Daily Gold Newsletter Archives - Page 2 of 9

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.

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 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.”

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 February 2, 2024February 2, 2024 by Richard

Gold – The Bearish Scenario

Commentary for Friday, Feb 2, 2024 (www.golddealer.com) – Today gold closed down $16.90 at $2036.10, and silver closed down $0.43 at $22.70. Gold dipped on the open today after the January jobs report roared, coming in at nearly double the expected number. This after a strong jobs showing in December suggests dynamic US employment growth. Results like this may shield the US economy from recession and offer the FOMC hawkish options which encourage a bearish scenario for the metals. Still, there are several moving parts to this latest optimism which will keep the bears at bay in the shorter term. Insiders will be looking for confirmation of a significant downtrend before rethinking their trading strategy. Last Friday gold closed at $2016.90 / silver at $22.81 – on the week gold was up $19.20 and silver was down $0.11.

On Monday the price of gold traded between $2036.00 and $2022.00 with mild safe haven demand as Biden is pressured to retaliate against a terrorist drone attack which killed 3 US soldiers in Jordan. A strong response is unlikely, but the Middle East is always a political hotspot below the surface and Biden promised a response. Still, the President does not need another problem before the election. Today’s short term rise in gold will not amount to much as markets refocus on the FOMC meeting which begins on Tuesday and ends Wednesday. After which Chief Powell will have his usual press conference. I’m not expecting fresh news, but anything which might relate to the Fed’s upcoming meeting in March will create increased speculation. Whether possible shifting sentiment translates into price changes for gold remains to be seen. Generally, however, the closer we get to March the more potential for volatility.

FXEmpire (Christopher Lewis) – Gold Markets Continue to Look For Momentum – “ Gold was rather volatile early during the trading session on Monday, as we continued to look for some type of bigger move. It’s worth noting that the market is using the 50-day EMA underneath, offering massive support, and that short-term pullbacks offer buying opportunities from what I can see, especially with the 2,000 level underneath offering a significant barrier that I believe is more or less a barrier zone of support down to the $1,980 level. In general, this is a situation where you probably continue to see a lot of value hunting, but we could just take off and if we do, 2040 will be the next target, after that 2060, followed by 2075. Anything above the 2075 dollar level really gets the market cooking and at that point in time it becomes a buy and hold scenario. On the other hand, a breakdown below the $1,980 level for me would be a rather significant turn of events and a change in attitude. Keep in mind that the central bank meeting, the Federal Reserve meeting on Wednesday, is going to probably be a major event. Not so much the decision, although it could be if they surprise markets, but I will be focused on the press conference. Where are the Americans going with monetary policy? How quickly are they getting there? That type of thing. The looser monetary policy statement, the more bullish this will be for gold, and of course, vice versa. Pay attention to those interest rates in America because if they drop, that helps gold as well. So, we’ll have to wait and see how this plays out, but I certainly have no interest in selling it, at least not as long as we are above that crucial $1,980 level. All that being said, position sizing will be crucial, but for the longer term, I believe the gold will probably continue to be a very important asset to own due to the geopolitical concerns as well as everything mentioned previously.”

On the day gold closed up $8.40 at $2025.20, and silver closed up $0.38 at $23.14.

On Tuesday the price of gold moved to daily highs ($2048.00) for a short time, reversing to daily lows ($2030.00) and finishing slightly in the green for the day. This created its typically choppy trading pattern and prices firm enough to keep the bulls interested. But I would not expect much change in the price of gold. Insiders are anxious to hear comments from Powell on Wednesday. The trade does not, however, expect enough fresh information to move the needle.

According to Vladimir Zernov (FXEmpire) consumer confidence reached two year highs amid declining pessimism about the future. This figures if inflation softens, our economy continues to show improvement and America adjusts to changing interest rates. Physical gold and silver bullion always have a place in this changing economic picture. The less “fear factor” the less interest in the physical metals. The more “fear factor” the more interest in making sure investors create a safe haven outside government intervention. The price of gold today is elevated ($2000.00) which tells you that folks are not ready to completely trust world leaders.

Reuters (Anushree Ashish Mukherjee) – Gold scales two-week peak as market focus turns to Fed meeting – “Gold prices climbed to a two-week high on Tuesday, supported by a softer dollar and lower Treasury yields while focus turned to the Federal Reserve’s policy meeting for insight into how soon it will cut interest rates this year. “A big part of gold moving is rates have been coming off and the dollar is in the red, but we are seeing the market elevated due to the anticipation for the Fed interest rate decision on Wednesday,” said Daniel Pavilonis, senior market strategist at RJO Futures. The dollar index, opens new tab fell 0.2%, making gold more appealing to other currency holders. The benchmark 10-year Treasury yields hit a two-week low. Lower interest rates decrease the opportunity cost of holding bullion. The Fed’s policy decision is due on Wednesday, having made a dovish turn in the December meeting. Markets are widely expecting the U.S. central bank to leave rates unchanged at the end of the two-day meeting. Fed wants to have a steady market so we may not see that many rate cuts, and Powell is going to be neutral and talk about the possibility of lowering interest rates, Pavilonis added. Last week data showed moderate growth in U.S. prices in December, keeping annual inflation below 3% for a third consecutive month and potentially allowing the Fed to begin cutting interest rates this year. A Reuters poll showed on Monday that uncertainty about the economy and U.S. interest rate cuts could drive record gold prices in 2024. Spot silver rose 0.3% to $23.28 per ounce, hitting its highest level since Jan.15 earlier in the session. Spot platinum fell 0.2% to $925.26 an ounce and palladium lost 0.2% to $981.21.”

On the day gold closed up $6.30 at $2031.50, and silver closed down $0.03 at $23.11.

On Wednesday gold again surprised, as it moved from testing support at $2035.00 through testing daily highs around $2055.00. Gold finally settled off highs on the day, but dealers did not immediately sell the rally and its price remained elevated through the close. Which might suggest insiders are looking for and would participate in a rally to the upside. In other words, dealers may be turning towards the optimistic side of the bullish scenario.

Of course, this is my speculation. There are other reasons which may support this push to higher ground. The labor market may be losing momentum according to ADP. The Dollar Index dipped to recent lows this morning (103.00). Safe haven demand is picking up over mixed signals from the Middle East. Still, the market lost more than half of its daily gain in today’s aftermarket so all this noise may amount to no more than a tempest in a teapot.

While against the apparent odds it appears that the Fed may get its “soft landing” as inflation cools. If inflation heads south, it suggests a fresh bearish development for the metals. Logically the price of gold should be moving lower, but paradoxically it moved to recent highs today.

The Fed left interest rates unchanged today, as expected, but Fed Chief Powell added details to the possible outcomes being considered for the more important FOMC meeting in March. The Fed Chief basically argued against an interest rate cut in March. He and his cohorts want to see inflation rates continue lower before taking any further action. But he did leave the door open to a rate cut if the economy substantially weakens. In other words, he described the typical Fed building blocks but rearranged their order. Let’s hope that a plan is in place by March because if this process continues through the summer or fall possible outcomes become more erratic.

Reuters (Anushree Ashish Mukerjee) – Gold prices firm as spotlight shifts to US Fed policy meeting – “Gold gained on Wednesday but was on track to snap its three-month winning streak, while markets were glued to the U.S. central bank’s policy rate outlook discussion later in the day. Gold has declined 0.8% so far this month after surging to a record peak in December, as traders pared back bets of a March start to U.S. rate cuts. We expect algorithmic buying activity to support prices, and strong physical demand and central bank demand, the major components of demand drivers for gold, are lining up in the same direction, said Daniel Ghali, commodity strategist at TD Securities. U.S. private payrolls rose far less than expected in January, data showed, though the pace likely overstates the slowing labor market momentum. The two-day meeting of the Federal Open Market Committee (FOMC) concludes later in the day, with the Fed likely to keep interest rates unchanged. Chair Jerome Powell’s news conference at 2:30 p.m. ET will be watched for insight into how soon the Fed will cut interest rates this year. The odds of a rate cut in March have dropped to about 64% currently, from about 73% a month ago, according to the CME FedWatch Tool. The press conference is where the markets will start to look for any signs that March is indeed on the table for the Fed’s first rate cut, Ghali added. The dollar index, opens new tab fell, but was on course for its best month since September, and benchmark 10-year U.S. Treasury yields hit a two-week low but were also set for monthly rise. Spot silver prices gained 0.1% to $23.19 per ounce, while platinum was up 0.5% at $925.47, and palladium rose 0.3% at $979.28. All three metals were poised for monthly declines.”

On the day gold closed up $16.90 at $2048.40, and silver closed down $0.06 at $23.05.

On Thursday gold moved between $2030.00 and $2060.00, again testing support and overhead resistance while finishing the day mildly in the green. This market, while precarious in nature, seems relatively happy at these higher levels, even as higher interest rates create crosswinds for the bullish scenario. Still, there may be major interest rates shifts, at least in the making that will support higher gold prices. (Reuters) – “Major central banks are now signaling that interest rates will likely move lower in coming months as inflation weakens, calling time on what of what has been the most aggressive tightening cycle in decades. The United States, UK and Sweden all left rates steady this week, with the U.S. Federal Reserve saying it sees lower rates on the horizon. Traders expect the Fed and ECB to start easing around the mid-year mark, while outlier Japan could finally hike rates soon.” Continued patience here by the bulls may prove rewarding.

On the other hand, there are insiders who believe we will not have a “soft” economic landing, we will instead experience a “no landing”. This wording suggests a sticky finish to the drawn out process of unwinding our Rube Goldberg economy. One which offers a perpetual static state of uncertainty. I think this ending is a bit much, but you never know these days, in a country which believes in the free lunch, and political claptrap. Before you claim this is absurd, remember the elections are right around the corner, and each party has its own version of this nightmare.

Reuters (Anushree Ashish Mukherjee) – Gold firms after US jobless claims, focus on NFP data – “Gold prices gained on Thursday after data showed U.S. weekly jobless claims rose last week, while market focus shifted to the U.S. non-farm payrolls data for more cues on the Federal Reserve’s policy path. The Labor Department said initial jobless claims increased to a seasonally adjusted 224,000 for the week ended Jan. 27. A separate report showed that U.S. worker productivity grew faster than expected in the fourth quarter. Gold is still in a “bad hangover” after the Fed’s reaction but a small rally is happening because of the initial claims number, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago. Other metals like platinum, copper, silver are all down over one percent which may prohibit gold’s chance of any sustained recovery, he added. Investors’ focus now shifts to Friday’s U.S. nonfarm payrolls for further clarity on the interest rate path. “Gold is expected to trade with a neutral to bearish bias, though losses could be limited ahead of the U.S. nonfarm payroll report due on Friday,” said Jigar Pandit, Head Commodity and Currency Business at BNP Paribas’ Sharekhan. Limiting gains in bullion, dollar, gained 0.2%. Spot silver rose 0.3% to $22.96 per ounce, platinum fell 0.8% to $910.66, and palladium shed 2% to $957.46.”

On the day gold closed up $4.60 at $2053.00, and silver closed up $0.08 at $23.13.

On Friday the dip in gold took most by surprise but the smart money will consider this latest “insight” more of a short term “snapshot”. For now, a strong jobs report suggests a renewed hawkish Fed trend, but the FOMC could be considering an interest rate cut by the summer months. This back and forth strategy has always served the FOMC well because it allows them to tap the economic brakes and adjust interest rates as necessary.

Reuters (Anushree Ashish Mukherjee) – “Gold prices slipped on Friday as the dollar and yields jumped following a strong U.S. nonfarm payrolls report, which created some uncertainty about whether the Federal Reserve might start cutting interest rates soon. The dollar index was 0.5% higher, making bullion more expensive for overseas buyers. Benchmark 10-year bond yields also gained. U.S. employers added 353,000 jobs in January, beating the 180,000 jobs economists had expected. A resilient economy and strong worker productivity encouraged businesses to hire and retain more employees, a trend that could shield the economy from a recession this year. With a decline of less than 1% since the data, gold is “holding on like a barnacle despite a whopper of an employment report,” said Tai Wong, a New York-based independent metals analyst. “But we might need to wait a little and see if gold grinds much lower,” added Wong. According to the CME Fed Watch, opens new tab Tool, traders now expect about a 78% chance of a U.S. rate cut in May, compared to 92% before the data. Lower interest rates boost non-yielding bullion’s appeal. Fed Chair Jerome Powell this week dismissed the idea of lowering interest rates in the spring, but voiced confidence that inflation would return to the 2% target. “If these (interest) rates stay where they are and there is a lack of clarity around that, what we’ll likely see is a rather muted environment for the upside for gold,” said WGC market strategist Joseph Cavatoni. Among other precious metals, spot silver lost 2.3% to $22.63 per ounce, platinum fell 0.7% to $906.92 and palladium was down 0.6% at $956.53.”

On the day gold closed down $16.90 at $2036.10, and silver closed down $0.43 at $22.70.

Platinum closed down $20.20 at $893.80, and palladium closed down $22.00 at $945.70.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage. Prices are in a two-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 $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 $2,074.70 and then at this week’s high $2,083.20. First support is seen at this week’s low of $2,037.70 and then at the January low of $2,023.30. 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 $23.00 and then at this week’s high of $23.445. Next support is seen at this week’s low of $22.605 and then at $22.25.”

Posted on January 26, 2024 by Richard

Gold – Steady for Now – Pulse or Minus $50.00

Commentary for Friday, Jan 26, 2024 (www.golddealer.com) – Today gold closed up $3.00 at $2016.90, and silver closed up $0.05 at $22.81. This was another one of those weeks in which traders waited for that second shoe to fall, relative to Fed interest rate policy. Patience is always a virtue but, in this case, it pays extra dividends. There was not much action this week, it was like watching the paint dry. But the inactivity provided time to get your ducks in a row. Let’s count our blessings that gold remains above the psychologically important support of $2000.00. I will settle for that in the messy government business of managing an inflationary economy. Hope for the best outcome and be patient in this uncertain consolidation. Last Friday gold closed at $2026.50 / silver at $22.57 – on the week gold was down $9.60 and silver was up $0.24.

On Monday the price of faded a bit as investors rolled back expectations of a US interest rate cut at the end of March, with a surge in equity markets further dampening interest in safe-haven bullion according to Reuters. Prices remained choppy between $2030.00 and $2016.00 with a downward drift as gold finished the day mildly in the red.

Chistopher Lewis’s (FXEmpire) suggestion that world central banks will soon be cutting interest rates would be a welcome plus for this market. There are, however, enough bearish cross currents to steady the price of gold at current levels plus or minus $50.00.

FXEmpire (Christopher Lewis) – Gold Continues to See Buyers on Dips – “Gold markets initially pulled back during the trading session on Monday, but then turned around to show a little bit of support. The 50-day EMA sits just underneath offering support. All things being equal, this is a market that I think will continue to find plenty of buyers, as that’s been the case for some time now. The $2,000 level underneath is a major large round number. All things being equal, this is a market that I think you will continue to see a lot of volatility due to the fact that the interest rate markets will of course be all over the place as well as we have had so much in the way of confusion when it comes to central banks. That being said, I think central banks around the world are going to start cutting rates, and therefore I am bullish on gold. That doesn’t necessarily mean that gold takes off straight up in the air, but what I think it does do is continue to put more of a buy on the dip mentality in the gold market. Monday was just a microcosm of this as we continue to see every time the market drops somebody’s willing to step in and pick things up. $2,000 should be your floor at the moment in this market, but we will have to wait to see whether or not it holds. In fact, I think there’s probably a zone of support extending from $2,000 down to the $1,980 level. On the upside, I believe that the $2,075 level above is your short-term ceiling. And if we can break that on a daily close, that would be a very bullish sign, perhaps allowing more of a buy and hold mentality when it comes to gold. Either way, I think you’ve got a pretty choppy market with more of an upward tilt than anything else so that’s how I’ve been trading this market. Not getting too big but definitely looking in one direction, and that is for the market to go higher.”

On the day gold closed down $6.70 at $2019.80, and silver closed down $0.41 at $22.16.

On Tuesday gold moved between $2031.00 and $2022.00 in a “See-Saw” fashion, finishing mildly in the green, helped by a short-covering rally according to technical commentary. This firm pattern of action is a bit surprising considering the continued strength of the dollar as the Dollar Index reaches weekly highs today (103.75) waiting for fresh trading information.

Reuters – “Gold prices steadied on Tuesday as investors awaited a slew of U.S. economic data this week for more clarity on the Federal Reserve’s interest rate cut timeline. “The gold market is just above the $2,000 mark and it seems to be a neutral market. Every time we start to break higher, we come back down,” said Daniel Pavilonis, senior market strategist at RJO Futures. “There is a lot of uncertainty on what is going to happen here economically in the United States.” Focus this week will be on the U.S. flash PMI report on Wednesday, fourth-quarter advance GDP estimates due on Thursday and personal consumption expenditures data on Friday. Fed officials last week said the U.S. central bank needs more inflation data in hand before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.”

Ernest Hoffman (Kitco) – JPMorgan boosts its 2024 projections for Fed rate cuts, gold investment – “Gold prices are continuing to hold above $2,000 per ounce in the new year, and the precious metal will benefit from additional rate cuts in 2024, along with the return of investment demand, according to commodities analysts at JPMorgan. While the investment bank still maintains that “the only structural bullish call we hold is for gold and silver,” precious metals are expected to lose some of the additional boost provided by high inflation. “Commodities are unlikely to benefit from core inflation in 2024,” said Natasha Kaneva, Head of Global Commodities Strategy at JPMorgan. “Inflation should fall to under 3%, so that, along with properly timing the business cycle, are the two conditions needed to initiate long positions, making the outlook for the sector very tactical in 2024.” Economic and geopolitical uncertainty tend to be positive drivers for gold, which is widely seen as a safe-haven asset due to its ability to remain a reliable store of value. It has low correlation with other asset classes, so can act as insurance during falling markets and times of geopolitical stress. A weaker U.S. dollar and lower U.S. interest rates also increase the appeal of non-yielding bullion. The analysts pointed out that anticipation of a Fed pivot has played a key role gold’s recent price rally, as it has over the last three rate cutting cycles. “Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical,” said Gregory Shearer, Head of Base and Precious Metals Strategy at JPMorgan. “At the moment, gold still appears quite rich relative to underlying rates and foreign exchange (FX) fundamentals, and still looks vulnerable to another modest retreat in the near-term, as Fed rate cut expectations are now running earlier than our forecasts,” he said. Shearer added that any price pullbacks in the coming months should be treated as buying opportunities ahead of a breakout rally which they expect to begin in mid-2024 as U.S. GDP growth slows. JPMorgan Research now predicts the Fed will deliver 125 basis points of cuts over the second half of 2024, which is 25 bps more than they projected in their 2024 outlook published just last month, as the central bank works to head off a U.S. recession. “Gold price predictions are based on Fed official forecasts, which see core inflation moderating to 2.4% in 2024 and 2.2% in 2025, before returning to the 2% target in 2026,” the analysts wrote. Based on this updated economic outlook, JPMorgan forecasts the U.S. 10-year nominal yield will fall 30 bp from 3.95% at the end of Q1 to 3.65% by the end of 2024, with the real yield declining from 1.75% to 1.45% over the same time frame. “We think over this period, the Fed cutting cycle and falling U.S. real yields will once again become the mono-driver behind gold’s breakout rally later in 2024,” Shearer said. “Gold’s inverse relationship to real yields has historically been weaker over Fed hiking cycles, before strengthening again as yields fall over a transition into a cutting cycle.” Falling yields will drive gold prices to new nominal highs in H2 2024, averaging $2,175 per ounce in Q4, and they expect a quarterly average peak of $2,300 per ounce by Q3 2025. The analysts predict central bank buying will continue to support gold prices through 2024, while positive net ETF flows will return later in the year. “There is still scope for boosted reserves at some central banks as institutions look to diversify reserve assets, so purchasing is likely to remain structurally elevated compared with the late 2010s.” The analysts believe that after two years of declining ETF gold holdings and below-average net long positioning on exchanges, increased investor appetite will also be a major contributor to the projected 2024 gold rally. “As of the end of 2023, managed money in net long positions — where more investors expect the price of gold to rise rather than fall — only screened at around 6/10 on a standardized scale, with 10 being the net longest positioning since 2018,” they said. “This means there is still a lot of capacity for investors, through the purchase of gold either on an exchange or via an exchange-traded fund (ETF), to increase their long positions.” “As rates eventually come down, we would expect recent ETF outflows to reverse with a return to retail-led ETF inflows boosting gold investor demand too, strengthening a move higher in prices,” Shearer said. “Continued central bank purchases, along with physical demand on price dips will remain a significant support to prices over the final twists and turns of the Fed cycle.”

On the day gold closed up $3.90 at $2023.70, and silver closed up $0.17 at $22.33.

On Wednesday gold ran out of gas in early trading, finishing on lows for the day ($2010.00). The drop was cushioned by a weaker dollar, adding some stability to these lower prices. Conflicting factors, however, make this trade awkward. Interest rate uncertainty stresses the short and medium term outlook. Countries like England and the United States benefit from the better than expected economic news which provides the Fed more policy choices. At the same time, China’s flagging economic outlook has their central bank scrambling to create liquidity. This slowdown could negatively impact one of the world’s largest gold bullion buyers. Finally, an informed trader believes a large futures speculator may have been working overtime today.

Reuters (Anushree Ashish Mukherjee) – Gold stumbles on strong US data, as traders strap in for more – “Gold eased on Wednesday after data showed strong U.S. business activity, even as a weakened dollar limited losses, while investors looked ahead to more economic indicators to assess when the Federal Reserve might first cut interest rates. “Gold prices are pretty insulated from a hawkish repricing in rates markets, because there are signs that investors are historically under-positioned in gold despite markets expecting an imminent start to the Fed’s cutting cycle,” said Daniel Ghali, commodity strategist at TD Securities. U.S. business activity picked up in January and inflation appeared to abate, an S&P Global survey showed. A strong U.S. economy and pushback from central bank officials is leading some investors to rethink their bets on how quickly the Fed will cut rates this year. According to the CME’s FedWatch Tool, opens new tab, markets expect the Fed to keep interest rates unchanged at its Jan. 30-31 policy meeting and have pushed back the timeframe of the first interest rate cut. The dollar slipped 0.5% against its rivals, making greenback-priced bullion cheaper for overseas buyers, while benchmark 10-year Treasury yields also edged lower. “China is putting together a more comprehensive package to stem the pervasively pessimistic sentiment that has plagued their markets for months which is weighing on the broad U.S. dollar,” Ghali added. China’s central bank announced a deep cut to bank reserves that will inject about $140 billion of cash into the banking system.” Investors are now focusing on the fourth-quarter advance U.S. GDP estimates on Thursday, and personal consumption expenditure data on Friday. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. Spot silver rose 1.1% to $22.67 per ounce, platinum was up 0.3% to $903.13, and palladium rose 0.8% to $955.87.”

On the day gold closed down $9.80 at $2013.90, and silver closed up $0.43 at $22.76.

On Thursday there was a mild rise to the upside in the price of gold as jobless claims rose. At the same time the Dollar Index moved back above 103.5 after yesterday’s weakness capping higher prices. Expect a choppy back and forth trade as the week draws to a close and traders look for something more dramatic to move the trading needle before the March FOMC meeting.

The ECB left interest rates unchanged as Lagarde claims it is too early to talk about rate cuts. The bullish “rate cut” door is closed in Europe. And the much talked about US rate cut will likely be delayed, perhaps into the summer. These actions will hinder higher gold prices. That being said, gold and silver closed mildly in the green, and gold holds above $2000.00.

Reuters (Sherin Elizabeth Varghese) – Gold edges up on weaker dollar; focus on US data, ECB decision – “Gold prices edged higher on Thursday, helped by a slight fall in the dollar, while investors awaited more U.S. economic data and the European Central Bank’s (ECB) policy decision. “The rate cut expectations have somewhat slowed as we came into the year with elevated or high expectations, and that has left the markets exposed to disappointments,” said Ole Hansen, Saxo Bank’s head of commodity strategy. “For now, gold is being left a little bit on its own because the market simply needs more data to judge whether the market is at risk of a deeper correction or whether this level around the $2,000 is strong enough to support the market in the short term.” Hansen added. According to the CME FedWatch Tool, opens new tab, markets widely expect the Federal Reserve to hold rates unchanged at its policy meeting on Jan. 30-31 and have pared back the timing of the first interest rate cut. The ECB is scheduled to announce its policy decision at 1315 GMT. While the central bank is expected to keep rates steady, investors will be looking out for comments from President Christine Lagarde. The first reading of fourth-quarter U.S. GDP is due at 1330 GMT and the personal consumption expenditure data on Friday are also on the radar, for more cues on the Fed’s rate cut plans. Data on Wednesday showed that the U.S. economy began 2024 on a positive note, with economic activity increasing in January and inflation starting to ease. Spot silver rose 0.9% to $22.85 per ounce, platinum dipped 0.2% to $897.08, and palladium edged up 0.1% to $964.01.”

On the day gold closed up $3.00 at $2016.90, and silver closed up $0.05 at $22.81.

On Friday gold opened firm, touching $2025.00 but traders sold a small rally and prices quickly moved to session lows of $2015.00. It is a small surprise that gold did not do better today considering the Dollar Index lost half a point in early trading, but so goes a market which is stuck between a rock and hard place relative to Fed policy. I’m hoping we will not need the patience of Job in this still developing transition.

Reuters (Anushree Ashish Mukherjee) – Gold holds steady with spotlight on Fed verdict – “Gold prices held steady on Friday as investors’ attention shifted to the U.S. Federal Reserve’s policy meeting due next week for more insights into the interest rate outlook. “We are seeing the gold market consolidating at the moment as the expectations of rate declines aren’t quite as soon as the market would like,” said David Meger, director of metals trading at High Ridge Futures. “But underlying theme or the idea that interest rates will come down in 2024 continues to underpin and support the gold market.” Markets widely expect the Fed to leave interest rates unchanged at its policy meeting on Jan. 30-31, but have pared back expectations of a rate cut by March, according to the CME FedWatch Tool, opens new tab. Lower interest rates decrease the opportunity cost of holding bullion. U.S. prices rose moderately in December, keeping the annual increase in inflation below 3% for a third straight month, which could allow the Fed to start cutting interest rates this year. Another set of data on Thursday showed the U.S. economy grew faster than projected in the fourth quarter. On the physical side, China’s gold premiums climbed this week as additional stimulus measures aided sentiment, days before Lunar New Year celebrations begin. In the short-term, the direction of gold and silver will continue to be dictated by incoming economic data and their impact on the dollar, yields and rate cut expectations, said Ole Hansen, Saxo Bank’s head of commodity strategy in a note. Spot silver lost 0.5% to $22.79 per ounce and headed for its best week in five. Platinum rose 1.8% to $907.60 and palladium gained 1.9% to $957.42, with both on track for a weekly increase.”

On the day gold closed up $3.00 at $2016.90, and silver closed up $0.05 at $22.81.

Platinum closed down $18.20 at $887.40, and palladium closed down $30.90 at $936.40.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage but have faded a bit. Prices are still in a three-month-old uptrend on the daily bar chart, but just barely. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at $2,067.30. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at this week’s high of $2,039.30 and then at $2,050.00. First support is seen at this week’s low of $2,004.00 and then at $2,000.00. The silver bears have the overall near-term technical advantage. Prices hit a three-month low Monday and are in a six-week downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above technical resistance at $24.00. The 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 $23.50. Next support at Thursday’s low of $22.76 and then at Wednesday’s low of $22.46.”

Posted on January 19, 2024 by Richard

Gold – Surprisingly Quiet

Commentary for Friday, Jan 19, 2024 (www.golddealer.com) – Today gold closed up $7.90 at $2026.50, and silver closed down $0.10 at $22.57. This was a week where the market struggled with conflicting data and speculation with the center player in this dilemma being the Fed. Not long ago sentiment shifted to the dovish side favoring an interest rate cut in March. Today, that cut is still in the cards, which supports current pricing. But insiders believe the Fed has enough faith in the improving economic data to wait until the summer months before circling a number. It’s time to get out your Worry Beads. The March interest rate decision may be moved to June. And the price of gold and silver will hang in the balance. Last Friday gold closed at $2046.70 / silver at $23.16 – on the week gold was down $20.20 and silver was down $0.59.

We were closed Monday, Jan 15^th for Martin Luther King Day. Banks, the Post Office and commodity markets were closed on this national holiday.

On Tuesday the price of gold moved between $2045.00 and $2025.00 with a downward drift in the domestic trade. This is the first day in a short trading week and we are off to a slow start, which is surprising considering gold’s technical picture remains encouraging. An example of a stronger dollar holding sway was reflected in the Dollar Index moving from 102.20 Friday through 103.31 today. And the reason for weakness in the price of gold. Fresh problems in the Middle East provide support and safe haven. Insiders expect continued back and forth patterns.

Reuters (Anushree Ashish Mukherjee) – Gold dips on strong US dollar, yields as Fed insights awaited – “Gold prices slid on Tuesday, pressured by a firm U.S. dollar and Treasury yields, while investors eyed remarks from several Federal Reserve officials this week to assess the likelihood of the central bank’s interest rate cuts in the year. Strong gains in the U.S. dollar index are pressuring the gold market as well as a rise in U.S. Treasury yields today on this first day back from the three-day holiday weekend,” said Jim Wyckoff, senior analyst at Kitco Metals. “However, one could argue that losses in gold are not bad compared to how strong the dollar is as tensions in the Middle East is keeping a floor under the prices.” The dollar index rose 0.5% to a more than one-month high, making bullion less attractive for other currency holders, while yields on the benchmark U.S. 10-year Treasury notes also gained. Fed Governor Christopher Waller is scheduled to deliver a speech on the economic outlook before the Brookings Institution at 1600 GMT, with at least other six officials due to speak this week. “Fed officials probably will keep a neutral guidance, keeping all options on the table based on incoming data. So to see gold prices tick higher, we need to remain on a soft landing path,” said UBS analyst Giovanni Staunovo.” he U.S. central bank is widely expected to hold its policy rate steady at the end of its Jan. 30-31 meeting. Traders see a 70% probability of an interest rate cut in March, according to the CME Fedwatch tool. Elsewhere, European Central Bank officials pushed back against market expectations for rapid rate cuts this year. Spot silver fell 0.3% to $23.12 per ounce, platinum declined 1.4% to $902.36, and palladium slipped 3.2% to $939.95.

On the day gold closed down $20.70 at $2026.00, and silver closed down $0.23 at $22.93.

On Wednesday gold opened with typical “up and down” pricing chop but settled on lows for the day. This makes for two consecutive daily losses of $20.00 and sets the tone for this trading week. This second loss was also fueled by the dollar which remains steady at weekly highs.

Solid US economic activity reported this morning also weighs on the metals. It allows the Fed broader interest rate options if the FOMC believes an immediate recession is no longer on the table. Traders, however, believe that the continued grind of higher interest rates will take its toll, continue to slow the economy and hurt the price of gold.

In December the price of gold was $2010.00, it reached recent highs ($2080.00) two weeks later as bullish optimism surged over the possibility of a March interest rate reduction. Still, FOMC insiders warned against too much optimism and their comments weakened a promising rally.

Today we are back to monthly lows approaching $2000.00 and traders fear lower prices are right around the corner. Whether the price of gold is higher or lower between now and the March FOMC meeting will in large part depend on the Fed’s still uncertain interest rate policy. This is not a revelation; it is the same reasonable thinking that has been in place for months. But for some reason many prefer speculation and rumor which creates this jittery trading pattern.

Reuters (Anushree Ashish Mukherjee) – Gold retreats to over one-month low after data dims rate-cut hopes – “Gold prices fell to a more than one-month low on Wednesday as strong economic data strengthened dollar and Treasury yields and lowered market expectations of a U.S. rate cut in March. Spot gold was down 0.9% at $2,008.89 per ounce as of 11:33 a.m. ET (1633 GMT), lowest since Dec.13. It fell 1.3% in the previous session in its biggest single-day decline since Dec. 4, 2023. U.S. gold futures fell 0.9% to $2,011.80. U.S. retail sales increased more than expected in December, keeping the economy on solid ground heading into the new year. The U.S. dollar (.DXY), opens new tab hovered at a one-month high following robust retail sales data. While yields on the benchmark U.S. 10-year Treasury notes also gained. “The markets are having doubts about interest rate cuts if the Fed can cut sooner than later, which is pressuring gold prices. With the dollar being strong and cuts taking time, it is hard for gold to hold a rally,” said Bob Haberkorn, senior market strategist at RJO Futures. “However, geopolitical risk will keep providing a base to prices and hold them around $2,000.” Fed Governor Christopher Waller’s on Tuesday said that the central bank should not rush to cut rates until lower inflation can be sustained. Traders are now pricing in around a 57% chance of a rate cut in March, according to theCME FedWatch tool, opens new tab. “Technically gold is at a little bit of risk here, if we close below $2,020 it signals that the sideways range has broken to the downside,” said Tai Wong, a New York-based independent metals analyst. Spot silver fell 1.5% to $22.57 per ounce, and platinum declined 1.8% to $879.09. Palladium slipped 1.8% to $919.14, marking its lowest since 2018. The rate at which platinum is displacing palladium in the production of autocatalysis is slowing due to the sister metals approaching price parity.”

On the day gold closed down $23.40 at $2002.60, and silver closed down $0.41 at $22.52.

On Thursday the gold bulls got some breathing room. With gold down in the domestic market Tuesday and Wednesday traders took advantage of the weakness and bought the dip in today’s trade. This is not a big deal, prices today ranged between $2208.00 and $2222.00 but anything to the upside as gold challenged $2000.00 helps bullish sentiment. The fact that gold finished the day close to highs is noteworthy considering the dollar remains around weekly highs.

Our sales volume picked up considerably yesterday, which suggests public interest remains steady, likely helped by safe haven demand. But the Fed still holds all the cards. A continued dovish response to interest rate policy in March will push gold prices higher. Anything less will encourage the bears. Still, I can’t imagine shorting gold at these levels. That trade is fraught with peril, as the world faces big problems in the Middle East and the Ukraine.

Reuters (Anushree Ashish Mukherjee) – Gold drifts higher on softer dollar, safe-haven inflows – “Gold prices firmed on Thursday, aided by a retreating dollar and safe-haven demand amid the Middle East conflict, while investors looked out for further clarity on the U.S. Federal Reserve’s future interest rate path. Spot gold rose 0.4% to $2,012.89 per ounce by 9:56 a.m. ET (1456 GMT) after hitting a five-week low in the previous session. U.S. gold futures also gained 0.4% to $2,015.50. The dollar (.DXY), opens new tab fell after climbing a five-week peak in the previous session. While yields on the benchmark U.S. 10-year Treasury notes also declined. Geopolitical tensions are unintentionally coordinating efforts to keep gold in the $2,000 range as there is so much uncertainty, said Daniel Pavilonis, senior market strategist at RJO Futures. The U.S. on Wednesday put the Yemen-based Houthi rebels back on its list of terrorist groups, as the militants attacked their second U.S.-operated vessel in the Red Sea region this week. A weaker dollar makes bullion cheaper for overseas buyers, while high-interest rates dent non-yielding bullion’s appeal. At least two Fed policymakers – Atlanta Fed President Raphael Bostic and Fed Governor Christopher Waller – have spoken against cutting rates too fast. Traders are pricing in a 57% chance of a March rate cut, according to CME’s Fed Watch tool. Gold investors are analyzing how much of a negative impact delayed interest rate cuts might have on prices, though a bunch of U.S. data misses could help gold’s cause, said Fawad Razaqzada, market analyst at City Index, in a note. Data showed jobless claims fell last week to the lowest level since late 2022, suggesting job growth likely remained solid in January. Spot silver was steady at $22.53 per ounce. “We forecast a 2024 price of $24.33/oz; ETF (exchange traded funds) demand may recover from liquidation; we anticipate deficits to buoy prices,” HSBC said in its 2024 outlook. Platinum climbed 1.8% to $898.99, and palladium gained 2.4% to $937.39.”

On the day gold closed up $16.00 at $2018.60, and silver closed up $0.15 at $22.67.

On Friday gold moved to highs on the day ($2036.00) but traders sold the rally and prices dipped to $2022.00. The price of gold moved reasonably lower on two occasions this week, but the interest created was subdued. This may suggest that either the bulls need a rest to gather themselves or this market needs fresh information to rally its base. The answer to this question might be found in gold’s moving averages. The 100 Day Moving Average is $1994.00, and the 200 Day Moving Average is $2012.00. That makes for a slim $12.00 pricing spread over a long period of time, which translates into a “ho-hum” trade in need of fresh information.

Reuters (Anushree Ashish Mukherjee) – Gold set for biggest weekly fall in six as rate cut optimism dulls – “Gold firmed on Friday but was poised to record its biggest weekly decline in six as comments from Federal Reserve policymakers through the week lowered expectations of an early rate cut. Spot gold rose 0.3% to $2,029.19 per ounce by 10:05 ET (1505 GMT) but was down 1% so far in the week. U.S. gold futures rose 0.5% to $2,030.80. The dollar index (.DXY), opens new tab dipped 0.1% but was up 1% for the week. A stronger dollar makes greenback-priced gold more expensive for foreign currency holders. Over the week, the markets have been speculating about the Federal Reserve’s timing for rate cuts, which has reflected in gold prices, said Bart Melek, head of commodity strategies at TD Securities. Chicago Fed President Austan Goolsbee said on Friday that the Fed needs more inflation data in hand before any rate cut judgment could be made. Atlanta Fed President Raphael Bostic on Thursday said the baseline for cuts to start was in the third quarter. Traders now expect about a 53% chance of a rate cut in March, down from 71% last week, according to CME’s Fed Watch Tool. “The longer-term price outlook is positive for gold,” said independent analyst Ross Norman, adding that gains will be deferred as markets try to get a handle on likely U.S. rate cuts and the possible trajectory of the dollar and gold. Lower interest rates decrease the opportunity cost of holding bullion. On the physical side, gold buying in India was lackluster this week as a correction in local prices failed to attract consumers. Spot silver fell 0.5% to $22.63 per ounce but was down about 2.7% for the week so far. Spot platinum lost 0.3% to $904.26, and palladium was down 0.1% to $937.34.”

On the day gold closed up $7.90 at $2026.50, and silver closed down $0.10 at $22.57.

Platinum closed down $6.00 at $897.30, and palladium closed up $4.90 at $941.80.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage but are fading a bit. Prices are still in a three-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at this week’s high of $2,062.80. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at $2,040.00 and then at $2,050.00. First support is seen at today’s low of $2,022.20 and then at Thursday’s low of $2,007.70. The silver bears have the overall near-term technical advantage. Prices are in a choppy, five-week-old downtrend on the daily bar chart. 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 November low of $22.26. First resistance is seen at $23.11 and then at this week’s high of $23.50. Next support is seen at this week’s low of $22.52 and then at $22.26.”

Posted on January 12, 2024 by Richard

Gold – Political Tension & Safe Haven

Commentary for Friday, Jan 12, 2024 (www.golddealer.com) – Today gold closed up $32.40 at $2046.70, and silver closed up $0.62 at $23.16. The price of gold finished the week with a bang today, touching $2060.00 before settling lower on the day. (Reuters) United States and Britain launched strikes against sites linked to the Houthi movement in Yemen, while Saudi Arabia called for restraint. There are other factors supporting higher gold prices as the chance of an interest rate reduction moves from 70% to 80% according to the CME Fedwatch tool. And typical book squaring as the paper trade closes short positions into this long weekend which creates a short covering rally. A reminder that we will be closed Monday, Jan 15^th for Martin Luther King Day. Banks, the Post Office and commodity markets are closed on this national holiday. Last Friday gold closed at $2042.40 / silver at $23.12 – on the week gold was higher by $4.30 and silver was higher by $0.04. Lots of noise and not much action.

On Monday the price of gold in the domestic US market was weaker but steadied by a dip in the dollar. This “push pull” action is typical these days as gold moved to early lows ($2018.00) quickly followed by a jump to highs on the day ($2034.00) before settling the day in the red.

This trading pattern is not encouraging in that gold moved from highs to lower lows but the fact that prices turned flat around $2025.00 and recovered somewhat is a plus. Traders stepping in to buy the weakness is also a plus. Volume numbers across our trading desk dipped this morning, suggesting a cautious public. But this market never fails to surprise in that Fed Governor Michelle Bowman told CNBC this morning that the “current stance of monetary policy appears to be sufficiently restrictive”. If this Fed Governor is correct, these comments might create the fresh spark gold traders are looking for in a flagging market, threatening support at $2000.00.

FXEmpire (Vladimir Zernov) – Gold Tests Weekly Lows Despite Falling Treasury Yields – “Gold tested new lows despite U.S. dollar’s pullback and falling Treasury yields. The broad pullback in commodity markets served as the key negative catalyst for gold. If gold settles below the support at $2015 – $2025, it will move towards the next support level at $1970 – $1980. Silver managed to rebound from session lows as gold/silver ratio moved towards the 87.50 level. Gold/silver ratio remains close to multi-month highs, and an additional pullback may provide significant support to silver. From the technical point of view, silver is stuck below the resistance at $23.40 – $23.60. A move above $23.50 will push silver towards the next resistance at $25.00 – $25.30. Platinum is under pressure amid a broad pullback in commodity markets. If platinum settles below the $950 level, it will head towards the next support at $925 – $935.”

On the day gold closed down $15.80 at $2026.60, and silver closed unchanged at $23.12.

On Tuesday the price of gold traded on both sides of “unchanged” in the domestic market, but this market feels “heavy”. Technical buying is helping with bullish support, but yesterday’s weakness was enough to discourage fresh physical buying in the short term. The plus here being that paper traders continue to buy weakness. Gold is now trading above its 200 Day Moving Average, which supports the longer-term positive technical outlook. But the cross winds at current prices are strong and easily cap higher prices for our shiny friend. I’m happy that gold remains above $2000.00, but this foothold may be tenuous if inflation does not weaken.

FXEmpire (Christopher Lewis) – Gold Bounces Back a Bit – “We rallied a bit during the trading session on Tuesday in the gold market as we continued to see a lot of noise. I suspect that the 50-day EMA is going to continue to offer a bit of support and we have bounced from there of the last two trading sessions. At this point, I think the $2,000 level is of course going to be important to pay attention to below there as well, as it is not only a large psychological figure, but it’s also an area where we’ve seen a lot of resistance previously. Above, we have the $2075 level offering significant resistance, and therefore, I think we are still very much in a range, but overall, this is a market that I do think favors a buy on the dip approach, as there are a whole litany of reasons to think gold will go higher, not the least of which is going to be geopolitical concerns. As we go into 2024, it’s obvious that there are a lot of things out there that could cause concern. We also have interest rates that are dropping based upon the idea that the Federal Reserve is going to cut multiple times in 2024. So, all things lead to higher pricing before it’s said and done. Looking at this market as a buy on the dip opportunity is probably going to be the way I play it most of the year, but it certainly is right now as traders are just now putting on bigger positions for the year and of course are trying to catch up to the overall trend in and of itself. Once we break above the $2075 level, it’s very possible that we may try to take on the top of that massive candlestick from December 4th. Ultimately, the inherent volatility of gold is showing itself, but I also recognize that this is a market that’s been in an uptrend for multiple reasons. Pay close attention to the 10-year yield in the United States, which can have a major influence, and of course many geopolitical issues at the same time also provide a little bit of support for gold as well.”

On the day gold closed down $0.20 at $2026.40, and silver closed down $0.22 at $22.90.

On Wednesday gold moved between $2036.00 and $2021.00 in the early trade so this looks like a second quiet day after Monday’s weakness. Traders seem content to test this market and see if this drift to lower prices will develop into something substantial. Another day of zero buzz as the market is yawning at current levels waiting for the second shoe to fall. US consumer data due tomorrow may push this market somewhat, but I believe expectations will remain unchanged and this market will settle around current levels, waiting for something more tangible from a Federal Reserve which may still be in transition mode.

Reuters (Anushree Ashish Mukherjee) – Gold treads water as traders gear up for US inflation print – “Gold steadied on Wednesday as traders kept their eyes glued to U.S. inflation data that could shape the Federal Reserve’s outlook on interest rate cuts this year, although a softer dollar kept a floor under prices. Cooler-than-expected inflation data will give more reason for the Fed to cut rates this year, which should move gold higher, said Bob Haberkorn, senior market strategist at RJO Futures. “Right now I expect kind of a quiet session, a little bit of back and forth, but (gold) remaining positive on the day ahead of tomorrow’s data.” U.S. consumer inflation data is due on Thursday. Economists polled by Reuters see year-on-year inflation at 3.2% in December, but think core inflation likely fell to 3.8%, its lowest since mid-2021. A New York Federal Reserve report revealed that consumers expect a decline in inflation, while Fed Governor Michelle Bowman on Monday stated that the U.S. central bank’s monetary policy seems “sufficiently restrictive”. Lower interest rates reduce the opportunity cost of investing in non-yielding bullion. “If markets have to dilute bets for a March rate cut, spot gold may see a brief stint back in the sub-$2k domain,” said Han Tan, chief market analyst at Exinity Group. “Still, bullion bulls would have no qualms restoring spot gold back above that psychologically important mark once markets get a firmer grasp on the Fed’s policy pivot.” The dollar index (.DXY) ticked down about 0.2%, making greenback-priced bullion more affordable for buyers holding other currencies. In other metals, spot silver fell 0.6% to $22.86 per ounce, while platinum lost more than 1% to $920.13, and palladium rose 1.1% to $989.38.”

On the day gold closed down $4.70 at $2021.70, and silver closed down $0.02 at $22.88.

On Thursday gold moved higher on the open ($2038.00) but quickly lost gains moving to lows on the day ($2015.00) before settling mildly in the red for the day. This is another example of mixed short-term signals producing a choppy trade. But the inflation numbers may not be strong enough to significantly diminish the expectations of an interest rate reduction in March. My bet is that in a few days this over the shoulder December snapshot will be forgotten. It is worth noting that the December inflation rate of 3.35% was in fact 6.41% a year earlier, so higher interest rates are taming the inflation dragon. Whether this will produce the expected interest rate cut in March remains to be seen, so keep your options open.

Reuters – US consumer prices rise more than expected in December – “U.S. consumer prices increased more than expected in December as Americans paid more for shelter and healthcare, suggesting that it was probably too early for the Federal Reserve to start cutting interest rates. Expectations for a rate cut in March were also tempered by other data on Thursday showing the labor market remaining tight at the turn of the year, with the number of people filing new claims for unemployment benefits unexpectedly falling last week. The reports followed news last Friday that the economy added 216,000 jobs in November and annual wage growth picking up.” “Overall, today’s inflation data makes a March rate cut seem like a less likely scenario,” said Charlie Ripley, senior investment strategist at Allianz Investment Management in Minneapolis.”

Reuters (Anushree Ashish Mukherjee) – Gold pares gains after US inflation data reduces rate cut bets – “Gold prices pared gains on Thursday after higher-than-expected U.S. consumer prices data for December drove concerns that interest rates could stay restrictive for longer, boosting the dollar and Treasury yields. The dollar index (.DXY) and Treasury yields extended gains after data showed U.S. consumer prices rose more than expected in December, which could delay a much anticipated interest rate cut in March from the Federal Reserve. “A modestly more robust CPI report than desired should keep a lid on gold for the session as traders continue to cling to the idea of a March rate cut. Gold is just grudgingly lower and (market) hopes PPI will show softer results tomorrow,” said Tai Wong, a New York-based independent metals.

On the day gold closed down $7.40 at $2014.30, and silver closed down $0.34 at $22.54.

On Friday gold became another reminder of the problematic Middle East. The United States and Britain launched airstrikes in Yemen. A big deal for sure but only a token consideration when compared to crude oil delivery which could be interrupted because of the narrow waterways. This second point has the world wringing their hands and subsequently stoking safe haven demand. My bet is that this problem will correct itself over the long weekend. Gold prices will likely settle back into its current holding pattern around $2000.00. The first FOMC meeting this year (January 30^th and 31^st)will only be a review of its current policy. The second meeting (March 19^th and 20^th) is more important. Analysts believe the Fed will commit itself concerning the interest rate problem at this March meeting. A continued dovish approach would likely produce higher gold prices, a turn to the hawkish side would likely push gold prices lower.

Reuters (Anushree Ashish Mukherjee) – Gold shines from Middle East tensions, Fed rate cut bets – “Gold prices rose more than 1% to a one-week high on Friday as an escalation in Middle East conflict fueled safe-haven buying, and a softer U.S. producer price index data boosted bets that the Federal Reserve might cut rates sooner. The United States and Britain launched strikes against sites linked to the Houthi movement in Yemen, while Saudi Arabia called for restraint. A rise in geopolitical risk is pushing gold prices up, and at the same time the U.S. central bank may be getting ready to start moderating its restrictive monetary policy, also a good environment for gold, said Bart Melek, head of commodity strategies at TD Securities. The PPI data came in negative, which was also a significant catalyst for prices, Melek added. U.S. producer prices unexpectedly fell in December amid a decline in the cost of goods, while prices for services were unchanged, which bodes well for lower inflation in the months ahead. However, data on Thursday showed U.S. consumer prices rose more than expected in December. Traders see an 80% probability of a rate cut in March, according to the CME Fedwatch tool, compared with about a 70% chance seen before the PPI report. Considered a safe haven, gold tends to gain during times of uncertainty, while lower rates also lift the appeal of the zero-yield asset. On the physical front, gold demand in most of the top Asian hubs firmed this week as the approaching Chinese New Year encouraged buyers in China and Singapore. Spot silver rose 2.7% to $23.37 per ounce, platinum gained nearly 2% to $932.83, and palladium was up 0.8% to $995.89.”

On the day gold closed up $32.40 at $2046.70, and silver closed up $0.62 at $23.16.

Platinum closed up $1.10 at $910.10, and palladium closed down $1.90 at $972.40.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage and regained some momentum today. Prices are in a three-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March 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 $2,058.70 and then at $2,071.10. First support is seen at $2,040.00 and then at the overnight low of $2,033.10. The silver bears have the overall near-term technical advantage. Prices are in a choppy, four-week-old downtrend on the daily bar chart. 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 November low of $22.26. First resistance is seen at this week’s high of $23.565 and then at $23.715. Next support is seen at this week’s low of $22.63 and at the November low of $22.26.”

Posted on January 5, 2024 by Richard

Gold – Interest Rates Rule

Commentary for Friday, Jan 5, 2024 (www.golddealer.com) – Today gold closed up $0.10 at $2042.40, and silver closed up $0.13 at $23.12. As the New Year develops, interest rates are still the determining factor controlling the price of gold. Commentators are split as to whether the bullish trade got carried away with the notion that the FOMC would remain dovish after the Fed’s recent “pause”. Our Wednesday post this week outlines the reasoning. The Fed may know what it is doing, but they are stingy with the details. This makes investment planning for anything other than the short term a risky venture. Keep your options open, the “key” here is to remain nimble, looking for shifting opportunities which come and go quickly. Today’s price swing between $2027.00 and $2061.00 suggests a jittery trade. Still, gold finished lower on the week – not a plus going into the weekend. Last Friday gold closed at $2062.40 / silver at $23.85 – on the week gold was down $20.00 and silver was down $0.73.

Our offices were closed on Monday (Jan 1^st) for the New Year.

On Tuesday the price of gold threatened $2070.00 in the early morning, but this modest rally reversed itself, moving to lows on the day, as traders reacted to a stronger dollar. Gold recovered to around unchanged on the day, but it is not surprising to see that a stronger dollar can sidestep bullish sentiment. Overhead resistance for gold in the present pricing range also remains a formidable adversary. Still gold’s strong technical picture and the possibility of a continued dovish Fed interest rate policy in 2024 suggests higher prices may be in the offing.

Reuters (Sherin Varghese) – Gold starts 2024 brightly on Fed rate cut bets, Red Sea worries – “Gold prices made a positive start to 2024, boosted on Tuesday by expectations the U.S. Federal Reserve will cut interest rates this year and concerns over attacks on shipping in the Red Sea. “I think there is a possibility of escalation in the Red Sea and that probably could push gold prices even higher,” said Daniel Pavilonis, senior market strategist at RJO Futures. Gold prices surged 13% in 2023 in their first annual rise since 2020 and are forecast to reach record highs in 2024, with lower interest rates reducing the opportunity cost of holding non-yielding bullion. “As we saw how much of a lift the price of gold obtained from expectations of rate cuts in 2023, we could well see significant gains in 2024 when central banks actually start loosening their polices and yields move further lower,” said Fawad Razaqzada, market analyst at City Index. “Inflationary pressures are likely to ease further across the world, leading to the start of the great rate-cutting cycle,” he said, adding that the actual timing and extent of the rate cuts will depend on incoming data. This week, market attention is on the minutes from the last Fed meeting due on Thursday. Data on U.S. job openings and December non-farm payrolls, both due on Friday, will also be closely followed. Elsewhere, spot silver rose 0.8% to $23.9526 per ounce while palladium fell 0.3% to $1,095.55. Platinum edged down 0.1% to $986.44 per ounce. “The outlook for palladium demand partly hinges on the pace of the energy transition, particularly growth in EV demand, as higher battery electric vehicle growth is negative for palladium demand,” HSBC said in a note.”

On the day gold closed up $2.00 at $2064.40, and silver closed down $0.12 at $23.73.

On Wednesday gold prices dipped on the open moving to daily lows of $2030.00 likely on the combination of two factors. The dollar remains strong, the Dollar Index moved from 102.10 through 102.75 in early trading which is counterintuitive if traders really believe that the Fed will lower interest rates in 2024. Still, “lowering” interest rates is a moving target depending on inflation. Will they “lower” early or “later” in the year? Or change their mind and stand pat?

Today’s drop in the price of gold could reflect a simple round of profit taking. The thinking here being that the combination of overhead resistance and the fact that gold is higher by $200.00 year over year sent the bulls to the sidelines, waiting for Fed confirmation relative to interest rates in 2024. There could also be some squaring of paper trading accounts in the new year.

Still this pricing picture should be discouraging to the bullish scenario because prices have been defensive these last 5 trading days, moving from $2080.00 highs through lows approaching $2030.00. Which does not seem to discourage the public, at least across our trading desk. The physical market is getting back into the game after the holidays. Yesterday we saw a large increase in both the buying and selling of bullion products, including IRA accounts.

Today’s dip in prices is not a big deal, the metals continue to trend lower, waiting for some finality with the interest rate question. The dip would be more compelling if traders did not buy this latest weakness. Gold would again be threatening the important $2000.00 support. Perhaps suggesting that all the higher price expectations this year based on lower interest rates have been exaggerated. Today’s comments by Richmond Fed President Fred Barkin are also worth noting – “Potential rate hike remains on the table”. Keeping their options open does not help the bulls.

On the day gold closed down $30.20 at $2034.20, and silver closed down $0.78 at $22.95.

On Thursday gold pushed to daily highs ($2050.00) before turning choppy with a bit of turbulence at these higher levels, before dipping to daily lows ($2030.00) and rebounding nicely, providing mild bullish support as gold finished the day mildly in the green. The weakening of the US dollar is creating this typical back and forth “chop”. Gold ignored today’s jobs report but will get another chance to ponder the release of December’s numbers this Friday. Gary Wagner (Kitco) – FOMC minutes rattle investors about the timing of first rate cut – “The primary component taking both gold and silver lower was today’s release of last month’s FOMC minutes. At issue was a lack of clarity concerning the timing of rate cuts, specifically when the Federal Reserve will implement its first rate cut of the year. Clearly, market participants and investors have been unrealistically optimistic. The consensus amongst analysts and economists believe that the Fed will implement its first rate cut as early as the second quarter of the year, and possibly as late as mid-year. This differs greatly from traders who according to the CME’s FedWatch tool believed that there is a 64.8% probability that the Federal Reserve will initiate its first quarter percent rate cut at the March FOMC meeting. The minutes released contained no insights as to the timing of upcoming rate cuts this year and tempered optimism with “an unusually elevated degree of uncertainty” as it pertains to the monetary policy path. The minutes also left the door open for further interest rate hikes if the data necessitates it. That being said, they continue to underscore their confidence that inflation is coming under control and “upside risks” have diminished. The minutes addressed concern that “overly restrictive” monetary policy might damage the economy. Recent data confirms that assumption, as the December ISM figures revealed an additional month in which US manufacturing activity has contracted. Currently, the important nonfarm payrolls report to be released on Friday.”

FXEmpire (Christopher Lewis) – Gold Markets do Very Little on Thursday – “You can see that the gold market has been somewhat quiet during the early hours on Thursday as we are trying to sort out whether or not there is enough support underneath to keep the gold market afloat. Another thing to pay close attention to is the fact that Friday is the non-farm payroll announcement and therefore Thursday probably more or less is a day that is going to be quiet by default. The non-farm payroll announcement will have a major influence on the bond market, which in turn could move the gold market as falling interest rates could be very positive for gold and of course vice versa. That being said, there are plenty of geopolitical concerns out there that could lift gold as well. So, I still believe that there are plenty of buyers underneath. In fact, I think the 50 day EMA and the $2,000 level just below there will continue to be a major floor in the market. On some type of pullback and a bounce, I am willing to start to build up a bit of a position, but I also recognize that the next 24 hours could be very noisy and therefore, it might be a bit difficult to read too much into the market, but liquidity should start to pick up on. By Monday I think once we get to that point where gold will show its true colors. If we were to break down below $2000 that would be a very negative sign. On the other hand, if we turn around and break above the $2075 level, then the market could really start to take off to the upside and we could continue the overall uptrend. In that environment, I suspect that it will be a breakdown of the US dollar that leads the market, not necessarily some type of major desire to own gold. Furthermore, you would also need to get paid to hold on to gold, so momentum is very important. Remember, gold does not pay any type of yield, so traders tend to prefer yield due to the fact that they don’t have to pay for storage. This is the one downfall of gold but ultimately with everything that’s going on in the world, it’s not a bad idea to own some.”

On the day gold closed up $8.10 at $2042.30, and silver closed up $0.04 at $22.99.

On Friday gold closed almost unchanged and was only marginally down on the week. Traders will carefully watch the CME FedWatch which today figures a 66% chance of a rate cut in March. Underline the word “carefully” because the same source offered a 90% chance a week earlier, a more bullish suggestion. In other words, this bullish balloon is losing altitude.

On the plus side for the bulls: The dollar is moving lower. The Fed may still lower interest rates in March. And even with the daily ruckus the price of gold remains above $2000.00. On the minus side: This market has believed the Fed will lower interest rates in March for some time and if the FOMC does not follow through gold may suffer. The price of gold at recent highs presents tough overhead resistance. We are seeing an increase in buying and selling of large gold positions across our trading desk which may prompt further selling if prices fade.

Reuters (Hissay Ongmu Bhutia) – Gold under pressure from stronger US dollar, Treasury yields – “Gold prices slipped on Friday and were on track for their first weekly fall in four, weighed down by a stronger dollar and higher bond yields, while investors keenly awaited U.S. non-farm payrolls data due later in the day. “Gold is currently trading down less than 1% for the week as stronger than expected U.S. economic data drove bond yields up and U.S. rate cut expectations down,” said Ole Hansen, Saxo Bank’s head of commodity strategy. “A stronger-than-expected U.S. (payrolls) report may challenge gold’s resolve given its potential further dampening impact on future rate cut expectations.” Data on Thursday showed that U.S. private employers hired more workers than expected in December, pointing to persistent strength in the labor market. Benchmark U.S. 10-year Treasury yields hit a three-week peak, while the dollar rose 0.3% and was heading for its biggest weekly gain since May, making gold more expensive for other currency holders. Focus now shifts to the U.S. non-farm payrolls report due at 1330 GMT for more clarity on the Federal Reserve’s rate path outlook. Economists polled by Reuters forecast that 170,000 jobs were created in December, fewer than the 199,000 in November. Traders are now pricing in about a 66% chance of a rate cut from the Fed at its March 20 policy meeting, compared with a 90% chance a week ago, according to the CME FedWatch tool. Elsewhere, spot silver was down 0.1% to $22.96 per ounce, while platinum slipped about 1% to $947.77. Palladium fell 1.3% to $1,023.89 per ounce in its ninth consecutive session of decline. “A combination of healthy availability of inventory, growing short positions, declining market share of internal combustion engines and palladium substitution have weighed on prices, we expect these trends to set the tone of trading in 2024,” (Standard Chartered analyst Suki Cooper).

On the day gold closed up $0.10 at $2042.40, and silver closed up $0.13 at $23.12.

Platinum closed up $5.40 at $959.30, and palladium closed down $0.70 at $1032.30.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls still have the overall near-term technical advantage but are fading a bit. Prices are still in a three-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March 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 Thursday’s high of $2,058.10 and then at Wednesday’s high of $2,074.30. First support is seen at the overnight low of $2,030.80 and then at $2,025.00. The silver bears have the overall near-term technical advantage. A choppy, three-month-old uptrend on the daily bar chart has been negated. 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 November low of $22.26. First resistance is seen at the overnight high of $23.38 and then at $23.75. Next support is seen at $23.00 and then at this week’s low of $22.88.”

Posted on December 29, 2023 by Richard

Gold – Higher Price Expectations

Commentary for Friday, Dec 29, 2023 (www.golddealer.com) – Today gold closed down $11.50 at $2062.40, and silver closed down $0.28 at $23.85. Going into the long New Year’s weekend gold continued to settle, trading between $2072.00 and $2058.00 with a mild downward bias. The end of the year is a typically quiet time for the metals as gold finishes strong and the bulls expect higher prices in 2024. When everyone is on the same “higher price” page, my contrarian self gets stronger. In this case, however, the next pivotal move will come from the Fed in March, so enjoy the ride. We are closed this coming Jan 1^st (Monday). Wishing you all a happy and healthy New Year! Last Friday gold closed at $2057.10 / silver at $24.29 – on the week gold was higher by $5.30 and silver was down by $0.44.

We were closed on Monday and Tuesday of this week for the Christmas holiday.

On Wednesday the price of gold was firm, moving between $2066.00 and $2082.00, reflecting rising bullish sentiment that the Fed will continue its recent turn to the dovish side of interest rate policy. This “assumption” by the bulls remains tenuous in my mind but has gathered steam and for now “higher gold” appears to be the working model. From my standpoint Powell has obviously turned dovish in the short term but left his options open for the longer term. Any changes in Fed policy between now and March of 2024 will weigh, positively or negatively, on the price of gold. Keeping your options open still makes sense.

FxEmpire (James Hyerczyk) – Gold Prices Forecast: Economic, Geopolitical Factors Bolster XAU/USD’s Appeal – “While spot gold experienced a marginal decline early Wednesday, it remains close to a two-week high. In contrast, gold futures have risen, putting them in a position to post a strong annual gain. This performance reflects gold’s enduring appeal in uncertain times. Anticipated U.S. interest rate cuts have strongly supported gold prices. This is evident in the inverse relationship between U.S. Treasury yields and gold prices. Additionally, recent U.S. inflation data and its influence on the Federal Open Market Committee (FOMC) policy have been pivotal. The dollar index is hovering near a five-month low, marking its worst yearly performance since 2020. Concurrently, the Euro is strengthening against the dollar. This decline in the dollar index, coupled with market anticipations of Federal Reserve rate cuts, significantly impacts gold prices. Middle East tensions, particularly the Israel-Hamas conflict and Houthi attacks, have disrupted global trade, enhancing gold’s status as a safe haven. Amidst these geopolitical conflicts and economic uncertainties, gold prices have risen, underscoring its role as a stable investment. Considering the blend of economic data, currency market trends, and Middle East tensions, the short-term outlook for gold remains bullish. The anticipation of U.S. rate cuts and ongoing global uncertainties continue to position gold as an attractive asset for investors. The current price of Gold (XAU/USD) at 2067.90 is above both the 200-day and 50-day moving averages, indicating a bullish trend. It has surpassed the minor resistance level of 2067.00, which could now act as a new support level. The next key resistance is at 2149.00. Being above the main support level of 1987.00 reinforces this bullish sentiment. The market’s position above both key moving averages and its breakthrough past minor resistance suggest buyer confidence and potential for further upward movement, provided it stays above these crucial levels.”

On the day gold closed up $23.70 at $2081.90, and silver closed up $0.24 at $24.38.

On Thursday gold prices settled at these lofty levels as traders stepped back and assessed a slowing paper trade influenced by the Christmas holiday. Across our trading desk this was the first day that buyers used real cash to purchase bullion. For the previous week our customers sold their bullion for cash payments. This is not a watershed moment, but it may portend a coming shift in the public’s perception as it relates to the price of gold. Being another short week because of the New Year I would look for a narrow pricing range, still supported by the possibility of lower interest rates next year. Many traders remain on holiday through the New Year which can create a rather ho-hum kind of market. And the price of gold cannot be considered cheap. Our shiny friend this past month is higher by $40.00 and is higher by $275.00 this past year. Which opens the door to profit taking if the Fed talks hawkish between now and March.

Reuters (Anjana Anil) – Gold steadies after hitting three-week high as US yields tick up – “Gold prices steadied on Thursday, after hitting a more than three-week high earlier, as an uptick in U.S. bond yields undermined the support from expectations of rate cuts by the Federal Reserve early next year. “There’s not a lot of trading volume right now in any of the markets so that usually causes smaller moves, especially when we’re approaching a big number like an all-time high,” said Chris Gaffney, president of world markets at EverBank. The dollar index hovered near a five-month low and was heading for a yearly decline. Benchmark 10-year bond yields picked up, but were also close to their lowest levels since July. The number of Americans filing initial claims for unemployment benefits rose last week, indicating the labor market continues to cool in the year’s fourth quarter. Investors are betting on an 87% chance of the Fed cutting rates in March, according to the CME FedWatch tool. Lower interest rates decrease the opportunity cost of holding non-yielding bullion. “We look for higher gold prices over the next 12 months, with weaker economic data and lower inflation in the U.S. forcing the Fed to cut rates,” UBS analyst Giovanni Staunovo said. On the physical front, China’s net gold imports via Hong Kong rose by about 37% in November from the previous month, data showed. Spot silver fell 0.6% to $24.094 per ounce but was poised to end the year about 1% higher. Platinum gained 0.3% to a more than six-month high of $999.33 while palladium fell 1.2% to $1,139.85. Both autocatalytic metals were on track to log yearly declines.”

On the day gold closed down $8.00 at $2073.90, and silver closed down $0.25 at $24.13.

On Friday the gold bulls continue to enjoy rising positive sentiment, even as the price of gold today closed mildly in the red. If you are looking for a wild card which may provide pricing insight, consider the premium charged on America’s favorite bullion coin, the US Eagle.

During the Covid scare premiums were sky high, roughly twice as high as they are today. The reasoning being that premiums reflect the public’s fear factor. High premiums usually point to a rising fear factor, lower premiums suggest that the public is becoming less worried about safe haven demand or economic breakdown.

Today the premium changed for US gold bullion eagles is about half of its Covid all-time high. At the same time, it is not as low as it was during the pre-covid days. Which indicates the public is less anxious but still reasonably worried and wants to cover all bets in case the current FOMC plan for a soft economic landing is abandoned. Tough job but so far so good.

Reuters (Deep Vakil) – Gold to enter 2024 with sights set on record highs – “Gold investors anticipate record high prices next year, when the fundamentals of a dovish pivot in U.S. interest rates, continued geopolitical risk, and central bank buying are expected to support the market after a volatile 2023. Spot gold is on track to post a 13% annual rise in 2023, its best year since 2020, trading around $2,060 per ounce. “Following on from a surprisingly robust performance in 2023 we see further price gains in 2024, driven by a trifecta of momentum chasing hedge funds, central banks continuing to buy physical gold at a firm pace, and not least renewed demand from ETF investors,” Saxo Bank’s Ole Hansen said. On Dec. 4, gold hit a record high of $2,135.40 on bets of U.S. monetary policy easing in early 2024 after a perceived dovish tilt from Federal Reserve Chair Jerome Powell, surpassing the previous record scaled in 2020. The precious metal almost made uncharted territory in May this year as a U.S. regional banking crisis took hold. By October, it had retreated close to $1,800 an ounce until safe-haven demand triggered by the Israel-Hamas conflict spurred another rally. Investors returned to the popular SPDR Gold Shares exchange-traded fund, which posted net inflows of over $1 billion in November. A Reuters poll in October forecast prices will average $1,986.50 in 2024. They have averaged above $1,950 so far this year, above any previous yearly average price. J.P. Morgan sees “a breakout rally” for gold in mid-2024, with a targeted peak of $2,300 on expected rate cuts. UBS forecasts a record of $2,150 by end-2024 if cuts materialize. The World Gold Council, in its 2024 outlook, projected that a drop of about 40 to 50 basis points in longer maturity yields, following 75-100 points of rate cuts, could translate into a 4% gain for gold. The conflict in the Middle East, uncertainty from elections in major economies, and central bank purchases led by China will also boost safe-haven bullion’s appeal next year, analysts predicted. But “gold could be forced to unwind some of this year’s gains if an inflation resurgence forces the Fed to abandon plans for a policy pivot in 2024,” said Han Tan, chief market analyst at Exinity. Inflation cooling faster than the Fed trims rates may also slow the economy and dent retail buying. Heraeus Metals expects higher gold jewelry demand in top consumer China this year, with more support possible in 2024 from stimulus measures. By contrast, silver looks set to fall 1% in 2023, trading just under $24 an ounce. It will trend towards $26 an ounce next year, benefiting from improved industrial demand, according to TD Securities. On track to fall 6% in 2023, platinum will hold a range between $800 and $1,100 an ounce in 2024, Heraeus estimates. The impact of the energy transition was demonstrated as auto catalyst – dependent palladium fell by more than a third this year, the market’s worst performance since 2008. Palladium, which fell below $1,000 an ounce in November – for the first time in five years – before recovering, faces surpluses as electric vehicles become more popular. Bank of America expects palladium to average $750 per ounce in 2024 subject to any major supply cuts.”

On the day gold closed down $11.50 at $2062.40, and silver closed down $0.28 at $23.85.

Platinum closed down $12.40 at $995.00, and palladium closed down $29.80 at $1104.00.

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

Posted on December 22, 2023 by Richard

Gold – An Optimistic 2024

Commentary for Friday, Dec 22, 2023 (www.golddealer.com) – Today gold closed up $18.00 at $2057.10, and silver closed down $0.02 at $24.29. Going into the holiday season the gold bulls should be happy enough in that prices this week have moved higher 4 days out of 5. This is not a Christmas rally for our shiny friend, the number of traders that believe the Fed will not raise interest rates next year is growing, and they believe this may portend higher prices for gold in 2024. Reuters however throws up a cautionary flag, “On the physical front, gold demand in India fell sharply due to high domestic prices.” The World Gold Council notes that China and India are the two largest consumers of gold bullion, so this lagging demand is a good reminder that relative price always matters. Still, gold’s 200 Day Moving Average ($2011.00) suggests it is not moving considerably lower anytime soon, and the corollary may be that further price upside is in the cards for 2024. Last Friday gold closed at $2021.10 / silver at $23.87 – on the week gold was higher by $36.00 and silver was higher by $0.42. If you are looking for an unrelated wild card that may change gold’s pricing, consider the presidential election. And let me offer a quote from Clarence Darrow, an early 20^th century attorney who gained prominence in the sensational trials of Leopold and Loeb and Scopes. “When I was a boy, I was told that anybody could become President; I’m beginning to believe it.” We will be closed Dec 25^th (Monday) and Dec 26^th (Tuesday) for Christmas. And Jan 1^st (Monday) for New Years.

On Monday the price of gold rallied in early trading (2034.00). It was also subject to a profit taking round ($2025.00) and a small upward adjustment before settling on the day. Silver followed suit, pushing to daily highs ($23.86) before traders sold the rally and it closed almost unchanged on the day. Gold and silver were helped by a weaker dollar as the Dollar Index has moved from 104.00 through 102.00 since last Tuesday. On this first day of the trading week gold and silver are holding up rather well considering the possible crosswinds and I expect a quiet market throughout the holidays in the absence of any big surprises. Next year this quiet assessment will be revised depending on the latest FOMC guess interest rate policy.

FxEmpire (Vladimir Zernov) – Gold Gains Ground at The Start of The Week – “Gold continues its attempts to settle above the resistance at $2015 – $2025 despite rising Treasury yields. Traders remain focused on dovish Fed, which is bullish for gold. If gold settles above $2025, it will head towards the next resistance at $2065 – $2075. Silver moved lower as gold/silver ratio settled back above the 85.00 level. The nearest support for silver is located in the $23.40 – $23.60 range. A move below $23.40 will push silver towards the support at $22.25 – $22.50. Platinum gains ground as traders react to the continuation of the strong rally in palladium markets. RSI remains in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.”

On the day gold closed up $5.20 at $2026.30, and silver closed down $0.04 at $23.83.

On Tuesday the price of gold remained choppy between $2039.00 and $2047.00 so the bullish sentiment is not hiding under the bed. The fact that traders are buying the dips also bodes well for the gold trade, especially through the holidays. In today’s trade the price of gold began to move sideways around $2045.00 so overhead resistance caps prices to some degree.

Still, the price of gold this past month is higher by $57.00, and this past year gold is higher by $250.00. This may suggest that any fresh bearish problems might prompt an accelerated downward draft as traders lock in profits and move to the sidelines. Silver prices seem a bit lazy trading on both sides of $24.00. Not too hot and not too cold as they say but this market offers long-term investor potential provided by still developing “green programs”.

FXEmpire (Christoper Lewis) – Silver Price Forecast – Silver Stretches Toward The $24 Level – “Silver has rallied slightly during the trading session on Tuesday to reach the $24 level, an area that of course a lot of people will pay close attention to as it is a large, round, psychologically significant figure, and an area where we have seen a little bit of resistance, but we have also broken through their multiple times. At this point, if we can break above the $24.25 level, then silver could really start to take off. That being said, remember that we have seen a massive repudiation of buying at the $26 level, which will of course come into the picture, as a certain amount of “market memory” will come into the picture, showing that the market will almost certainly react in this area. I think there’s a situation where every time we dip, there should be buyers willing to get involved, as they can pick up “cheap silver.” Remember that silver is highly sensitive to the interest rate situation in the bond markets, most specifically the US. The 10-year yield is one that a lot of people pay close attention to, and if those yields continue to drop, it’s very likely that silver will continue to see a lot of upward momentum. After all, traders will do what they can to protect wealth as lower interest rates make bonds less valuable, and therefore precious metal suddenly get a little bit of a 2nd look. Looking at the industrial demand side of silver, a lot of people put heavy weight on the idea of new “green technology” demand coming into the picture to put silver much more in demand. Furthermore, we have to ask whether or not the market is going to continue to see other industrial demand, which of course silver has plenty of. In general, this is a situation where I think you’re looking for dips as buying opportunities with the 200-Day EMA as support, preceded by the 50-Day EMA. I have no interest in shorting silver anytime soon, but I do recognize that as we head into the holiday season, liquidity could cause a lot of volatility.”

On the day gold closed up $12.10 at $2038.40, and silver closed up $0.21 at $24.04.

On Wednesday morning the price of gold remained choppy between $2040.00 and $2030.00. With such a small price spread I would suggest this has turned into a quiet trade, in the holiday season mode. I would not be surprised to see little pricing action through the New Year, but analysts expect this static situation to shift gears as early as March. This remains to be seen but a dovish turn would be bullish for the price of gold, a hawkish turn would be bearish. The price of silver, in my opinion, has the opportunity to decouple from gold next year and proves to be the better of the two investment choices if patience is one of your virtues.

FXEmpire (Christopher Lewis) – Gold Markets Continue to Consolidate – ‘The gold markets pulled back slightly during the trading session on Wednesday, as the $2050 level has offered a bit of resistance, and therefore I think it will be interesting to see if we can break above there. That being said, the market is going to continue to go back and forth between the $2000 level underneath, and the $2050 level above. The 50-Day EMA sits below the $2000 level, which would be a hard “floor in the market” currently. All things being equal, the market is likely to continue to see upward pressure, and I do think that the $2050 level continues to be resistance, but ultimately, I think we have a situation where the liquidity starts to pull out of the market, therefore I think you get a situation where we are more likely than not going to stay in this overall range. That being said, the market is likely to continue to see a lot of noisy behavior, but I do think that overall, the buyers are going to be driving the market. At this point, I am a buyer on dips, and therefore I will look for certain types of short-term drops that I can take advantage of. The $2000 level underneath should be a major support level; therefore, I think we need to pay close attention to it. The 50-Day EMA racing there also brings a lot of people into the market due to algorithms, and therefore I think it’s a situation where the market will continue to see plenty of support. With the market focusing on interest rates, I do think it makes quite a bit of sense that we would see the gold markets continue to move up and down based on that, especially considering that gold tends to do fairly well when interest rates drop, something that we should see during the course of 2024. With that being the case, I think you get a situation where eventually, we break toward those highs that we made a while ago on that huge wipeout candlestick. In general, this is a scenario where I think you cannot be a seller, at least not until we break down below the 50-Day EMA.”

On the day gold closed down $3.90 at $2034.50, and silver closed up $0.31 at $24.35.

On Thursday gold continued its quiet holiday trading mood moving between $2036.00 and $2046.00 and the weaker dollar helped it finish mildly in the green for the day. If economic data does not fade into the first quarter of next year the scenario of possible lower interest rates will likely continue to stoke higher prices in gold. Our walk-in trade at the store has typically slowed as folks embrace the holiday season. The weather continues to be cloudy and rainy in Los Angeles and it is another blessing that Rudolph is guiding Santa’s sleigh!

Reuters (Sherin Elizabeth Varghese) – Gold extends gains after US data spurs Fed rate-cut prospects – “Gold prices gained on Thursday as U.S. Treasury yields retreated after economic data fueled expectations that the Federal Reserve would likely cut interest rates next year. Data showed U.S. gross domestic product increased at a 4.9% annualized rate last quarter, revised down from the previously reported 5.2% pace, while weekly jobless claims increased slightly. “GDP data came in a bit soft and gold charged up. Market is craving the burgeoning Fed pivot,” said Tai Wong, a New York-based independent metals trader. The market expects an 85% chance of a Fed rate cut by March, compared with 79% before the data, according to the CME FedWatch tool. Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar and bond yields. Benchmark U.S. 10-year yields hit a near five-month low. The Fed’s dovish stance has caused markets to price in several rate cuts in 2024. However, some Fed officials have spoken out against imminent rate cuts. Market focus has now shifted to the U.S. core personal consumption expenditure (PCE) report on Friday. “We do believe that gold will continue to maintain price levels above $2,000 and these expectations we have of lowering inflationary pressures will continue to foster the sideways to higher movement in gold,” said David Meger, director of metals trading at High Ridge Futures. In other metals, spot silver gained 0.9% to $24.34 per ounce, while platinum edged down 0.4% to $954.79 and palladium fell 0.3% to $1,192.71. “The fundamental backdrop is stronger for platinum and it should continue to outperform palladium going forward,” BofA said in a research note dated Wednesday. BofA expects rising palladium surpluses under its base case next year, with a possibility of prices falling to a low of $500 per ounce if there are no supply cuts.”

On the day gold closed up $4.60 at $2039.10, and silver closed down $0.04 at $24.31.

On Friday the price of gold edged higher, making its second attempt this month to challenge $2070.00. While the technical guys may be expecting even higher prices next year, I would suggest caution. You could be looking at the early signs of a tired bull market, and the beginning of solid overheard resistance which could drag on for years.

An optimistic view for gold pricing in 2024 is straightforward. Cautious investors are not sure what the Fed has in mind and will consider options. The fact that the physical gold bullion market across our trading desk remains a net buyer at these higher prices supports this conclusion. Also note that a guaranteed US 5% interest rate through 2024 is a safe bet – while these turbulent markets sort themselves out you can relax and tend to less volatile issues.

Reuters (Serin Varghese)) – Gold gains 1% as rising Fed rate cut bets boost appeal – “Gold climbed 1% to a near three-week peak on Friday as the dollar and U.S. Treasury yields slipped on rising expectations that the Federal Reserve will cut interest rates early next year. “Precious metals, including gold, are being driven higher by very aggressive rate cut expectations with the market pricing in a Fed cut in March and a total of 150 bps in 2024,” said Tai Wong, a New York-based independent metals trader. “It’s priced for perfection but the market usually discounts too zealously.” Traders on Friday stuck to the view that the U.S. central bank will start cutting rates in March after government data showed price pressures continued to cool last month. Annual U.S. inflation slowed further below 3% in November and underlying price pressures continued to abate. The dollar index (.DXY) traded near a five-month low, making gold more appealing to foreign buyers. The benchmark 10-year bond yields were close to their weakest level since July. Gold will continue to be helped by weaker Treasury yields and the U.S. dollar index and concerns about a slowdown in the economy, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “The current technical breakout could really push prices up to that $2,100 level. It could retest those recent contract highs.” On the physical front, gold demand in India fell sharply due to high domestic prices.”

On the day gold closed up $18.00 at $2057.10, and silver closed down $0.02 at $24.29.

Platinum closed up $11.90 at $979.50, and palladium closed down $4.50 at $1212.20.

Posted on December 15, 2023 by Richard

Gold – Terminal Interest Rate

Commentary for Friday, Dec 15, 2023 (www.golddealer.com) – Today gold closed down $9.10 at $2021.10, and silver closed down $0.23 at $23.87. On Wednesday Chief Powell created a thunderclap by claiming the latest Consumer Price Index and Producer Price Index suggest that a terminal interest rate has been reached. Jerome then put some icing on the cake by saying that the FOMC expects to cut rates in 2024. Keep in mind, however, that the Chief also said that declaring victory over the evil inflation demon is premature, suggesting that changes to this new dovish policy are still very much on the table. Last Friday gold closed at $1998.30 / silver at $22.97 – on the week gold was up $22.80 and silver was up $0.90. We will be closed Dec 25^th (Monday) and Dec 26^th (Tuesday) for Christmas. And Jan 1^st (Monday) for New Years.

On Monday my last week’s optimism about gold holding the upper end of its recent trading range seems misplaced as our shiny friend moved to three-week lows. Adding insult to injury typical bargain hunting after last Friday’s big drop was non-existent while technical selling always increases this typical “momentum” pile on. Still, there are many factors outside the present discussion which could either reverse or mute rising bearish anxiety.

Gold trading below $2000.00 is unfortunate and represents expected volatility in stormy financial waters. Its recent bottom was in October ($1825.00), its recent top was in early December ($2050.00). The pricing spread being $225.00 which is not the end of the world if you consider this large push to higher ground was prompted by speculation that the Fed’s interest rate intentions might turn dovish. Since March of 2022 the Fed has increased rates 11 times to tame inflation. But experts believe there will be no more hikes this year (money.com). It is also a real possibility that the FOMC will lower rates next year to help create a soft economic landing. Keep your powder dry, this story is still unfolding because of the number of variables at play.

Reuters (Stephen Culp) – Wall Street subdued, gold slides ahead of CPI, Fed – “U.S. stocks were muted and gold slid on Wednesday, as investors bided their time ahead of crucial inflation data and the U.S. Federal Reserve’s monetary policy meeting. The three major U.S. stock indexes were mixed, with the Dow Jones edging higher and the Nasdaq nominally lower and the S&P 500 essentially unchanged. Gold dropped to a near three-week low as the dollar firmed and Treasury yields moved higher. On Tuesday, the Labor Department is expected to release its closely watched Consumer Price Index (CPI) report, which is expected to show inflation continues to cool but remains well above the Fed’s 2% annual target. “This is typical market action prior to big releases,” said Jay Hatfield, portfolio manager at InfraCap in New York. “There’s considerable uncertainty CPI, to a lesser to degree PPI and the Fed.” Also on Tuesday, the Federal Open Markets Committee (FOMC) is due to convene for its two-day monetary policy meeting, which will culminate on Wednesday with its interest rate decision and the release of its summary economic projections. “When something big is about to happen, usually nobody makes any big bats either direction, and that’s what’s happening today,” Hatfield added. While the Fed is largely expected to let the Fed funds target rate stand at 5.25%-5.50%, market participants will parse the central bank’s dot plot in order to assess the central bank’s expected path forward.”

On the day gold closed down $20.30 at $1978.00, and silver closed down $0.20 at $22.77.

On Tuesday the price of gold firmed in reaction to the latest inflation numbers. This must be a surprising turn of events given the big drop in gold prices yesterday. But it makes sense in that professional traders point out that important variables can change overnight. Gold pushed to daily highs ($1996.00) before traders sold this rally and it finished at lows for the day ($1979.00). This kind of trading ruckus will continue because paper traders are still not sure about what the Fed has in mind regarding its inflation policy.

Even the best commentators are split into opposing camps. Those who believe interest rates are high enough and because of this inflation will move lower. And there are those who insist that the Fed maintain a hawkish interest rate policy or risk getting behind this dangerous curve.

Today is an example of the clash between these two opposing camps, which produces a kind of “pendulum” thinking – which swings back and forth between these adversaries.

The FOMC meets today and Wednesday. Chief Powell will then hold his usual press conference. The expectation is that the Fed will leave rates unchanged, a dovish shift. But the Chief’s rhetoric will remain hawkish, which gets us into next year without upsetting the apple cart.

Reuters (Ashitha Shivaprasad) – Gold prices pare gains after U.S. inflation data – “Gold prices on Tuesday pared gains after data showed that U.S. consumer prices rose unexpectedly in November, while traders’ focus shifted to key central bank policy meetings for clarity on monetary policy. The consumer price index (CPI) rose 3.1% in Nov on an annual basis, in line with economists’ expectations. The CPI edged up 0.1% on a month-on-month basis in Nov. “Inflation data was in line with the expectations, but people really needed to see a strong down tick in order to cement the those marked interest rate cuts,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “Gold will be stuck between $2,050 on the upside and $1,950 on the downside. Weak economic data and geopolitical tension could boost prices.” All eyes turn towards the Fed’s two-day policy meeting that will end on Wednesday with its interest rate decision and the release of its summary economic projections. The Fed is widely expected to leave rates unchanged this week, with about an 80% chance of a rate cut in May, CME FedWatch Tool shower. Lower interest rates tend to support zero-yielding gold. “If a recession does occur, the dollar could weaken and that would help to propel the gold price to new highs… Gold is forecast to trade between $1,880-$2,250,” Heraeus Metals said in its 2024 outlook. The dollar pared losses after CPI data, making gold more expensive for other currency holders.”

On the day gold closed down $0.20 at $1977.80, and silver closed down $0.04 at $22.73.

On Wednesday gold was choppy to mildly higher waiting for today’s comments by Fed Chief Powell. He will likely not offer anything fresh so I suspect gold prices will remain steady through the close. But keep in mind that his comments come after today’s close. The aftermarket prices or further insight will be reflected in tomorrow’s domestic trade.

It was typical that Janet Yellen was talking to the press today before the market close. I believe our Secretary of the Treasury’s comments were designed to ensure that folks believe Washington and the Fed are on the same financial page. She also makes two important points. First, Yellen said that there is always a threat of recession, but she does not believe that threat is high today. And second, she also believes that inflation be will 2% by the end of 2024.

If she is correct lower inflation obviously decreases gold’s “fear trade”, which creates the current support for gold just under $2000.00 – a negative for the bullion trade. If she is wrong, higher inflation numbers would increase Fed hawkishness – also a negative for the bullish gold scenario. But if the result is something between these two extremes, the Fed option would be to lower interest rates in 2024, an obvious plus for the gold market.

This is also a great time to roll out one of my favorite sayings. “May you live in interesting times.” Some claim this is an old Chinese curse. I have not been able to trace its origin, but does it not fit our current interest rate predicament? Maybe “interest rates” are not as important as once thought, and gold pricing hinges on investor “fear factor” and “safe haven” demand.

You should be asking why gold got substantially stronger ($2050.00) in the aftermarket after Powell’s announcement? The answer – traders believe the Fed will loosen monetary policy in 2024 by lowering interest rates as soon next March. Today’s latest bullish surge in gold may be laying the groundwork for all-time highs sooner than many expected. But a caution flag is warranted. Gold may now be overbought. And traders will sell rallies, creating volatility.

FXEmpire (James Hyerczyk) – Fed’s Final Decision of 2023: Market Impacts and Predictions – “As the Federal Reserve prepares for its final interest rate decision of the year, the financial markets are on alert for any potential shifts. The prevailing opinion among Wall Street experts is that the Fed will hold the current interest rate steady at 5.25% to 5.50%, signaling a phase of stabilization following a series of substantial hikes since March 2022. Notably, futures market data, including insights from the CME Group’s FedWatch Tool, indicate a roughly 40% chance of the first rate cut by the Fed occurring in March 2024. This expected timing is crucial, as it will significantly influence perceptions of the Fed’s stance as either hawkish or dovish. The decision, complemented by the Fed’s policy statement, dot plots, and Chair Jerome Powell’s remarks, is set to critically shape the short-term trends in Treasury yields, the US Dollar, gold, and the stock market. Treasury Yields – Firstly, the impact on Treasury yields could be significant. If the Fed adopts a hawkish stance, signaling further rate hikes or a longer period of high rates, we could see an uptick in yields as investors anticipate a tighter monetary policy. Conversely, a dovish outlook, hinting at rate cuts or a halt in hikes, might lead to a drop in yields as expectations for a more accommodative policy take hold. US Dollar – The US Dollar’s trajectory is closely tied to the Fed’s tone. A hawkish stance typically bolsters the Dollar, as higher interest rates attract investors seeking better returns. On the flip side, a dovish approach could soften the Dollar, making it less attractive to yield-seeking investors. Gold Market Reactions – Gold, often seen as a hedge against inflation and currency devaluation, reacts inversely to the Dollar’s movements. A hawkish Fed could dampen gold prices as a stronger Dollar and higher yields make gold less appealing. However, if the Fed leans dovish, we could witness a rally in gold prices, driven by a weaker Dollar and lower opportunity cost of holding non-yielding assets.

Stock Market – The stock market’s response is a bit more complex. A hawkish Fed could initially trigger a sell-off, as higher rates can dampen economic growth and corporate earnings. But it could also signal confidence in the economy’s strength, potentially offsetting some negative reactions. On the contrary, a dovish Fed might be welcomed by the stock market, as lower rates can stimulate economic activity and improve corporate profitability.”

On the day gold closed up $4.50 at $1982.30, and silver closed down $0.09 at $22.64.

On Thursday the choppy rise in the price of gold was initially confusing. The Fed did not raise interest rates, but traders had already suspected this would be the case. But the confirmation of this suspicion was the first step in stoking the bullish fireplace. The second step became apparent as Chief Powell’s next comment left traders scratching their heads. According to the Chief the CPI and PPI (inflation indicators) support the idea that the FOMC might be able to begin lowering interest rates as soon as March of 2024. The third step was typical as paper traders jumped on the initial bullish idea and short covering created even more buzz.

Reuters (Anushree Ashish Mukherjee) – Gold touches one-week high as Fed hints at lower US rates next year – “Gold prices touched a one-week high on Thursday as the U.S. dollar and Treasury yields were beaten lower after the Federal Reserve signaled an end to its monetary policy tightening cycle. “Fed’s dovish pivot was telegraphed over yesterday’s FOMC meeting and very pragmatically gave a green light for markets to price in a more aggressive Fed cutting cycle on the horizon, and we expect that the market will run with it,” said Daniel Ghali, commodity strategist at TD Securities. “This is extremely positive for gold prices, given that investor demand was one of the missing pieces for the rally to new all-time highs to be sustained.” Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies. The dollar slipped to a four-month low, while the U.S. benchmark 10-year yield dropped to its lowest level since late-July. Seventeen of 19 Fed officials projected lower interest rates by end-2024, after the Fed kept interest rates steady for the third meeting in a row, as was widely expected. Markets are now pricing in around an 83% chance of a rate cut in March from the Fed, according to the CME FedWatch tool. The European Central Bank also left interest rates unchanged as expected on Thursday, signaling an early end to its last remaining bond purchase scheme. “We retain a positive outlook for gold, targeting a price of $2,250 per ounce by end-2024,” UBS analyst Giovanni Staunovo said. Elsewhere, spot silver rose 1.6% to $24.14 per ounce, platinum gained 1.7% to $949.70 and palladium climbed 6.5%, to $1,056.97.”

On the day gold closed up $47.90 at $2030.20, and silver closed up $1.46 at $24.10.

On Friday the price of gold dipped on the open, tried to recover but finished the day mildly in the red. This rather dismal performance after the big jump in prices yesterday is a good reminder that gold is subject to outside influences which ignore relative interest rates and even Fed thinking concerning inflation. Today’s dip in prices may be a round of profit taking. Or reduced safe haven demand as traders now believe that a “soft landing” is a reality. Still, let a solid bullish week for gold put a smile on your face. Be happy that physical gold, the only real safe haven protection, is still above $2000.00. In spite of the “new” Terminal Interest Rate.

FXEmpire (Arslan Ali) – Gold, Silver, Copper Daily Forecast: Rising on Fed’s Dovish Stance and Economic Data – “Gold prices have risen, driven by the Federal Reserve’s dovish signals, with spot gold stabilizing above $2,036, despite remaining below its monthly peak. In the wake of dovish signals from the Federal Reserve, gold prices experienced a modest rise in Asian trade, as expectations of lower interest rates in 2024 weakened the dollar and Treasury yields. Markets are now pricing in at least three rate cuts from the Fed, starting possibly in March 2024. This shift has bolstered gold’s appeal, with spot gold stabilizing at $2,036.83 an ounce and futures rising by 0.3%. Despite this uptick, gold prices remain below the monthly highs of over $2,100. The prospect of reduced rates, while beneficial for gold, may divert investments towards riskier assets if economic conditions improve. Copper prices also strengthened, supported by a weaker dollar and positive economic data from China. March copper futures saw a 0.3% increase, reflecting optimism fueled by the People’s Bank of China’s liquidity injection into the economy. This action suggests the continuation of low loan rates to aid economic recovery, positively impacting copper prices. Gold, on December 15, is exhibiting a promising upward trend, currently priced at $2,041, marking a 0.33% rise. This positive movement situates the precious metal just above its pivotal point of $2,039. The asset now faces immediate resistance at $2,057, with further barriers at $2,072 and $2,085. Support levels are established at $2,019, $2,008, and $1,991, which might come into play if the current bullish momentum wavers. The technical indicators offer an insightful perspective. The Relative Strength Index (RSI) is nearing the overbought threshold at 69, suggesting a strong but potentially overstretched bullish sentiment. Significantly, Gold’s trading above the 50-Day Exponential Moving Average (EMA) of $2,017 reinforces the current uptrend. A critical development in the chart pattern is Gold breaking above the $2,040 double-top pattern, a move that traditionally signifies a continuation of the buying trend. This breakout indicates potential for further upside. In conclusion, the technical outlook for Gold remains bullish above the $2,040 mark. Silver’s market performance on December 15th reflects a cautiously optimistic outlook. The metal, currently trading at $24.219, has seen a modest gain of 0.16%. Positioned just above its pivot point of $24.22, Silver faces immediate resistance at $24.63, with further levels at $24.91 and $25.20. Should the momentum shift, support can be found at $23.83, $23.52, and $23.24. The Relative Strength Index (RSI) of 71 indicates an overbought condition, suggesting the possibility of a near-term pullback. Notably, Silver’s current trading above the 50-Day Exponential Moving Average (EMA) of $23.64 confirms a short-term bullish trend. A significant technical pattern is Silver completing the 50% Fibonacci retracement around the $24.20 mark. A bullish breakout above this level could signal further buying interest. In summary, Silver exhibits a bullish trend above the $24.15 threshold.”

On the day gold closed down $9.10 at $2021.10, and silver closed down $0.23 at $23.87.

Platinum closed down $15.30 at $949.80, and palladium closed up $86.40 at $1198.10.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the firm overall near-term technical advantage and have regained strength. Prices are in a nine-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March 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 this week’s high of $2,062.90 and then at $2,072.70. First support is seen at the overnight low of $2,045.50 and then at Thursday’s low of $2,039.10. The silver bulls have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $26.00. The next downside price objective for the bears is closing prices below solid support at this week’s low of $22.785. First resistance is seen at $24.75 and then at $25.00. Next support is seen at the overnight low of $24.285 and then at $24.00.”

Posted on December 8, 2023 by Richard

Gold – More Surprises in Store?

Commentary for Friday, Dec 8, 2023 (www.golddealer.com) – Today gold closed down $31.60 at $1998.30, and silver closed down $0.76 at $22.97. The price of gold moved significantly lower today in the domestic trade as a strong US jobs report rewrote the short-term pricing picture. Reuters believes that there is less likelihood interest rates will move lower next year because today’s US job data showed broad based strength. Because gold dipped below $2000.00 the technical sharpies believe further declines are in the cards. This might be an overreaction but price volatility through the typically quiet holiday season is now on the table. Last Friday gold closed at $2071.00 / silver at $25.50 – on the week gold was down $72.70 and silver was down $2.53. We will be closed December 25^th (Monday) and December 26^th (Tuesday) for Christmas. And January 1^st (Monday) for New Years.

On Monday the price of gold was again unpredictable, and my admonition to keep your seat belts on and tightened is again a warning of turbulence. Last Friday gold began a quiet weekend trade, but something set it off during the overnight Globex trade and prices soared ($2140.00). Before the bulls could count their winnings, the market whipsawed, and by the time the domestic trade was pouring their first cup of coffee the market was down roughly $50.00.

I always expect uncertainty during market extremes, both high and low, but this kind of volatility is surprising. The lesson learned, or perhaps relearned is that it never pays to be wed to any one idea (bullish or bearish) to the extent that you throw caution to the wind.

Gold closed last Friday at $2071.00. During the weekend trade it moved to $2152.00! By the time markets closed today it was roughly $2024.00. That amounts to a $128.00 spread in a short period of time, so let’s be extra careful these days. Technical experts claim that the bulls are exhausted, and they might be right. But we are testing the extremes so keep an open mind.

Reuters (Wayne Cole) – Gold makes the running as oil fails to fire – “Asian stocks have made a hesitant start to the week, while gold hit a new peak and Treasuries ran into profit-taking on their recent stellar gains. Oil failed to sustain an early rally that followed news of attacks on commercial shipping in the Red Sea. Three vessels came under attack in international waters on Sunday, while Yemen’s Houthi group claimed drone and missile attacks on two Israeli vessels in the area. The threat to such a major global shipping route could add to inflationary pressure, although the impact seemed limited so far. Notably, oil prices lost early gains and Brent eased around 57 cents to $78.31 a barrel amid doubts that OPEC+ would be able to maintain planned output cuts, particularly by some African countries. At the same time, U.S. oil output is at record levels above 13 million barrels a day and rig counts are still rising. That means the U.S. is producing more oil than Saudi Arabia right now. A commodity faring better is gold, which surged suddenly this morning to top $2,111 an ounce for the first time before paring the gains to $2,086. There was no obvious catalyst for the move, leaving dealers suspecting the hidden hand of trend-following CTAs and algo funds following the break of a triple-top around $2,107. Central banks have also been gold bugs, buying a net 800 metric tons in the year to September in a record for that period. Bulls are now touting chart targets at $2,240 and $2,400. Market pricing for early and aggressive rate cuts is clearly a positive for non-yielding gold, with Fed fund futures currently implying a 59% chance of a U.S. cut as early as March. A week ago that probability was around 20%. There are also 125 basis points (bps) of easing implied for all of 2024, up from 80 bps a couple of weeks ago. In addition, markets are pricing in an 80% chance of the ECB easing in March, although the hawkish head of Bundesbank pushed back against such prospects in an interview over the weekend. ECB President Christine Lagarde will have her chance to comment in a speech and Q&A later on Monday. Such extreme pricing leaves the market vulnerable to pullbacks, and both Fed funds and Treasuries ran into selling on Monday. Yields on U.S. two-year notes rose almost 4 bps, but that follows a drop of 40 bps last week. German two-year bunds also look susceptible to some profit-taking after yields dived 41 bps last week. Bonds really need U.S. November payrolls on Friday to be solid enough to support the soft-landing scenario, but not so strong as to threaten the chance of easing. Median forecasts are for payrolls to rise 180,000, keeping unemployment steady at 3.9%. Many analysts suspect risks are to the upside, with Goldman Sachs tipping 238,000, including a chunk of workers returning from strikes, and a jobless rate of 3.8%.”

On the day gold closed down $46.90 at $2024.10, and silver closed down $0.94 at $24.56.

On Tuesday the price of gold dipped on the open, testing $2010.00 before traders bought weakness with little conviction. I expected bargain hunting after yesterday’s drop in prices, but most were too rattled by the sudden rise in bearish sentiment. The strong dollar also encouraged bearish sentiment as the Dollar Index has moved progressively higher since last Wednesday.

The oddsmakers are still making the case that the FOMC will leave interest rates unchanged next week. This optimistic outlook has been a long-standing bullish lynch pin. But any fading of this belief will also encourage bearish sentiment. This could turn into a kind of domino trade as speculators will likely expect further losses if gold continues to slide towards $2000.00.

The idea that the Fed will not change the interest rate dynamic anytime soon is already baked into this cake, so what the bulls need is fresh news to rally base support and push back against rising bearish sentiment. The most likely scenario here would be that the Fed will begin to lower interest rates next year to help engineer a soft economic landing. No one knows how this confusion will end but some Yogi Berra wisdom might help: “It ain’t over till it’s over”.

Vladimir Basov (Kitco) – Nornickel expects palladium and platinum shortage to widen this year – “In its recent research report released today, Nornickel, the world’s largest producer of palladium and high-grade nickel, said that it has revised the 2023 palladium market deficit from -0.2 Moz to -0.9 Moz. The company added it has reviewed the secondary supply of palladium from +9% growth down to 15% fall, while slightly lower than expected primary production from North America will be offset by weaker electronics demand. As for the platinum market, Nornickel expects it to flip into the fundamental deficit this year. “The increase of primary supply, mainly attributed to resilience of South African mining companies to electricity disruptions, will not be enough to offset rising automotive and industrial demand for platinum, as well as lower recycling,” the authors of the report said. Importantly, the company sees platinum market deficit of -0.4 Moz this year, comparing to its previous view of balanced market due to lower secondary supply. As for 2024, Nornickel expects palladium deficit to narrow down to -0.4 Moz amid secondary supply recovery, while platinum market will be relatively unchanged at -0.3 Moz, as recycling volumes recovery will be offset by increase in industrial demand of glass and electronics sector. However, Nornickel sees “significant” risk from South Africa and North America amid potential cost optimization at low margin projects.”

On the day gold closed down $5.60 at $2018.50, and silver closed down $0.36 at $24.20.

On Wednesday the gold trade was less heavy and more optimistic as it traded in a tight range and finished in the green for the day. Whether today’s close represents the early signs of consolidation which was missing in Tuesday’s trade I will leave to the reader.

Still, I would not expect much from this latest insight. The Dollar Index remains at weekly highs (104.00) which creates drag for the bullish scenario. Friday the Labor Department will release November’s employment numbers, but I suspect traders will remain sanguine.

The bulls are hoping for the consolidation, which is helped psychologically as the Bank of Canada left interest rates unchanged today. But this market leans toward sudden changes.

Reuters (Anjana Anil) – Gold firms on weaker yields as focus turns to US jobs data – “Gold prices inched higher on Wednesday buoyed by lower bond yields, while investors awaited for a crucial U.S. employment report that could set the tone for Federal Reserve’s policy meeting next week. Helping bullion, benchmark 10-year Treasury yields hovered near a three-month low. “While gold may draw support from speculation around the Fed cutting rates, it may take a fresh fundamental spark to re-ignite the bullish rally. This could come in the form of the highly anticipated U.S. jobs report on Friday,” said FXTM senior research analyst Lukman Otunuga. “The nearest support can be found at the psychological $2,000 level while multiple resistance can be identified at $2,035, $2,050, and $2,100.” The November U.S. non-farm payrolls data due on Friday, could provide clues on the interest rate path ahead of the U.S. central bank’s policy meeting next week. Bullion climbed to a record high of $2,135.40 on Monday on elevated bets for a Fed rate cut, before dropping more than $100 in the same session, due to uncertainty over the timing of the monetary policy easing. Traders are pricing in about a 60% chance of a rate cut by March next year, CME’s FedWatch Tool shows. Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion. “The buying (in gold) should gradually resume and outlook continues to remain bullish,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai. Data on Tuesday showed U.S. job openings fell to a more than 2-1/2-year low in October, signaling that aggressive rate hikes have started to flow through the economy.”

On the day gold closed up $12.00 at $2030.50, and silver closed down $0.31 at $23.89.

On Thursday the price of gold again opened choppy, trading between $2020.00 and $2040.00. An interesting level to me, suggesting consolidation not retreat, but gold’s technical picture suggests an exhaustion top has been reached and lower prices are in the making.

The best you can glean from recent volatility is that this market remains unstable. The fact that gold is trading above $2000.00 is a small plus for the bulls. The holiday season is also a small plus for our shiny friend. But Christopher Lewis (FXEmpire) has hit the nail on the head – this market has turned into a grind – for both buyers and sellers. Whether that portends higher or lower prices for gold or silver remains difficult to say in the short term.

If history is any guide, however “higher” prices over the longer term makes more sense. Because “peace” does not seem to be breaking out anytime soon in this troubled world.

Christopher Lewis (FXEmpire) – Gold Markets Continue to Grind in Consolidation – “Gold markets initially tried to rally during the session on Thursday, as we continue to try to sort out where we are going next. The recent volatility has made the gold market very difficult to deal with, therefore it’s not a huge surprise to see us try to work off some of the fear. The week started out with a huge bang, only to turn around and fall apart. However, it now appears that we are trying to form some type of consolidation range between the $2000 level underneath, and then above at the $2050 level above. Looking at this chart, it’s obvious that the $2000 level will be an area that people pay close attention to, because not only has it previously been resistance, but now it’s acting as support. It’s also a large, round, psychologically significant figure, and an area where I imagine that there are a lot of options barriers to be found. In general, I think this is a situation where you have to be very cautious, but I still like the idea of buying gold, not selling it. We look at gold, it can serve as safety, but it also can serve as a way to fight falling interest rates. In general, I think this is a situation where you will continue to see a lot of noisy behavior, and the fact that Friday has the Non-Farm Payroll announcement coming out, and that of course will move interest rates quite drastically in the United States, which will have its knock on effect here in the gold market. Beyond that though, we also have a lot of geopolitical concerns out there that could drive gold higher, so keep an eye on all of that. Either way, I don’t have any interest in shorting gold anytime soon, but if we were to break down below the $2000 level and the 50-Day EMA, then I would have to reevaluate things, but right now it doesn’t look like we have the momentum to do so. In general, if we break above the $2050 level again, I think we continue to climb much higher.”

On the day gold closed down $0.60 at $2029.90, and silver closed down $0.16 at $23.27.

On Friday the price of gold surprised veteran traders, but I believe this market may now be oversold. To be fair this opinion is likely in the minority, but such are the travels in the metals marketplace these days. I am not ready to concede that price “consolidation” for gold and silver necessarily means significantly lower prices. Today’s “surprise” will need another week to confirm absolute direction.

In the meantime, I’m satisfied that gold and silver are trading at the upper end of their recent highs. Next week will provide a better pricing picture and I would not be surprised to see a stable market in a relative sense. This latest storm may be more talk than action.

Reuters (Anushree Ashish Mukerjee) – Gold slides 1% as strong US jobs data clouds rate cut bets – “Gold prices fell on Friday as the dollar and Treasury yields strengthened after traders lowered bets for U.S. interest rate cuts to materialize by March next year following a stronger-than-expected jobs data. The dollar index (.DXY) firmed 0.2%, making bullion more expensive for overseas buyers. Also, 10-year Treasury yields ticked higher. U.S. job growth accelerated in November while the unemployment rate fell to 3.7%, suggesting financial market expectations of a rate cut early next year were probably premature. “Gold has slumped as the U.S. employment report showed strength across the board,” said Tai Wong, a New York-based independent metals trader. “If today, gold finishes at new lows under $2,009, that would be a signal that the correction has further to run. If gold holds well on a pretty strong payrolls number it will give buyers confidence that we’ve seen at least a short-term bottom.” Traders had earlier priced in about a 60% chance of a March start to Fed rate cuts, but after the jobs data, pared that to just under 50%, with May now a more likely starting point. Traders will seek further confirmation from the Fed meeting scheduled on Dec. 12-13. “We expect short dips in gold market but see continued strength in demand, keeping the overall trend sideways to higher,” said David Meger, director of metals trading at High Ridge Futures.”

On the day gold closed down $31.60 at $1998.30, and silver closed down $0.76 at $22.97.

Platinum closed up $8.10 at $916.20, and palladium closed down $29.20 at $941.14.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls still have the overall near-term technical advantage but became exhausted to suggest a near-term market top is in place. Prices are still in a two-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in March futures above solid resistance at the record high of $2,152.30. 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 $2,050.40 and then at $2,059.60. First support is seen at this week’s low of $2,027.60 and then at $2,015.00. The silver bulls still have the overall near-term technical advantage, but became exhausted to suggest a near-term market top is in place. Prices are still in a two-month-old uptrend on the daily bar chart but the bulls need to show fresh power soon to keep it alive. Silver bulls’ next upside price objective is closing March futures prices above solid technical this week’s high of $26.34. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the overnight high of $24.225 and then at $24.50. Next support is seen at $23.65 and then at $23.25.”