on the ground). From Putin’s perspective, there were quite a few red lines crossed in just a week – and about three weeks from presidential elections in Russia. However, the end result was for Macron to look like a fool playing Napoleon and a bit of a panic on the NATO media front as they attempted to walk this boots-on-the-ground threat back.”

Reuters (Ashitha Shivaprasad) – Gold advances to 4-week peak as US rate cuts expected soon – “Gold started March on a positive note, with prices rising to a four-week high on Friday after muted economic data hardened expectations of a U.S. interest rate cut by June. Benchmark U.S. 10-year Treasury yields, and the dollar index retreated after the data, making gold more attractive. Data showed U.S. manufacturing slumped further in February. Another set of data on Thursday indicated that the annual increase in U.S. inflation in January was the smallest in three years, keeping a June rate cut from the Federal Reserve on the table. Bart Melek, head of commodity strategies at TD Securities, said gold is seeing some upside as the market is convinced that the Fed will ease its monetary policy by midyear, lowering the opportunity cost of bullion. “In three-four months, prices will hit a record if we see poor economic data and the market is convinced that (the) Fed is ready to cut,” he said, adding that strong central bank buying is also supporting the market currently. Lower interest rates tend to boost demand for non-yielding gold. Physical gold demand in India was subdued for the week as an uptick in domestic prices dented sentiment and prompted buyers to delay purchases. UBS analysts in a note, “we believe market participants underestimate the potential for prices to rise amid lower U.S. rates, a weaker dollar, and firm industrial application demand for silver.” Spot platinum rose 0.6% to $880.80 ounce, while palladium was up 1.4% at $955.50. Both eased on a weekly basis. Northam Platinum’s CEO said platinum mining companies in South Africa are caught up in the worst crisis in three decades as prices plummet.”

On the day gold closed up $41.20 at $2086.90, and silver closed up $0.48 at $23.15.

Platinum closed up $4.30 at $884.20, and palladium closed up $19.30 at $952.80.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have gained the slight overall near-term technical advantage. A three-month-old downtrend on the daily bar chart has been negated and prices are starting to trend up. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,066.10 and then at $2,075.00. First support is seen at $2,050.00 and then at the overnight low of $2,047.00. The silver bears have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at the February high of $23.56. The next downside price objective for the bears is closing prices below solid support at the February low of $21.975. First resistance is seen at $23.00 and then at $23.25. Next support is seen at this week’s low of $22.245 and then at $22.00.”

Posted on February 23, 2024 by Richard

Gold – The “No Hurry” Fed

Commentary for Friday, Feb 23, 2024 (www.golddealer.com) – Today gold closed up $18.90 at $2038.60, and silver closed up $0.20 at $22.97. Gold surprised even insiders today as it threatened $2040.00 out of the clear blue sky. Perhaps this strong finish will remind us of the popular 1930 story by Watty Piper – The Little Engine That Could. If you belong to the right age group, you will remember the story of a little train engine that would not give up despite hardships, finally arriving at her destination summoning the children to enjoy the festivities. So how does this story relate to gold’s pricing journey? Gold has had to work at staying above $2000.00, and in its own way believes the Fed will cut interest rates. But the January FOMC minutes suggest that the Fed is in no hurry to change interest rate policy. So, will gold remain stuck in the snow avalanche that stopped the train in our story? Or will it continue to define lasting value, eventually making all-time highs? The majority of those in the physical market believe that gold will eventually toot its whistle, rewarding those who did not get discouraged on the road to price appreciation. Last Friday gold closed at $2011.50 / silver at $23.46 – on the week gold was higher by $27.10 and silver was lower by $0.49.

We were closed Monday, February 19^thPresident’s Day. Banks, the Post Office, Wall Street and the commodity markets were also closed.

On Tuesday the price of gold opened on the firm side, this first day of a short trading week. It moved from $2020.00 through $2030.00 before settling somewhat lower on the day. China lowering its key interest rate and a weaker dollar supported a higher price in gold.

The Dollar Index lost a half point in the early trade, not a big deal but an important outside factor supporting the price of gold this morning.

This looks like another rainy morning in Los Angeles as President Biden visits LAX for his third fund raiser in three months. And the chaos continues as to whether former President Trump can run again against President Biden. A legal question which will likely have to be sorted out by the Supreme Court before November. Which guarantees more political drama from both sides, and likely no real progress in matters of importance to the working class.

Christopher Lewis (FXEmpire) – Gold Continues to See Buyers Jumping Into The Market – “The gold markets continue to see a lot of inflows, as there are a lot of reasons to think that the gold market could continue to go higher over the next several weeks, if not years. Gold Markets Technical Analysis – You can see gold has rallied above the 50 day EMA during the trading session and it now looks as if we are ready to go much higher. That being said, this is a market that has a lot of noise around it and of course you have to be somewhat cautious as to what you do with your position size anyway, after all gold does tend to be very noisy. So, with that being said, it’s likely that we have a scenario where short-term pullbacks continue to find plenty of buyers. I think down here at the $2,000 level is a beginning area of massive support down to the $1,980 is something that you have to pay close attention to. The 200-day EMA sits underneath there as well. So, with all of that being said, it has to come in and technical traders will have to acknowledge that. On a move higher, the $2,060 level followed by the $2,075 level, both could cause major issues. But I think it is becoming apparent that the best strategy is buying on dips. I don’t necessarily think that you want to chase it with a huge position, but the last couple of days, I have been telling you that this is a market every time it pulls back, the buyers get involved, and that’s what we continue to see. Pay attention to the 10-year yields in the United States because they will have a major influence on gold. The US dollar will have a major influence on gold and of course, geopolitical concerns, which there are plenty of, will continue to have a major influence on gold. If we can clear the $2075 level, gold is going to take off. You can see the air pocket that we hit on December 4th when we had that wicked spike in early Asian trading. With that, I remain bullish, but I recognize it’s going to be pretty choppy. Make sure to be cautious with your sizing, but I think it is obvious that there is only one direction at this point.” Silver Price Forecast – Silver Continues to Show Signs of Strength – The silver markets continue to look bullish at this point, as we have a few major levels making themselves known as we continue to see buyers on dips. Silver Markets Technical Analysis – You can see that we have bounced a bit to save the 50 day EMA as support and as I record this, we are currently testing the 200 day EMA, which of course will capture a lot of attention. Above, we have a significant barrier in the form of $23.50, that is followed by $24.50 and then eventually $26. When you look at the action of silver over the last several years, the area between $22 and $26 has been an area of intense focus for the market. We have broken out of this area a couple of times, but in general, we’ve stayed in this general vicinity. I think this is a market that continues to be “buy on the dip” and that does make a certain amount of sense considering that central banks around the world will be loosening monetary policy this year. Furthermore, pay close attention to the US dollar, which has fallen a bit during the trading session so that does help silver as well. If we can break above the $23.50 level, I think you’ll see people adding to positions, trying to push it to that crucial $24.50 level. Short-term pullbacks offer buying opportunities, and the $22 level underneath, I think, is your hard floor in the market. You can make out over the last, say, six weeks that we have formed a bit of a W pattern, which will attract a lot of attention as it is a widely followed technical pattern. You should also pay attention to the 10-year yield in America. If it starts to drop, that will hold silver, and of course, gold which silver quite often will follow in and of itself. However, never forget that there is the industrial demand part of the equation as well, so silver can be a bit more volatile than gold as well at times because of this.”

On the day gold closed up $16.00 at $2027.50, and silver closed down $0.33 at $23.11.

On Wednesday the price of both gold and silver were a bit on the soft side which must be a disappointment to the bulls who enjoyed a nice pop in prices yesterday. Still all eyes will be on the release of the last FOMC minutes (Jan 30^th and 31^st) as traders once again look for clues as to what the Fed has on its mind and when it might shift interest rate gears.

All this ruminating is of course speculation because the proof of the pudding will be tasted after the FOMC meeting which will be held March 19^th and 20^th. That confab could move the needle because the Fed will offer a summary of their economic projections.

Whether those projections will be positive or negative for gold will hinge on the direction of interest rates. More specifically, are rates trending lower, remaining steady, or moving higher?

Higher interest rates are a fact these days and generally they create an expectation that these higher interest rates will eventually move inflation lower. But the key to this thinking revolves around how long the Fed can keep rates higher without pushing the economy into recession.

The much awaited minutes of the last FOMC meeting were released today and most everyone was disappointed that FOMC members remain hawkish relative to interest rates. This was not unexpected, but the bright bullish light which helped push gold back above $2000.00 is starting to dim after seriously considering the January minutes. And the number of those who still believe the Fed will turn dovish anytime soon, may be moving rapidly lower.

If you are looking for something less bearish in the tea leaves consider today’s aftermarket, which was up a few dollars. So gold is not exactly falling out of bed. But the sobering realization that lower interest rates are not right around the corner may stymie speculation of higher gold prices at least through the summer months.

On the day gold closed down $5.20 at $2022.30, and silver closed down $0.26 at $22.85.

On Thursday gold held steady finishing mildly in the red, ignoring mixed growth in the US economy and the latest Purchasing Managers Index (PMI). The Dollar Index was steady around 104.00. These factors have calmed the market and produced small changes in the price of gold.

So, what to do while waiting for the second shoe to fall? Enjoy a quiet week and join everyone else in second guessing FOMC developments and its “subject to change” interest rate policy.

FXEmpire (Christopher Lewis) – Gold Continues to Struggle in The Same Region – “In gold, as you can see, we did rally a bit early during the trading session on Thursday as the $2,030 level continues to offer a bit of resistance, which happens to be where the market fell apart from the surprise CPI announcement during the previous week. This, of course, is a region in the market that will continue to be important, and therefore traders will continue to pay attention to how the market behaves at that price. With that being the case, I think a little bit of a pullback does make some sense due to the fact that there’s a little bit of market memory here on short-term charts. We are also in the middle of the overall consolidation, and that’s commonly a place where you’ll see a little bit of trouble. This has been a very strong move to the upside, and it’s been stubbornly bullish, because every time we rally and give up some gains, we turn around and rally again, only to give those up again.”

Reuters (Anjana Anil) – Gold climbs on dollar retreat and conflict-driven demand – “Gold prices rose on Thursday, driven by a retreating U.S. dollar and safe-haven demand on the back of the Middle East conflict while investors await further U.S. economic data for a steer on interest rate expectations. The dollar weakened against a basket of currencies. The dollar index was down 0.2% making bullion more appealing to buyers holding other currencies. “Gold price gains today are correlated to the softening of the U.S. dollar ahead of the release later today of the PMI number,” said Ricardo Evangelista, senior analyst at ActivTrades. “We also have lingering geopolitical instability, which favors the safe-haven gold, and also uncertainty about the economic outlook, with Japan and the UK both now in technical recession … alongside China.” Conflict in the Middle East has intensified with Israel’s bombardment of Rafah in Gaza’s south. On the data side, the focus is on initial jobless claims at 1330 GMT and U.S. manufacturing and services data scheduled for 1445 GMT. “Any signs of economic weakness could spark hope that rate cuts could be on the way, which may assist gold,” said Tim Waterer, chief market analyst at KCM Trade. Lower interest rates boost the appeal of holding non-yielding gold. Minutes of the U.S. Federal Reserve’s latest policy meeting released on Wednesday showed that a majority of the central bank’s policymakers are concerned about the risks of cutting interest rates too soon. Markets are pricing in about a 72% chance of a June rate cut, the CME Fed Watch Tool. In other precious metals, spot platinum was up 1.5% at $895.90 an ounce, palladium rose 0.3% to $951.97 and silver gained 0.6% to $23.02.”

On the day gold closed down $2.60 at $2019.70, and silver closed down $0.08 at $22.77.

On Friday gold finished the week with a happy surge to the upside as prices moved from lows of $2015.00 to highs on the day of $2040.00. And while it may seem that the price of gold is “stuck” the physical market is patiently waiting for the next round of higher prices.

This enthusiasm is bolstered by the unraveling state of world affairs. And the unending rise in world debt. Patience is required to get through this shifting sentiment but with the long term view in mind those who hold steady during this transition should be nicely rewarded.

Reuters (Anjana Anil) – Gold holds ground as dollar weakens, US rate cut hopes dim – “Gold prices held steady on Friday but were set for a slight weekly gain buoyed by a softer dollar and safe-haven demand from escalating tensions in the Middle East, even as U.S. Federal Reserve officials bruised hopes of early rate cuts this year. The dollar index was heading for its first weekly dip in almost two months. A weaker dollar makes greenback-priced bullion less expensive to overseas buyers. “Gold is up primarily on the fact that the U.S. dollar is a little weaker,” said Bob Haberkorn, strategist at RJO Futures. “It’s a delicate walk right now in the precious metals market, but there is a lot of safe haven buying despite the rates being as high as they are.” Fed Governor Christopher Waller said on Thursday that he was in “no rush” to cut rates, firming investor bets against U.S. interest rate cuts before June. Most policymakers at the Fed’s last meeting were concerned about the risks of cutting interest rates too soon, the minutes showed. Recent data showing higher-than-expected U.S. consumer and producer prices also dashed speculation about an early interest rate cut, further weighing on bullion. Lower interest rates boost the appeal of holding non-yielding bullion. “More hawkish comments from Fed officials overnight have been a modest drag for the yellow metal,” said UBS analyst Giovanni Staunovo. A surge of interest in bitcoin exchange-traded funds (ETFs) is prompting investors to swap out holdings in gold-backed ETFs. Spot platinum dropped 0.3% to $904.25, palladium gained 0.9% to $976.91. Silver lost 0.2% to $22.70 and was down 3% so far in the week.”

On the day gold closed up $18.90 at $2038.60, and silver closed up $0.20 at $22.97.

Platinum closed up $4.30 at $906.00, and palladium closed up $18.30 at $985.20.

Jim Wycoff (Kitco) – “Technically, the gold futures bears have the slight overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the February high of $2,083.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,950.00. First resistance is seen at this week’s high of $2,045.50 and then at $2,050.00. First support is seen at this week’s low of $2,023.90 and then at $2,007.60. The silver bears have the overall near-term technical advantage. However, a nine-week-old downtrend on the daily bar chart has been negated to suggest a market bottom is in place. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the February low of $21.975. First resistance is seen at $23.00 and then at Thursday’s high of $23.20.”

Posted on February 16, 2024 by Richard

Gold – Rate Expectations Hold Sway

Commentary for Friday, Feb 16, 2024 (www.golddealer.com) – Today gold closed up $9.40 at $2011.50, and silver closed up $0.53 at $23.46. The story of interest rates driving gold prices, either up or down, is an old story, but traders should be used to this dynamic considering the length of this economic transition. And if you look at interest rates over the past year the rise has been gradual, no surprises. This is yet another reason traders should not be confused over the latest gossip. Yet this week, even the expectation of future changes created a nervous trade, despite the fact that gold prices were slightly boring. The reason for the dip in gold this week was poor US retail sales in January. Today it again slipped below $2000.00 before reversing direction and finishing the day mildly in the green. So, is everyone making a mountain out of a molehill when it comes to market data? Of course, and this is especially true in the physical market. Last Friday gold closed at $2023.30 / silver at $22.53 – on the week gold was down $11.80 and silver was higher by $0.93.

A reminder that we will be closed this Monday, February 19^thPresident’s Day. Banks, the Post Office, Wall Street and the commodity markets are also closed.

On Monday the price of gold was weaker, and the price of silver drifted mildly higher. The technical guys still give gold the green light but expect lower prices for silver. Gold opened at $2026.00, wobbled, recovered, and then moved to session lows $2010.00. It closed just mildly in the red for the day. This type of pricing pattern has been typical as gold waits for fresh news which is strong enough to move the needle one way or the other. The price of our shiny friend seems capped to the upside by a strong dollar, the Dollar Index comfortable above 104.00. It is worth noting that some professionals are not expecting an interest rate cut anytime soon as US inflation remains stubbornly high. Today’s higher gold pricing may be the result of that expected rate cut. If the Fed dilly dallies or remains hawkish gold will dip below $2000.00.

Reuters (Anushree Ashish Mukherjee) – Gold drops as traders eye US CPI data for Fed cues – “Gold prices slipped on Monday as the dollar edged up as investors looked toward U.S. inflation data that could offer insight into the Federal Reserve’s interest rate cut plans. Spot gold was down 0.5% to $2,014.70 per ounce at 9:28 a.m. ET (1428 GMT). U.S. gold futures also fell 0.5% to $2,028.60 per ounce. The dollar index was up 0.1%, making greenback-priced bullion more expensive for overseas buyers. Jim Wyckoff, senior analyst at Kitco Metal, said interest rate cuts will probably be pushed to the second half of the year as U.S. economic data has been too strong lately to see a rate cut by May. He added there is limited buying interest in gold due to the recent rally in the stock market. “We are expecting some cooling inflation and if we don’t get it, it will put some pressure on prices,” he said. The Reuters poll for U.S. January CPI projects a 0.2% monthly rise while core CPI is expected up 0.3%. The U.S. CPI data is due on Tuesday, followed by U.S. retail sales data on Thursday and producer price index (PPI) data on Friday, while markets also await comments from at least seven Fed officials this week. Last week, several Fed policymakers, including Chair Jerome Powell said they would wait to cut rates until they were more confident that inflation would fall to 2%.” Traders see about a 62% chance of a rate cut in May, according to the CME Fedwatch tool. Pending Fed rate cuts, strong physical demand and official sector buying are projected to lift prices to an average of $2,200/ounce next quarter, said Bart Melek, head of commodity strategies at TD Securities in a note. Spot platinum gained 0.9% to $879.13 per ounce, while palladium climbed 3.3% to $887.07, and silver was down 0.2% to $22.55 per ounce.”

On the day gold closed down $5.10 at $2018.20, and silver closed up $0.18 at $22.71.

On Tuesday the price of gold dipped dramatically, falling to $1990.00 as inflation data for January came in hotter than expected. This is obviously a disappointment to the bullish gold scenario because it was the cause which pushed gold below $2000.00 support.

For gold to steady itself above $2000.00 the bulls were relying on a continued cooling trend in inflation. This would allow the Fed to lower interest rates, which would be a tonic to the existing gold market. The bulls now face higher interest rates and a deteriorating technical picture. It is too soon to read more into these tea leaves than is necessary. In the past such drops have been buying opportunities and even with this fresh news gold is not exactly falling out of bed.

Reuter (Anushree Ashish Mukherjee) – Gold slides below $2,000/oz for first time in two months after US inflation data – “Gold prices fell below the key $2,000 per ounce level to a two-month low on Tuesday, as a stronger-than-expected U.S. inflation report tempered prospects of an early interest rate cut from the Federal Reserve. Spot gold was down 1.4% at $1,990.79 an ounce by 10:10 a.m. ET (1510 GMT), its lowest since Dec. 13. U.S. gold futures also fell 1.4% to $2,003.60. Data showed U.S. consumer prices increased more than expected in January amid an increase in the costs of shelter and healthcare. “That was not the report that the market wanted to see,” said Tai Wong, a New York-based independent metals analyst. “Fed doves are looking for shelter today as surprisingly stubborn inflation has dropped the chances of a May rate under 50% for the moment,” Wong added. Fed policymakers will probably wait until June before cutting interest rates, traders bet after the U.S. CPI data. Higher interest rates increase the opportunity cost of holding bullion. Following the inflation data, the dollar jumped 0.7% to a three-month high against its rivals, making gold more expensive for holders of other currencies. The U.S. 10-year Treasury yield also rose. The CPI print triggered “large-scale Commodity Trade Advisor (CTA) liquidations in gold markets, but prices would need to revisit the $1,950 per ounce range to spark the next algorithmic selling program,” TD Securities wrote in a note. Investors will now focus on retail sales data on Thursday and producer price index (PPI) on Friday. The market will also listen to comments from a slew of Fed officials this week. Several U.S. Fed officials, including Chairman Jerome Powell, said last week they want to see more evidence inflation will continue to decline before cutting rates. Elsewhere, spot platinum was down 1.9% at $871.55 an ounce, palladium fell 4.2% to $854.40 and silver lost 2.9% at $22.02.”

On the day gold closed down $25.30 at $1992.90, and silver closed down $0.61 at $22.10.

On Wednesday gold traded between $1992.00 and $1986.00 but managed to finish the day almost unchanged, which is a plus. Still, the bad news is out, and this market favors lower gold numbers. Consider this process constructive because traders will get a chance to study support levels while using fresh information to assess damage control. Technically the experts expect to see support for gold in the $1980.00 range. I do not see much interest in these new lower levels across our trading desk, so my bet is that the public is waiting for a better deal.

Given the state of the world and the unending climb in world debt I would not expect a large price discount from current levels. We could again be above $2000.00 by the summer months. But the prime moving force for now is to expect more inflation not less, and therefore higher interest rates, which generally tends to tap down prices even for popular bullion products.

Reuters (Anushree Ashish Mukherjee) – Cooling Fed rate-cut bets pin gold below $2,000 level; palladium jumps – “Gold prices extended their dip and traded below the key $2,000-per-ounce level on Wednesday, a day after hotter-than-expected U.S. inflation data prompted investors to lower bets for early Federal Reserve interest rate cuts, while palladium jumped 7%. “Gold is trading lower on the heat of the CPI data. It’s going to be hard for gold to rally because part of its rally north of $2,000 was on the expectation of Fed rate cuts coming sooner,” said Bob Haberkorn, senior market strategist at RJO Futures. The catalyst for gold to trend even lower would be more confirmation that the Fed might not be able to cut rates soon, he added. Data on Tuesday showed U.S. consumer prices rose more than expected in January, at a 3.1% annual rise, above economists’ forecast in a Reuters poll for a 2.9% increase. Traders now see three 25-basis-point rate cuts in 2024, down from four, in line with the Fed’s “dot plot” released in December. The U.S. central bank may wait until June before cutting rates. Higher interest rates increase the opportunity cost of holding bullion. Investors will now focus on U.S. retail sales and producer price index data due to be released on Thursday and Friday, respectively. At least five Fed officials are due to speak this week. Spot palladium jumped 6.8% to $922.56 and platinum rose 2.1% to $889.68. Earlier this month, palladium prices had fallen below those of sister metal platinum for the first time since April 2018. “Physical consumers are likely buying palladium on dips as prices have been trending lower for the last several months,” said Daniel Ghali, commodity strategist at TD Securities. Silver gained 0.2% to $22.13.”

On the day gold closed down $2.60 at $1990.30, and silver closed up $0.23 at $22.33.

On Thursday the bulls were smiling as the price of gold moved from $1994.00 through session highs of $2006.00, worked its way through a profit taking round and then bounced higher, finishing the day mildly in the green. This trading pattern suggests that gold’s most recent selloff was bought by the futures trade – a plus. Regaining the $2000.00 foothold does not mean the end of troubles for the gold market but it does suggest that pricing is stabilizing in the shorter term.

Reuters (Sherin Elizabeth Varghese) – Gold near two-month low, investors eye US data for rate cut cues – “Gold prices languished near a two-month through on Thursday as traders lowered expectations of sooner and deeper rate cuts by the Federal Reserve this year, while markets await a slew of U.S. economic data for further clarity. The dollar index slipped 0.1%, making bullion cheaper for other currency holders. “The (U.S.) inflation data this week was the story that broke the camel’s back and tipped gold prices below the $2,000 range,” said Craig Erlam, senior markets analyst at OANDA. Data on Tuesday showed an unexpected spike in U.S. consumer prices, which caused bullion to fall 1.4% on Tuesday. Fed policymakers will probably wait until June before cutting rates, traders bet after the CPI data. Higher interest rates increase the opportunity cost of holding bullion. Fed Vice Chair for Supervision Michael Barr on Wednesday said the path back to 2% inflation “may be a bumpy one”. Meanwhile, Chicago Fed President Austan Goolsbee cautioned against delaying rate cuts for too long. All the negative factors are already priced in, so not expecting further sharp downward move for gold, said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai. The focus is now on U.S. retail sales and initial jobless claims data, due at 1330 GMT, and the producer price index numbers, due on Friday. At least three more Fed officials are scheduled to speak later this week. If retail sales data shows signs that the U.S. economy is cooling, then that could be ultimately beneficial for gold, OANDA’s Erlam said. Palladium gained 2.4% to $956.81 an ounce. It surged over 8% on Wednesday on short-covering, reclaiming its premium over platinum. Spot platinum climbed 1% to $897.95 and silver rose 1.2% to $22.64.”

On the day gold closed up $11.80 at $2002.10, and silver closed up $0.58 at $22.91.

On Friday it would be an understatement to say that the price of gold has been erratic these past 5 trading days. On Feb 13^th it moved from $2030.00 through $1995.00 in short order, surprising even insiders. It held around lows of $1990.00 for several days. As analysts tried to sort out what happened. Why did traders turn jittery over short term data, which next week will be outdated? Before the week was over the price of gold was again above $2000.00, so the best conclusion that can be made going into the weekend is that support at $1990.00 was tested and proved to be stronger than expected. I was curious enough to check our sales log and found that the public turned out to be a strong buyer on this most current dip – a plus for the physical market. Remember next week is a short trading week, commodity markets are open 4 days.

FXEmpire (Christopher Lewis) – Gold Price Forecast – Gold Continues to Bounce From Major Low – “Gold has shown itself to be somewhat resilient during the last couple of days as we have bounced from the $1,980 level. This is an area that of course will attract a lot of attention as it had been support previously. And you’ll notice on the chart that I have colored it darker as I think it’s an area that extends up to the $2,000 level for support as a range, not necessarily something that is like a brick wall. So, in other words, traders will have to pay close attention to how prices behave in that area and so far, it has shown its proclivity to bounce. It’s also worth noting that the 200-day EMA is sitting near the $1,980 level. So therefore, it adds even more credence to this area being important. At this point it looks like gold is going to try to get to the 50 day EMA above, which sits right around the $2,020 level. If we can break above there, then I think we’ve got a real shot at going higher. That doesn’t mean that it’ll be easy, and it doesn’t mean that it has to happen, but I do think it’s something that the market participants are currently eyeballing, so at this point, you have to look at it through that prism. Given enough time, if we can break above there, then we could go to the $2,060 level, possibly even the $2,075 level. If we were to turn around and break down below the 200-day EMA, then it could send the market down to the $1,940 level. In general, this is a market that I think continues to be very noisy, but it’s also a market that has well-defined support that a lot of traders are starting to lean into. Another thing to keep in mind is that there are plenty of geopolitical concerns out there that could drive gold higher as well, and of course if central banks around the world are going to cut rates, it makes a lot of sense that gold should do well.”

On the day gold closed up $9.40 at $2011.50, and silver closed up $0.53 at $23.44.

Platinum closed up $8.50 at $907.60, and palladium closed unchanged at $948.70.

Jim Wycoff (Kitco) – “Technically, the gold futures bears have the slight overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the February high of $2,083.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,950.00. First resistance is seen at $2,023.30 and then at $2,035.00. First support is seen at $2,000.00 and then at this week’s low of $1,996.40. The silver bears have the firm overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above technical resistance at $23.445. The next downside price objective for the bears is closing prices below support at the October low of $21.17. First resistance is seen at this week’s high of $23.15 and then at $23.445. Next support is seen at $22.50 and then at $22.00.”

Posted on February 9, 2024 by Richard

Gold – Above $2000.00 – For Now

Commentary for Friday, Feb 9, 2024 (www.golddealer.com) – Today gold closed down $8.90 at $2023.30, and silver closed down $0.04 at $22.53. On the open its price was steady at $2032.00 before moving to lows of $2020.00 and finishing the day modestly off lows. Not a big deal, this pattern is familiar these days as gold struggles against higher interest rates. And its technical picture is only slightly encouraging. On the plus side the gold market in China is closed for their upcoming New Year celebration. Still with bearish commentary on the rise gold has managed to hold up above $2000.00. In the short term, however, traders are looking for fresh bullish information before placing their bets. Last Friday gold closed at $2036.10 / silver at $22.70 – on the week gold was down $12.80 and silver was off $0.17.

On Monday the price of gold was firm on the open ($2028.00) but quickly dipped to session lows ($2014.00) as the ISM service Sector beat expectations. Which suggests that respondents believe that business is steady, and they are optimistic about the economy. The dip in the price of gold is the result of a stronger dollar as the Dollar Index moved a half point higher in the early trade. Higher interest rates pushed gold prices mildly lower on the day as traders again ponder a test of the important $2000.00 support. Heavy rain and travel warnings continue in Los Angeles so plan accordingly if you are planning an in person visit to the store and stay safe.

FXEmpire (James Hyerczyk) – Interest Rates Expected to Hold Steady as Fed’s Balancing Act Continues – Federal Reserve’s January Meeting: A Balancing Act in Monetary Policy – As the Federal Open Market Committee (FOMC) readies for its first rate-setting meeting of 2024 on January 30-31, expectations are high that key interest rates will remain steady. The FOMC, having paused rate hikes in July, is likely to keep the federal funds rate target range at 22-year highs. This decision is backed by the need to manage inflation effectively while steering the U.S. economy towards a stable path, avoiding a recession. Inflation Trends and Economic Growth – Despite a slowing in inflation, it remains above the Fed’s long-term target of 2%, warranting a cautious stance from the Federal Reserve. The economy has shown resilience, with consumer spending and growth in late 2023 exceeding expectations. This has lessened the immediate necessity for rate cuts. The focus is now on how Fed Chair Jerome Powell and other policymakers, such as Loretta Mester, Thomas Barkin, Raphael Bostic, and Mary Daly, interpret these economic signals in the upcoming meeting. Market Reactions and Fed’s Strategic Approach – The Fed’s communication since its last 2023 meeting has tempered market expectations, with forecasts now pointing to a potential first rate cut in May. However, with the bond market predicting a high chance of rates remaining unchanged by the end of January, the Fed faces the challenge of deciding when to pivot to rate cuts without triggering inflation. This strategic balance is reflected in the S&P 500 Index’s notable return over the past 12 months, showcasing investor optimism. Rate Cut Prospects and Fed’s Cautious Policy – Though there is a probability of a rate cut by the March meeting, experts and economists anticipate any such action to be cautious and gradual. The Fed’s decision-making will be data-driven, focusing on a range of economic indicators, including inflation trends and labor market conditions. The general sentiment is that the Fed will not rush into policy changes, maintaining higher interest rates for an extended period. Consumer Implications and Economic Outlook – The current economic climate suggests that consumers should manage high-cost debts wisely and be cautious about fixed-rate loans or CDs. The Federal Reserve’s policies in 2024 will be crucial in shaping the broader economic landscape, with a focus on achieving a ‘higher for longer’ stance on rates. The upcoming FOMC meeting will be pivotal in determining the future direction of the U.S. economy, with a careful balance between supporting growth and controlling inflation.

On the day gold closed down $10.40 at $2025.70, and silver closed down $0.36 at $22.34.

On Tuesday the price of gold trading between $2022.00 in the early trade and moving to session highs of $2038.00 before settling with an upward bias on the day. This is good news for the bulls, or perhaps that is a bit too optimistic. Let’s call today’s price action encouraging because it suggests traders are willing to buy the dips within the higher interest rate structure.

I believe this pattern is becoming more reliable and will remain in place unless there is a seismic shift in current interest rate thinking. If, for any reason the Fed turns decidedly hawkish gold will move lower, but for the present this more optimistic pattern is repeating itself – a bullish plus.

Reuters (Anushree Ashish Mukherjee) – Gold rebounds as dollar rally cools, Fed speakers on tap – “Gold regained some ground on Tuesday on a slight pullback in the U.S. dollar and Treasury yields, while traders positioned for remarks from several Federal Reserve officials this week to gauge the likely pace of interest rate cuts this year. Propping up zero-yield bullion, dollar was down 0.1% and benchmark U.S. 10-year Treasury yields also eased slightly. Fed speakers are expected to reiterate that while March might be too early for a rate cut, they just need more of the same on the inflation front in order to start their cutting cycle, said Daniel Ghali, commodity strategist at TD Securities. “We’re expecting gold prices to firm on the horizon with next week’s CPI data release potentially being the catalyst. We expect a soft print on inflation and gold to respond quite positively,” he added. At least eight Fed speakers are due to speak this week. After robust jobs report last week, traders have pared back, opens new tab bets of a March U.S. rate cut. “Gold bulls have been slammed by stronger-than-expected U.S. economic data, and have been forced to revisit lower levels as markets continue to lower their bets for a Fed rate cut in March,” said Han Tan, chief market analyst at Exinity Group. “Bullion should rise as that first Fed rate cut looms closer. However, if the Fed is forced to delay the start of its policy pivot, that should prompt the precious metal to unwind more of its recent gains in the interim.” Spot silver fell 0.2% to $22.32 per ounce, while platinum rose 0.3% to $899.12 and palladium was up 0.1% to $949.64.”

On the day gold closed up $8.80 at $2034.50, and silver closed up $0.05 at $22.39.

On Wednesday gold moved between $2030.00 and $2042.00. The market dipped in the early trade but reversed direction and moved to session highs before closing almost unchanged. With a strong Dollar Index, trading above 104.00 since Monday, this swing in the pricing model is a bit surprising and suggests that traders are testing both support and overhead resistance.

Jim Wycoff (Kitco) –“Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,052.60 and then at this week’s high of $2,059.10. First support is seen at Tuesday’s low of $2,038.80 and then at this week’s low of $2,030.80.”

On the day gold closed up $0.70 at $2035.20, and silver closed down $0.11 at $22.28.

On Thursday gold moved between $2020.00 and $2036.00, typically choppy with little direction as weekly jobless claims came in around expectations. On the day it finished just slightly in the red, but this market needs fresh news to spark a real move in either direction. Volume numbers across our trading desk remain lethargic which figures as gold is about unchanged on the month and the public does not seem in a mood to buy or sell. Most everyone is willing to wait on the Fed before making decisions about balancing precious metal positions for the new year. Occasional selling of both physical platinum and palladium continues but the numbers are small. And what we do buy is quickly sold to investors who believe this market offers upside opportunity to those with a long term perspective. In my opinion fresh buyers will have to have to develop the patience of Job, as this has already turned into a long haul. The good part however is that I can’t imagine much downside from the current numbers.

Reuters (Sherin Elizabeth Varghese) – Gold subdued as traders seek more Fed cues; palladium extends slide – “Gold prices eased on Thursday as dollar ticked higher, with investors awaiting more cues on the timing of the U.S. Federal Reserve’s first interest rate cut this year, while palladium prices dropped to a fresh five-year low as demand concerns persist. “At this point in time, there’s nothing really in the price action that suggests we’re going to see a breakout in either direction. The data we’ve seen recently shows that policymakers are still unsure as to whether it’s quite time yet for interest rate cuts,” said Craig Erlam, senior markets analyst at OANDA. Fed officials want to hold off on cutting interest rates until they have more confidence that inflation is headed down to 2% and gave a range of reasons for feeling little urgency to start easing policy soon or to move quickly once they do. High interest rates increase the opportunity cost of holding bullion. Investors will be watching out for U.S. weekly jobless claims data due at 1330 GMT after last week’s monthly non-farm payrolls report came in stronger-than-expected, showing signs of persistent strength in the labor market. Spot palladium , meanwhile, fell 1.9% to $877.40 per ounce, after hitting $874.24, its lowest since August 2018, earlier in the session. “The demand picture doesn’t look fantastic at the moment, be it as a result of automotive industry changes (EVs), or the industrial sector woes of countries like Germany and China. Momentum and sentiment are firmly against the palladium price,” said Tim Waterer, chief market analyst at KCM Trade. Both platinum and palladium are used by automakers in catalytic converters to clean car exhaust fumes. Elsewhere, silver rose 0.6% to $22.32 per ounce and platinum lost 0.3% to $876.94.”

Anna Golubova (Kitco) – Fed could still pivot in March, but it won’t be through rate cuts: Nomi Prins warns of massive banking crisis – “After a hawkish Federal Reserve and a strong U.S. jobs report, markets are now pricing in the first rate cut in May. However, Dr. Nomi Prins, geo-macro economist and best-selling author, still sees the Fed as likely to pivot in March but without the use of rate cuts. Prins was speaking in an interview with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. After the Fed kept rates between 5.25% – 5.5% and Powell stated that a March rate cut was not likely, markets re-adjusted their expectations from a cut in March to a 60% chance in May, according to the CME FedWatch Tool. But Prins said investors need to pay closer attention to what’s happening with quantitative tightening (QT), forecasting a pivot to quantitative easing (QE) sooner than many anticipate. “In the Q&A on Wednesday, [Powell] answered some questions that indicated there could be other ways of the Fed loosening monetary policy before the second half of the year,” Prins said. “The quantitative tightening that is in play has been reduced. So QT is becoming much more QT light.” The Fed pursues QT by removing money from the economy – it allows some of its debt securities holdings to mature without reinvesting the principal. Since June 2022, the Fed has reduced its holdings by over $1.3 trillion to $7.7 trillion. During the press conference, Powell stated that rate cuts and quantitative easing could be separated and the Fed’s balance sheet was going to be a specific topic of conversation for the March FOMC meeting. At the press conference, Powell said: “We’re getting to that time where questions are beginning to come into greater focus about the pace of run-off and all that. So at this meeting, we did have some discussion of the balance sheet, and we’re planning to begin in-depth discussions of balance sheet issues at our next meeting in March.” Prins added that this means that the Fed could introduce various forms of QE as soon as the next meeting. “He was indicating, without trying to, that there could be some movement towards various forms of QE before we see actual rate cuts,” she said. Prins also explained how the Fed’s emergency lending program, the Bank Term Funding Program (BTFP), created after three major bank failures in March of last year, fits in and why it could be extended past its expiration date of March 11. Prins expects gold to be one of the first assets to react in response to potential future QE. For the reasons why and to get Prins’ bullish gold price forecast for this year. The main reason for the Fed to introduce QE would be more incoming bank failures, according to Prins. “I do see the potential for a massive crisis in the banking sector. We are not out of the woods there. If that happens, it will be remedied by QE, and that will help this particular sector by creating liquidity,” Prins said. For more on why Prins is still optimistic when it comes to stocks despite the risk of more bank failures, watch the video above. Prins also commented on Former President Trump’s remarks regarding the promise to ban the creation of a central bank digital currency (CBDC) if he is elected. Trump is currently the front-runner in the Republican leadership race. Speaking at a campaign stop in New Hampshire in January, Trump said: “As your president, I will never allow the creation of a central bank digital currency. Such a currency would give a federal government — our federal government — absolute control over your money. They could take your money and you wouldn’t even know it’s gone.” Prins shared her fears about CBDCs and how they can be introduced in the U.S.

On the day gold closed down $3.00 at $2032.10, and silver closed up $0.29 at $22.57.

On Friday the weakness in gold was the perfect finish to a ho-hum trade which failed to hold anyone’s attention. Gold was down a sawbuck and silver off a dime this week, and the process basically put everyone to sleep. Still gold is holding above $2000.00, and silver is trading mid-range between recent highs and lows. Not exciting but believe it or not these pricing trends are strong enough to keep the bears in check and bulls on a short leash.

Reuters (Anushree Ashish Mukherjee) – Gold en route to weekly dip as rising bond yields dent appeal – “Gold slipped on Friday and was heading for a weekly fall, pressured by elevated Treasury yields, while investors awaited next week’s U.S. inflation data for more clues on the timing of the Federal Reserve’s interest rate cuts. Benchmark 10-year U.S. Treasury yields rose to a two-week high and two-year yields hit an almost two-month high, making non-yielding bullion less attractive for investors. Several Fed officials, including Chairman Jerome Powell, have said this week they want to see more evidence inflation will continue to decline before cutting rates. U.S. monthly consumer prices rose less than initially estimated in December, revised government data showed on Friday. Market participants now await U.S. consumer price index (CPI) for January, due on Tuesday. Traders now see about a 62% chance of an interest rate cut in May, according to the CME Fedwatch tool, opens new tab. Lower interest rates decrease the opportunity cost of holding non-yielding bullion. Elsewhere, palladium fell 2.9% to $861.06 per ounce and platinum was down 1.3% to $873.97. Prices of both metals were heading for a second weekly dip.”

On the day gold closed down $8.90 at $2023.30, and silver closed down $0.04 at $22.53.

Platinum closed down $15.20 at $871.40, and palladium closed down $22.70 at $865.90.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,050.10 and then at this week’s high of $2,059.10. First support is seen at Thursday’s low of $2,034.60 and then at this week’s low of $2,030.80. The silver bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $23.72. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. First resistance is seen at this week’s high of $22.84 and then at $23.00. Next support is seen at this week’s low of $22.195 and then at $22.00.”