Daily Gold Newsletter Archives - Page 4 of 9

Posted on September 15, 2023 by Richard

Gold – Optimistic or Pessimistic?

Commentary for Friday, September 15, 2023 (www.golddealer.com) – Today gold closed up $13.70 at $1923.70, and silver closed up $0.38 at $23.13. When it comes to what the Fed might do next with interest rates the gold trade can’t seem to make up its mind. This confusion is the result of a “cause and effect” problem. When the Fed raises interest rates (the cause) the expected decrease in inflation (the effect) takes time to work its way through the economy. Our latest inflation numbers came in hot, blocking the hoped for dovish FOMC response. But this market remains very transitory. Thursday traders worried that rising inflation would increase Fed hawkishness and hinder gold. Friday negative sentiment moderated, and the price of gold moved higher. An oversold market, higher crude oil and a short covering rally helped this week finish on a positive note. Good Grief – Charlie Brown! Last Friday gold closed at $1918.40 / silver at $22.89 – on the week gold was up $5.30 and silver was higher by $0.24.

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 continued to be choppy, trading between $1921.00 and $1930.00. On the day gold finished mildly in the green, but this looks like a sleepy start to another week of rumor and innuendo. The Consumer Price Index for August will be out this Wednesday. But most do not expect much change in these already elevated numbers. I look for more of the same ho-hum market with close trading ranges this entire week, barring lightning strikes.

Next week we will have something more tangible on our hands. The Fed will meet on September 12^th and 13^th, releasing information after the market close on Wednesday the 14^th. There are rumors of a fundamental change in the making but caution is always better than rumor.

Reuters (Deep Kaushik Vakil) – Gold gains as dollar slips with eyes on US inflation data – “Gold rose on Monday, heading for its best session in nearly two weeks as the dollar retreated before this week’s key U.S. inflation reading that could influence the Federal Reserve’s interest rate decision later this month. A weaker dollar contributed to the gains, said Bank of China International analyst Xiao Fu, adding “the worries about a German recession and European slowdown certainly will have some safe-haven supportive factor as well.” The euro zone economy this year will grow slower than previously expected, the European Commission forecast as the biggest economy, Germany, slips into recession. The dollar index fell 0.4% ahead of U.S. inflation data due on Wednesday, making greenback-priced gold cheaper for overseas buyers. That data could make traders revise their bets on whether the Fed has further to go in raising rates, with the CME FedWatch tool currently showing a 42% chance of a hike before 2024. “The medium-term prospects for gold if the U.S. economy does manage to avoid a recession look more challenging,” Kinesis Money market analyst Rupert Rowling said in a note. Ahead of Fed’s Sept. 19-20 meeting this month, Fed policymakers have been clear that they are not itching to raise rates, but few among them are ready to declare victory either. “China’s demand (for silver) seems to be picking up and with the country accounting for about half of global offtake, any improvement here could lend an element of support,” Edward Meir, an analyst who provides research for brokerage firm Marex, wrote in a monthly note.”

On the day gold closed up $4.90 at $1923.30, and silver closed up $0.21 at $23.10.

On Tuesday the price of gold drifted lower in the overnight Hong Kong and London markets, but reversed direction in the domestic New York cash market as traders bought this weakness. But by the end of the trading day, however, gold threw in the towel and finished in the red. The bulls do get a plus today because their fight for higher ground is still above $1900.00.

There are two short term factors weighing on the price of gold. The first, and probably the most important is that our shiny friend has struggled against a stronger dollar since early Monday. The second relates to the August CPI data release expected tomorrow. These two factors have created a generally defensive market as traders brace for the uncertain interest rate picture.

Reuters (Harshit Verma) – Gold slips on dollar rebound as US inflation test nears – “Gold slipped to a more than two-week low on Tuesday as the dollar rebounded, while investors positioned for the U.S. inflation print on Wednesday. “People are getting out of the market and waiting to see how the data comes out, and maybe buy gold at a lower price because there’s still (some) safety buying in gold,” said Bob Haberkorn, senior market strategist at RJO Futures. Making gold more expensive for other currency holders, the dollar index gained 0.3% ahead of the U.S. consumer price index data due on Wednesday, which could influence the Federal Reserve’s interest rate decision. Headline U.S. inflation climbed 0.6% in August, according to a Reuters poll, versus a 0.2% rise the prior month. However, Americans’ overall views on inflation were little changed in August, the New York Fed reported Monday. Higher interest rates dull non-yielding bullion’s shine, with traders betting on a roughly 47% chance of a hike in November after a widely expected pause by the Fed next week, according to the CME FedWatch tool. “Should the inflation figures print above market forecasts, gold prices are likely to depreciate as expectations rise around the Fed having headroom to hike one time this year.” FXTM senior research analyst Lukman Otunuga said. Traders also awaited the ECB’s rate decision on Thursday. ECB euro short-term rate (ESTR) forwards are pricing a bit more than a 50% chance of a rate hike at this week policy meeting. “Europe’s economy is definitely facing a lot of challenges so eventually safe-haven demand will emerge if investors see that the currency is going to be under pressure,” said Harshal Barot, a senior consultant at Metals Focus.”

On the day gold closed down $12.00 at $1911.30, and silver closed up $0.03 at $23.13.

On Wednesday gold was typically choppy between $1906.00 and $1915.00 but most professionals consider this market to be rangebound since May. Which should discount the many short term data points along the way to a recognizable trend, either up or down. During this time the already strong dollar has increased in strength, reacting to a hawkish Fed. Yet gold has steadied itself against this rise, and in fact is still in the fight for pricing above $1900.00.

I’m not suggesting the price of gold is out of the woods. There are forces domestically (a hawkish Fed based on today’s inflation data) and abroad (central banks with their own agenda) which threaten the status quo. Still, I see a defensive market, not one falling out of bed. The so-called big gold downside, if there is one, in this uncoupling game may be surprisingly small.

Reuters (Harshit Verma) – Gold steadies as traders assess impact of U.S. CPI on Fed plans – “Gold steadied on Wednesday after retreating immediately following data showing an acceleration in U.S. consumer prices, on expectations that the inflation readings may not prompt a big change in the Federal Reserve’s interest rate strategy. The Labor Department data showed headline and core CPI in August rose 0.6% and 0.3%, respectively, month-on-month. Economists were expecting increases of 0.6% and 0.2%, respectively. However, traders’ expectations for the Fed leaving interest rates unchanged at its Sept. 19-20 policy meeting only got stronger after the data, while pricing around a 44% chance of another hike before 2024, according to the CME FedWatch tool. “Precious metal investors are less worried about higher inflation and more focused on the costs associated with holding a non-interest bearing asset in a rising rate environment,” said Chris Gaffney, president at EverBank World Markets. But “focus now shifts to the retail sales numbers which some investors feel is an even more important indicator than the CPI info we got today.” Higher interest rates boost yields on competing safe-haven U.S. Treasury bonds, drawing investors away from zero-interest-bearing bullion. Investors are looking forward to U.S. August producer prices, retail sales data and the European Central Bank’s rate hike verdict on Thursday ahead of the Fed’s Sept. 20 policy decision.”

On the day gold closed down $2.20 at $1909.10, and silver closed down $0.22 at $22.91.

On Thursday the price of gold dipped to $1902.00 before the paper trade bought the weakness and pushed prices towards $1910.00, and gold closed almost unchanged on the day. This trade has turned into a ho-hum exercise as the Fed tries to feather in an interest rate policy based on it’s hoped for a cooling inflation trend.

Unfortunately, this “wait and see” approach has not calmed inflation anxiety. That is not to say the Fed is out to lunch – this anticipated change is a matter of timing, and some insiders believe it could take a year or longer for inflation to move significantly lower.

In the meantime, August wholesale inflation rose (0.7%) which was hotter than expected according to CNBC (Jeff Cox). A stronger dollar and retail sales coupled with a rising Producer Price Index suggests the Fed may not turn dovish at the September 19^th and 20^th meeting.

The Fed’s hawkish sentiment will eventually cool the inflation dragon. But it will also slow down the economy and raise the risk of recession. Some economists are asking if this added risk is worth the price of admission. Does it make sense to “rock the boat”?

Reuters (Harshit Verma) – Gold at 3-week low as strong US data lifts dollar, yields – “Gold prices held near a three-week low on Thursday after higher-than-expected U.S. producer prices data and retail sales numbers raised worries that U.S. interest rates are likely to stay higher for longer, boosting the dollar and bond yields. “We saw some headline inflationary data that was hotter than expected and as a result, we are seeing yields tick higher once again and continue to pressure the spot gold market,” said David Meger, director of metals trading at High Ridge Futures. Data showed U.S. producer prices increased by 0.7% in August, the most in more than a year, while U.S. retail sales increased by 0.6% over Reuters’ expectation of 0.2% during the same period. The U.S. dollar index jumped 0.4% to over six-month high, reducing gold’s appeal for overseas investors, while the yield on the benchmark 10-year note rose 1.8 basis points to 4.266%. “There are concerns that the Fed does have the possibility of continuing to raise interest rates or yields continue to rise and that does apply some pressure to the gold market,” Meger said. Although markets are pricing in that the Fed would hold rates unchanged at their policy meeting next week, there’s a 39% probability of a rate rise in November, according to the CME’s FedWatch Tool. Higher interest rates dull the appeal of bullion, which bears no interest. Earlier in the day, The European Central Bank raised its key interest rate to a record high of 4% on Thursday, but signaled this was likely to be its final move. However, the $1,900 level for gold is fairly well-supported and will attract some bargain hunting, analysts said.”

On the day gold closed up $0.90 at $1910.00, and silver closed down $0.16 at $22.75.

On Friday the price of gold drifted higher as the bullish scenario seems to be getting back on its feet helped by a weaker dollar. The Empire State manufacturing survey suggests an economic contraction – another reason for the Fed to be cautious with interest rates.

Positive economic data out of China (always a big bullion player) encouraged the bullish scenario. But the bearish technical picture for gold must show improvement before the important momentum players will pay attention.

The wild card here is whether the Fed will skip an interest rate hike in September.

Reuters (Harshit Verma) – Gold gains as dollar slips, focus shifts to Fed meet next week – “Gold recovered from three-week lows on Friday aided by the dollar’s retreat after better-than-expected Chinese data and a stronger euro, while traders focused on the Federal Reserve’s guidance on interest rates next week. “We are seeing a consolidation in the euro and the slightly-recovering yuan against the U.S. dollar. This is positive for gold, which is strongly holding above $1,900 per ounce,” said Carlo Alberto De Casa, analyst at Kinesis Money. “Gold holding above the $1,900-level is positive news as it shows the resilience and investor interest in bullion,” he added. The dollar slipped 0.1% against its rivals after hitting a six-month peak on Thursday, making gold less expensive for other currency holders. Data showed China’s factory output and retail sales grew at a faster pace in August, boosting recovery hopes in the world’s top bullion consumer. Investors focus shifted to the U.S. central bank meeting due next week, in which the Fed is widely expected to leave interest rates unchanged. “The outlook for rates to be kept high for longer has been keeping non-yielding gold prices under pressure,” said Yeap Jun Rong, a market strategist at IG. Data on Thursday showed U.S. producer prices increased by the most in more than a year in August while retail sales also beat expectations, boosted by a surge in gasoline prices. Positive Chinese data supported other precious metals, with silver rising 2.2% to $23.13 per ounce, platinum gaining 1.1% to $916.29 and palladium up 1% at $1,263.57. All three metals are heading for weekly gains.”

Jim Wycoff (Kitco) – “Technically, the gold futures bears have the firm overall near-term technical advantage. Prices are trending lower again. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at this week’s high of $1,954.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,947.50 and then at $1,954.60. First support is seen at today’s low of $1,931.20 and then at this week’s low of $1,921.70. The silver bears have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at $24.50. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $23.75 and then at $24.00. Next support is seen at $23.00 and then at this week’s low of $22.55.”

On the day gold closed up $13.70 at $1923.70, and silver closed up $0.38 at $23.13.

Platinum closed up $18.40 at $926.40, and palladium closed down $3.10 at $1243.80.

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 blessed day. Richard Schwary

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Posted on September 8, 2023 by Richard

Gold – Adjusting to Higher Rates

Commentary for Friday, September 8, 2023 (www.golddealer.com) – Today gold closed up $0.90 at $1918.40, and silver closed down $0.06 at $22.89. Our shiny friend drifted quietly lower ($20.00) this week as analysts again brought out the tea leaves in a market decidedly lacking in fresh information. Which way this market will move in the short term is anyone’s guess. Going into the weekend there is reasonable support around $1920.00, and given the Fed’s still hawkish outlook, this is a small plus for the bulls. I’m still of the opinion that if the Fed raises even a token amount, traders will assume the worst-case scenario and continue in a defensive mode. The downside here may be less than expected. The general confusion factor is high, and traders will buy the dip as gold continues to adjust to these higher interest rates. Last Friday gold closed at $1939.80 / silver at $24.23 – on the week gold was off by $21.40 and silver was down $1.34.

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 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 domestic gold market was closed for Labor Day.

On Tuesday the price of gold began to fade over the long weekend. This weakness continued in the domestic US market. The top to bottom spread in prices was typical, as gold moved between $1934.00 and $1925.00. This latest swoon in the price of gold was the result of a stronger dollar, now at 6-month highs. The Dollar Index moved from 104.00 through 104.75 today alone.

This is the old story, as traders again consider the possibility of higher interest rates over the longer term. Just the consideration of these higher rates is enough to stifle higher gold prices. At the same time the uncertainty between Wall Street and the financial community is not resolved. This to some degree keeps the price of gold from falling out of bed, in the shorter term.

Reuters (Brijesh Patel) – Gold hits 1-week low as dollar strengthens after weak China data – “Gold slipped to a one-week low on Tuesday as investors sought the U.S. dollar after weak data in China, although rising expectations for a pause in interest rate increases by the U.S. Federal Reserve limited losses. Making gold more expensive for other currency holders, the dollar gained 0.5% to a more than three-month high after data showed China’s services activity expanded at the slowest pace in eight months in August. However, the drop in the price of gold was limited by hopes that interest rate increases may be ending. “The expectation for a dovish Fed in September is capping the downside for gold,” said Carlo Alberto De Casa, market analyst at Kinesis Money. Recent U.S. economic data has backed bets of a soft landing as worries about inflation and recession have eased, cementing expectations that the Fed might not have to raise interest rates further. According to the CME FedWatch tool, traders see a 93% chance of the Fed leaving rates unchanged at a Sept. 19-20 policy meeting, and about a 60% chance that rates would remain at current levels for the rest of the year. Gold, which yields no interest, tends to lose its attraction when interest rates rise. A focus will also be on comments by Fed officials who are expected to speak during the week. “Gold seems to be searching for a fresh fundamental catalyst to trigger its next significant move,” Lukman Otunuga, senior research analyst at FXTM, said in a note. “In the meantime, the precious metal is showing signs of exhaustion on the daily charts with weakness below the 50-day SMA opening a path back toward $1,920.”

On the day gold closed down $13.60 at $1926.20, and silver closed down $0.67 at $23.56.

On Wednesday gold held up in the early trade ($1925.00) but soon moved lower, finding support around $1915.00 as the Dollar Index moved to weekly highs (105.00). While the drift to lower ground is obvious, and will likely continue, our shiny friend is still fighting for that important ground at or above $1900.00.

The Institute of Supply Management (ISM) was unexpectedly upbeat this morning, suggesting economic growth. A minus for the bullish gold scenario, but hardly definitive.

Technically the bears have the advantage in gold and silver. The trading mood is downbeat. But the possibility of a shift in Fed thinking has created a “neutral status quo”.

There is not enough good news to move the price of gold or silver significantly higher and not enough bad news to move them considerably lower.

I would expect more of the same, in this short week, barring any lightning bolts.

Reuters (Deep Kaushik Vakil) – Gold at one-week low as firm dollar, yields dominate mood – “Gold languished near one-week lows on Wednesday on strength in the dollar and Treasury yields, driven by expectations for U.S. interest rates to stay elevated for longer and worries about China’s economy. “Fears of recession in the U.S. having constantly been pushed back as we see resilience in the activity data are giving a boost to the U.S. dollar,” said Edward Gardner, commodities economist at Capital Economics. The dollar held near a six-month peak, denting investor appetite for greenback-priced bullion, while benchmark 10-year Treasury yields were also close to Aug. 25 highs. Federal Reserve Governor Christopher Waller said on Tuesday the latest round of economic data was giving the U.S. central bank space to see if it needs to raise interest rates again. “Waller’s comments suggest that the Feds thinking has shifted and that they are worried about the downside risks of doing too much,” said Michael Hewson, chief market analyst at CMC Markets. Markets were all but certain that the Fed will keep rates unchanged at its Sept. 19-20 meeting, but still bet on a 42% chance of a rate hike before 2024, according to CME FedWatch tool. Higher U.S. interest rates and Treasury yields lift the opportunity cost of holding non-interest-bearing gold. “A lot will also depend over the next few months on how China’s economy holds up, in particular appetite for jewelry, which really goes hand in hand with consumer confidence,” Gardner said. China’s services activity expanded at the slowest pace in eight months in August, as stimulus failed to meaningfully revive consumption.”

On the day gold closed down $8.10 at $1918.10, and silver closed down $0.35 at $23.21.

On Thursday the price of gold was typically choppy this morning, trading between $1916.00 and $1923.00 reflecting conflicting views of how the economy is doing and what the Fed will do with interest rates at its next opportunity. Still, the price of gold closed almost unchanged.

Normally this type of market should produce boredom…tight pricing spreads and not much action. But actually, gold holds a great amount of interest for a wide audience, likely still on the sidelines because the outcome of this latest grand experiment is not assured.

I think the average person on the street is more worried about rising living expenses and the price of gas. But a greater percentage of people with disposable income are considering options. You would be surprised at the increase in the number of our daily wires as investors bought this latest dip in prices. Even though guaranteed interest rates are all over the place at 5%.

The World Gold Council notes that ETF numbers are trending lower, perhaps a negative for the bullish gold scenario. But this may be another shift in the day-to-day trading wind because there is a big difference between Exchange Traded Funds and the physical market.

Host of the Rebel Capitalist Show George Gammon latest talk with Michelle Makori (Kitco) was interesting. George is looking for a Black Swan event which will be linked to an inversion of the yield curve. End of the world scenarios have been shouted from the house tops since I got into the physical business in the early 1970’s. Thanking God they never seem to show up, but cataclysm always manages to focus the cash physical market which has been hot for weeks across our counter as the public buys this latest dip.

FX Empire (Vladimir Zernov) – Gold, Silver, Platinum Forecasts – Gold Settled Near $1920 Amid Rising Demand For Safe-Haven Assets – Silver and platinum remained under pressure amid worries about the slowdown of the Chinese economy. Gold stabilized near the $1920 level despite a stronger dollar. It looks that rising demand for safe-haven assets provided some support to gold markets. In case gold settles back above $1920, it will head towards the nearest resistance level at $1935 – $1940. Silver remains under pressure amid worries about the situation in the Chinese economy. If silver stays below the $23.00 level, it will move towards the support at $22.25 – $22.50. If silver stays below the $23.00 level, it will move towards the support at $22.25 – $22.50. Platinum has also moved lower as traders fear that China’s demand for the metal would decline. A move below the $900 level will push platinum towards the support at $880 – $890. RSI remains in the moderate territory, so platinum has enough room to gain additional downside momentum.

On the day gold closed down $0.60 at $1917.50, and silver closed down $0.26 at $22.95.

On Friday the price of gold was choppy and will likely remain so next week as traders wait for the next CPI reading. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. August 2023 CPI data are scheduled to be released on September 13, 2023, which is next Wednesday. The Labor Department averages may be adjusted after the fact, so analysts are not expecting any surprises. Still, this is an important data point which will likely influence the price of both gold and silver next week.

Reuters (Arpan Varghese) – Gold firms as dollar rally cools, traders eye more Fed cues – “Gold firmed on Friday buoyed by a slight retreat in the dollar, while investors hunkered down for more economic data next week to gauge the Federal Reserve’s interest rate hike plans. The dollar, however, is bound for its longest weekly winning streak since 2014, propelled by recent strong U.S. economic data. The greenback’s overall strength put bullion on course for its first weekly dip in three. Focus is now on U.S. inflation readings due on Sept. 13, and the Fed’s policy decision on Sept. 20. While there’s still significant investment in the dollar and Treasuries, there’s also plenty of safe-haven buying in gold and that’s supporting prices, said George Milling-Stanley, chief gold strategist at State Street Global Advisors. Even if CPI numbers look good, the Fed’s preferred gauge – the personal consumption expenditure – is still very sticky, “so if we get a recession or a period of slow growth amid continued high inflation, it could lift gold above the pack of other safe havens”, Milling-Stanley added. Traders saw around a 93% chance of the Fed keeping rates unchanged in September and 43% odds of one more hike before 2024, according to the CME FedWatch tool. Higher rates dull appetite for zero-yield gold. However, if the Fed ends up needing to hold longer, “that becomes the worst of all possible worlds for gold”, said Ilya Spivak, head of global macro at Tastylive. In physical gold markets, top consumer China’s economic support measures drove some demand optimism.”

Neils Christensen (Kitco) – “Technically, the gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the September high of $1,980.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Wednesday’s high of $1,954.50 and then at $1,965.00. First support is seen at this week’s low of $1,940.00 and then at $1,925.00. The silver bears have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at this week’s high of $24.655. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at $23.50 and then at $24.00. Next support is seen at this week’s low of $23.13 and then at $23.00.”

On the day gold closed up $0.90 at $1918.40, and silver closed down $0.06 at $22.89.

Platinum closed down $14.80 at $891.70, and palladium closed down $22.70.

Posted on September 1, 2023 by Richard

Gold – Cautious Price Patience

Commentary for Friday, September 1, 2023 (www.golddealer.com) – Today gold closed up $1.60 at $1939.80, and silver closed down $0.24 at $24.23. It’s easy to see that gold and silver have been enjoying a small updraft in pricing since last Friday, as the trade considers FOMC dovish options. But I believe professionals will discount this small bullish happiness once it concludes that steady inflation numbers are a harbinger of bad news for the bulls. Still this revelation may take time to develop. The domestic markets are closed Monday for Labor Day – this short trading week suggests tight price ranges and a continued, even sleepy trade. Last Friday gold closed at $1911.10 / silver at $24.22 – on the week gold was higher by $28.70 and silver was up $0.01. A very quiet week, with some underlying tension.

Monday, September 4^th is Labor Day. Domestic markets are closed, and GoldDealer.com will also be closed. It is hard to believe today, but a universal Labor Day, including the right to strike without fear or bloodshed was a hard-won victory for the American worker.

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 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 continued choppy between $1905.00 and $1925.00, so mildly higher relative to Friday’s close but holding its own considering hawkish comments by Chief Powell last week. And the drag created by a rising Dollar Index, which began moving higher last Thursday and has since settled on both sides of 104.00 which represents 3-month highs. There are several data points of interest to gold speculators this week, but this is overplayed. The general picture of higher interest rates is in place and well known, so I expect this market will play out flat and on both sides of $1900.00 until the confusion over interest rates is resolved.

Reuters (Deep Kaushik Vakil) – “Gold shrugs off hawkish Powell to start data-packed week – “Gold held its ground on Monday as investors digested hawkish comments from Federal Reserve Chair Jerome Powell before a slew of U.S. economic data this week that is expected to shed light on inflation and the labor market. “Even if gold and silver are not moving up, they’re relatively steady, but even being steady in this environment can be considered positive news,” said Carlo Alberto De Casa, market analyst at Kinesis Money. The U.S. central bank may need to raise interest rates further to cool still-too-high inflation, Powell said at an annual gathering in Jackson Hole, Wyoming on Friday. Gold struggled for direction as gains were kept in check by a higher dollar, while a retreat in benchmark 10-year Treasury yields from multi-year highs offered some respite. Non-interest-bearing bullion tends to underperform when higher interest rates boost yields on rival safe-havens like U.S. bonds. “The general view is that market participants were already priced for a hawkish outcome in the lead-up to Powell’s speech, which allows room for some relief on little surprises,” said Yeap Jun Rong, a market strategist at IG. “Concerns of re-accelerating inflation on U.S. economic resilience are translating into mounting bets of a November rate hike.” A series of economic data this week, including the U.S. core PCE inflation and August non-farm payroll report, will likely provide more clarity on the economy’s strength. Highlighting investor sentiment toward bullion, data on Friday showed COMEX gold speculators cut net long positions in the week ended Aug. 22.”

On the day gold closed up $6.80 at $1917.90, and silver closed up $0.02 at $24.24.

On Tuesday the price of gold drifted lower in the early trade ($1915.00) but quickly reversed direction, moving to daily highs ($1936.00) on news of sagging consumer confidence. The theory here is that we are closer to recession than most believe, which makes sense because you can’t move interest rates from near zero through something like 5% + without causing an economic slowdown. Interest rates are the classic inflation break and Chief Powell has stated many times – controlling inflation remains a number one priority.

This morning’s disappointing consumer confidence provided fresh data which suggests the economy is “slowing down”. The news was jumped on by the paper trade, encouraging the bullish scenario and driving prices higher in gold (three week high) and silver (four week peak).

It makes sense to realize that no one economic tool is without fault. Economists use many tools and throw in some “Kentucky Windage” before opining about economic growth or recession. My bet is that this latest bullish encouragement will be placed on the back burner when the reality of a still hawkish Fed creeps back into the headlines.

Reuters (Lucia Mutikani) – US consumer confidence drops in August on inflation worries – “U.S. consumer confidence fell more than expected in August after two straight monthly increases amid renewed concerns about inflation, a survey showed on Tuesday. The Conference Board said its consumer confidence index dropped to 106.1 this month from a downwardly revised 114.0 in July. Economists polled by Reuters had forecast the index retreating to 116.0 from the previously reported 117.0. The decline erased the back-to-back increases in June and July. “Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, chief economist at The Conference Board in Washington. “The pullback in consumer confidence was evident across all age groups, and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000.”

On the day gold closed up $18.60 at $1936.50, and silver closed up $0.54 at $24.78.

On Wednesday gold continued higher as the dollar weakened and the momentum trade joined the party. The price of gold opened flat around $1935.00 but quickly moved to daily highs, threatening $1950.00 as the dollar lost more steam. Since last Friday the Dollar Index has moved from 104.00 through 103.00. Some economic prophets claim that higher interest rates have become anathema to the economy and should be avoided, especially in the short term.

Still, I’m old school when it comes to short term price moves up or down. Making great judgments should be avoided. Stating the obvious makes more sense. The price of gold began its charge to the upside in mid-August ($1890.00), in what turned out to be a surprising short-term bottom. Since then, it has gathered momentum, now challenging $1950.00.

But it makes sense to question how far this latest bullish fun can continue. There has been huge overhead resistance in place since the summer months ($1960.00) and the cardinal event concerning higher interest rates is unresolved. Traders will be looking for at least a profit-taking round given Powell’s obsession with inflation. Or more likely a significant sell off in gold if the Washington Deep Thinkers press their bets on higher interest rates.

This type of pricing action is typically not of much interest in the physical market because time frames are almost never short term. Today’s long term bullion investors only sell a portion of their out of sight nest egg when they have specific needs. This approach does not worry about growing storm clouds or sunny days. In either case a tried-and-true response is at the ready.

Reuters (Deep Kaushik Vakil) – Gold steadies near three-week high as traders await more US data – “Gold was perched atop a three-week high on Wednesday as traders positioned for more U.S. economic readings that could further alter the odds of another interest rate hike by the Federal Reserve. U.S. job openings dropped in July to approach pre-pandemic levels, raising hopes that the Fed could lower inflation without a sharp rise in the unemployment rate. “The chances of another rate hike before the end of the year dropped… and this caused a drop in U.S. Treasury yields and also in the U.S. dollar,” said ActivTrades senior analyst Ricardo Evangelista. “Bad news for the economy will be good news for gold.” Benchmark 10-year yields came off their lowest in two weeks, while the dollar hovered near lows hit during its worst session since Aug. 4 on Tuesday. Dollar-priced bullion, which bears no interest, finds support when bond yields fall. Investors now await the Commerce Department’s second take on April-June GDP at 1230 GMT, the PCE price index on Thursday and the nonfarm payrolls (NFP) report on Friday. “Of course, the risk here is that the JOLTS (Job Openings and Labor Turnover Survey) report was a lone wolf and if the U.S. GDP and NFP data comes in hot, hold on to your gold hats as we could easily see Tuesday’s gains reverse,” said Matt Simpson, senior analyst at City Index.”

On the day gold closed up $7.80 at $1944.30, and silver closed down $0.05 at $24.73.

On Thursday the price of gold opened relatively steady, which is a small surprise considering the PCE (Personal Consumer Expenditures) came in as expected. What is interesting about this fresh data is that inflation this past year (4.2%) has been steady. With all the drama about “rising or falling” inflation is not moving higher or lower.

This should have created a downdraft in the price of gold this morning because it would suggest the Fed will remain hawkish on its interest rate intention. You could make a reasonable argument that the expected downdraft was offset by the current uptrend in momentum, but momentum is dissipating. Inflation, at least according to this measurement, is not and the PCE is a favored economic tool used by the Fed. Eventually the price of gold drifted lower on the day but considering what it might have done I would call this only minor transitory pricing.

Reuters (Harshit Verma) – Gold clings to gains as cooling US inflation boosts Fed pause bets – “Gold held on to gains on Thursday after cooler U.S. inflation and weaker jobs numbers reinforced expectations that the Federal Reserve will keep interest rates on hold this year. Inflation as measured by the personal consumption expenditures (PCE) price index rose 0.2% last month, matching June’s gain. In the 12 months through July, the PCE price index increased 3.3%, after advancing 3.0% in June. U.S. consumer spending, which accounts for more than two-thirds of the country’s economic activity, accelerated in July. Weekly initial jobless claims fell 4,000 to 228,000. That compares with a four-week average of 237,500. Bob Haberkorn, senior market strategist at RJO Futures said that while the numbers were “not terrible”, they were “not great” either and may mean that the U.S. Federal Reserve would be in a position to halt interest rate rises early next year. Gold is now in wait-and-watch mode, and a drop in bond yields could prompt some strength in bullion, Haberkorn added. U.S. Treasury yields were little changed to slightly lower, while the dollar briefly trimmed gains, before rising again, after the economic data. Bets on the Fed leaving rates unchanged in September stood at 88.5%, while bets of a pause in November were at 56%, according to the CME Group’s FedWatch tool.”

On the day gold closed down $6.10 at $1938.20, and silver closed down $0.26 at $24.47.

On Friday the price of gold and silver settled into the “unchanged” region for the week. A kind of cooling down in both metals. This may be the result of two independent forces. A market struggling with a “soft landing” coupled with the notion that the Fed is willing to put up with marginally higher inflation rates. This is not a popular line, but it does kind of tack together an end game which will buy more time for all parties. Gold pricing has been trending lower since April but seems to have settled around $1900.00. Still, there are plenty of loose ends with both the bullish and bearish scenario. I just don’t see a short-term fix to the interest rate dilemma, so traders may play both sides of the street well into 2024.

Reuters (Harshit Verma) – Gold gains as Fed pause bets rise on U.S. jobs data – “Gold was set for a second straight weekly gain on Friday after data showing a rise in the U.S. unemployment rate in August boosted bets that the Federal Reserve may hold off on further interest rate hikes this year. U.S. bond yields and the dollar extended their losses after the data, supporting non-yielding bullion. The U.S. economy added more jobs than expected in August, but a rise in the unemployment rate to 3.8% and moderation in wage growth pointed to an easing in labor market conditions. “Gold is rallying modestly after a generally friendly employment report though it wasn’t quite as weak as hoped,” said Tai Wong, a New York-based independent metals trader. “Bulls want to see gold advance and close strongly to maintain its recent momentum; weakness under $1,940 would be a concern.” Bets on the Fed leaving rates unchanged in September rose to 93.0% from 89% before the data, while bets of a pause in November rose to 65.1% from 55%, according to the CME Group’s FedWatch tool.”

On the day gold closed up $1.60 at $1939.80, and silver closed down $0.24 at $24.23.

Platinum closed down $5.70 at $965.60, and palladium closed up $9.40 at $1217.20.

Jim Wyckoff (Kitco) – “Technically, the gold futures bears still have the overall near-term technical advantage but the bulls have gained momentum this week. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,985.00 and then at $2,000.00. First support is seen at today’s low of $1,964.60 and then at $1,950.00. The silver bulls have the overall near-term technical advantage and have momentum. A fledgling price uptrend is in place on the daily chart. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at the July high of $25.82. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $25.425 and then at the July high of $25.82. Next support is seen at $24.745 and then at $24.55.”

Posted on August 25, 2023August 25, 2023 by Richard

Gold – Jackson Hole – Powell at Work

Commentary for Friday, August 25, 2023 (www.golddealer.com) – Today gold closed down $7.10 at $1911.10, and silver closed up $0.01 at $24.22. Everyone was holding their breath, awaiting Chief Powell’s Jackson Hole comments early in this trading day. And the market held steady until the Chief called inflation “too high” and warned that “we are prepared to raise rates further”. Gold moved from $1923.00 to lows on the day approaching $1890.00. And just as quickly recovered ($1910.00). So, what just happened? The Chief refocused his hawkish reality. This speech was not much different from his last Jackson Hold appearance a year ago. The cautionary plus here, is that gold is not falling out of bed even as higher interest rates loom large. Last Friday gold closed at $1886.10 / silver at $22.70 – on the week gold was up $25.00 and silver was higher by $1.52. Another ho hum week for gold but the silver bulls are stirring.

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 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 pushed to daily highs in the New York cash market ($1898.00) but traders again sold the rally repeating the kind of roller coaster ride we should be getting used to in this interest rate transition period. The Jackson Hole Economic Symposium is a 3-day conference put on each year by the Federal Reserve Bank of Kansas City at Jackson Hole, a lovely area located in Wyoming. This meeting is attended by important financial thinkers from around the world. And the discussion will be highlighted by comments from Chief Jerome Powell this Friday. Traders will be watching carefully for fresh interest rate tips.

If the Powell comments at least open the dovish door for consideration, it would be a welcomed plus for the bullish scenario. If the Chief remains resolute about fighting inflation, especially in the shorter term, the price of gold would remain defensive. In either case, the professionals give gold a plus because its price has remained above March lows, mitigating downside risk.

Reuters (Deep Kaushik Vakil) – Gold loiters near 5-month low as traders hunt for more Fed cues – “Gold held around five-month lows on Monday, pressured by higher bond yields as markets geared up for the Federal Reserve’s Jackson Hole symposium for clues on where interest rates might settle. “The market remains concerned about the outlook for rates in the U.S. and most clearly, the recent spike that we’ve seen in the bond yields to a cycle high,” said Ole Hansen, Saxo Bank’s head of commodity strategy. “The cost of holding a gold position right now is simply too high for longer-term investors to get involved.” Gold grazed its lowest since mid-March at $1,883.70 last week, as buoyant economic data raised bets for higher-for-longer U.S. interest rates, reducing demand for the non-yielding commodity. Rising Treasury bond yields and home mortgage rates may reduce support at the U.S. Federal Reserve for additional rate increases, the prospect of which has already been ebbing on the basis of weaker inflation. Investors now look to Fed Chair Jerome Powell’s speech on Friday, as central bankers from around the world assemble in Jackson Hole for their annual conference. “The discussion is likely to be centered around whether it warrants a higher level of longer-term equilibrium interest rates versus a decade ago,” said Kelvin Wong, senior market analyst, Asia Pacific, OANDA. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.3% on Friday, reporting its first inflow in a month.”

On the day gold closed up $7.20 at $1893.30, and silver closed up $0.60 at $23.30.

On Tuesday gold traded between $1890.00 and $1905.00 which I find interesting considering the mounting bearish sentiment in the metals these days. Think about it, the rising interest rate story has been in place for some time and in fact interest rates are now around 5%, which is a huge jump when compared with pandemic lows of near zero.

And yet our shiny friend is working hard to remain closer to $1900.00 than to $1800.00. And that in spite of all the moving averages heading south. Don’t get me wrong, I’m not dancing in the streets because I think the Fed will remain hawkish. But all in all, things could be a great deal worse and yet the gold is not particularly weak in price or in physical demand.

Reuters (Brijesh Patel) – Gold holds near five-month low, focus turns to Jackson Hole – “Gold prices hovered near a five-month low on Tuesday as a stronger dollar and higher bond yields dented bullion’s appeal, while focus shifted to the Jackson Hole symposium due later this week for more cues on the interest rate outlook. Benchmark 10-year U.S. Treasury yields eased for the day. However, they were still near their 15-year high levels. Meanwhile, limiting gold’s upside, the dollar rose 0.2%, making gold more expensive for holders of other currencies. Gold prices fell to their lowest level since March last week as strong U.S. economic data boosted bets that U.S. interest rates would stay higher for longer. Higher rates increase bond yields, making non-yielding bullion less attractive. “The Fed is going to remain optimistic here and that’s probably going to support the argument that maybe the Fed will have to do more tightening,” said Edward Moya, senior market analyst of the Americas at OANDA. Richmond Fed president Thomas Barkin said the U.S. central bank needs to defend the 2% inflation target to ensure its own credibility remains intact with the public. On the technical front, gold prices are trading below the 50, 100 and 200-day moving averages. Speculators who trade on technical signals regard a break below such moving averages as a bearish sign. Indicative of sentiment, receding fears of a U.S. slowdown and surging bond yields have gradually eroded the appeal of exchange-traded funds (ETF) backed by safe-haven gold. “Against this backdrop, gold will doubtless find it difficult to come out of the defensive in the near future. That said, sentiment is now already so bearish that it wouldn’t take much to spark a price recovery,” Commerzbank said in a note.”

On the day gold closed up $3.10 at $1896.40, and silver closed up $0.12 at $23.42.

On Wednesday the price of gold was surprisingly strong in the early trade, moving to $1920.00 as the chance that the Fed will leave rates unchanged grows stronger. Anything above $1900.00 will help the bullish scenario. Traders will be suspicious of this latest vibe because while the Fed may leave rates unchanged in September, they will likely opt for a rate hike before the end of the year. The potential downside in gold prices is growing weaker, a plus for the bullish sentiment. But the upside near term for the price of gold will likely be capped because of the fear of higher interest rates. Especially if inflation does not continue to move lower.

Reuters (Harshit Verma) – Gold scales near two-week peak as Treasury yields retreat – “Gold prices jumped 1% to a near two-week high on Wednesday, helped by a pullback in U.S. bond yields and the dollar as investors looked ahead to the Jackson Hole symposium for guidance on interest rates. “It (gold) was a little oversold ahead of itself and we’re getting a bounce on some bargain hunting and then short covering,” said Bob Haberkorn, senior market strategist at RJO Futures, adding that a slight dip in yields is also helping. Benchmark 10-year Treasury yields slipped from near 16-year highs hit in the previous session, while the dollar pared gains against its rivals. The S&P Global’s flash U.S. composite PMI index showed U.S. business activity approached the stagnation point in August, with growth at its weakest since February as demand for new business in the vast service sector contracted. Market participants focus will be on a speech by Federal Reserve Chair Jerome Powell at Jackson Hole on Friday for additional clues on the path for interest rates. According to the CME’s FedWatch Tool, the probability that the Fed leaves rates unchanged at its September meeting is now at 88.5%. Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion. “People are expecting a continued hawkish tone from Chair Powell. It is too early for him to point to a loosening in policy on the horizon,” said Daniel Ghali, commodity strategist at TD Securities. “The markets attention is now shifting from how high will rates go to how long will rates remain high.”

On the day gold closed up $22.10 at $1918.50, and silver closed up $0.94 at $24.36.

On Thursday the price of gold dipped on the open ($1911.00) and traders bought the dip as prices pushed to highs on the day ($1920.00). And on the day both gold and silver closed virtually unchanged. Even the physical trade was on the quiet side today.

This looks like settling to me after yesterday’s jump to highs on the week as traders may feel Wednesday was “too much, too soon” and took profits. All the attention will be on Jackson Hole, but I don’t think the Chief will vary much from his traditionally hawkish position on inflation.

Because of this, paper traders will likely square up accounts and move to the sidelines going into an uncertain weekend. Frankly there is some underlying tension in this trade which might favor the upside, still I expect a jerky market within a narrow price range for both gold and silver.

FXEMPIRE (Christopher Lewis) – Gold Price Forecast – Gold Markets Give Up Early Gain – “Gold markets have initially tried to rally during the trading session on Thursday but gave back those gains to show hesitation. At this point, I think we have got a scenario where the market simply doesn’t know what to do between now and the Jackson Hole Symposium, so therefore I think you probably have a lackluster session ahead. Ultimately, the market will then have to decide what to make of the central banker speakers, such as Jerome Powell and Christine Lagarde, and therefore I think it’s probably only a matter of time before we see some type of move. Once we get through that, then I think you have a situation where we could get a little bit of follow-through. Right now, it’s likely that the market will continue to see a lot of volatility, and I do think that if we break above the 50-Day EMA, then it opens up the door to go looking to the $2000 level. Underneath, the 200-Day EMA opens up the possibility of a move to the $1900 level. All things being equal, this is a market that is also in the midst of forming a “double bottom”, so it could be trying to tell us what’s about to happen next. Furthermore, the candlestick on Thursday was rather impulsive, so that’s exactly what you want to see in order to turn the market around and start going higher. In general, this is a market that continues to be very noisy, and you do need to be cautious with your position size due to the fact that the market adjustments do tend to be rather violent, and therefore you could find yourself on the wrong side of a bad position quickly. In general, you need to get some type of momentum going in order to jump in with the bigger position, so between now and then caution is the better part of valor. With that being the case, be very cautious but I do think that eventually the gold market probably will get a little bit of a boost. However, keep in mind that Jerome Powell could spook the markets.”

On the day gold closed down $0.30 at $1918.20, and silver closed down $0.15 at $24.21.

On Friday the price of gold was typically jittery, looking for fresh interest rate clues. And most traders thought the conclave at Jackson Hole provided an excellent opportunity. The reality here, however, is that the Fed’s interest rate position has not changed “one jot or tittle” if you are biblically inclined. This is not bad news, but it is stubbornly consistent.

Other, longer-term factors which may eventually push gold and silver to all-time highs are in play. But in the meantime, the Fed’s primary focus is rising inflation. This fixation will hinder the bullish scenario. But as our debt load continues to grow it makes sense to keep an independent financial asset like physical gold and silver bullion in a safe hiding place.

Jim Wycoff (Kitco) – “Technically, the gold futures bears still have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,980.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at the overnight high of $1,951.20 and then at $1,963.50. First support is seen at $1,935.00 and then at Wednesday’s low of $1,926.20. The silver bulls have the overall near-term technical advantage and have momentum. A fledgling price uptrend is in place on the daily chart. Silver bulls’ next upside price objective is closing September futures prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at the August low of $22.265. First resistance is seen at this week’s high of $24.43 and then at $25.00. Next support is seen at $24.00 and then at Wednesday’s low of $23.475.”

On the day gold closed down $7.10 at $1911.10, and silver closed up $0.01 at $24.22.

Platinum closed up $5.20 at $944.30, and palladium closed down $15.50 at $1218.20. In my opinion platinum and palladium bullion provide great value but live products are scarce.

Posted on August 18, 2023 by Richard

Gold – Rising Bearish Sentiment

Commentary for Friday, August 18, 2023 (www.golddealer.com) – Today gold closed up $2.00 at $1886.10, and silver closed up $0.03 at $22.70. Gold finished the week with a small corrective bounce, likely the result of short-covering and mild bargain hunting, but there are no game changers on the horizon. Interest rates will remain higher, and the Fed will remain aggressive, but the insight here is that the economy is not falling out of bed. CNBC commentator Rick Santelli made an interesting comment this week about traders being fixated over interest rates. By extension, the metals may surprise, moving higher in this transition if traders stop worrying about Fed intention and look at the bigger world picture. Last Friday gold closed at $1912.90 / silver at $22.67 – on the week gold was down $26.80 and silver was up $0.03.

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 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 dipped on the open, pushing towards lows on the day ($1902.00) before traders bought the dip. But the slip towards $1900.00 support remains in place, encouraged by a bearish technical picture and rising interest rates. I think a test of support below $1900.00 is in the short-term cards unless the bulls can find the buzz needed to encourage their base.

Still, the downside at this point might be less than expected for two reasons. First, the price of gold has moved lower by $80.00 this past month, so our shiny friend may already be in oversold territory. Further weakness might create the typical short covering rally. Second, the Dollar Index moved from 100 through 103 during the same time frame. Traders will be looking for an oversold condition. A weaker index will encourage the bullish short-term scenario.

Reuters (Brijesh Patel) – Higher US dollar, yields drag gold to more than one-month low – “Gold prices fell to a more than one-month low on Monday as a stronger dollar and elevated bond yields took the shine off bullion, while investors awaited fresh catalysts to gauge the downside after a mixed bag of U.S. inflation numbers last week. The dollar jumped 0.5% to its highest level in over a month, making greenback-priced bullion more expensive for overseas buyers, while benchmark 10-year Treasury yields rose to 4.205%. “Technically gold can move below the $1,900 levels here without a lot of problems. We’ve reached recent support levels and the path is quite open for gold to trend lower as short-term interest rates move higher.” Last week, data showed U.S. consumer prices increased moderately in July. However, producer prices rose slightly more than expected, fueling concerns that the Federal Reserve could keep rates higher for longer. Interest rate increases tend to lift bond yields and also raise the opportunity cost of holding non-yielding bullion. “We continue to see a pretty significant decline in long exposure in gold and a significant increase in short exposure. Speculative investors are getting out of gold and interest rate expectations are a big factor here,” said Bart Melek, head of commodity strategies at TD Securities. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell to the lowest level since January 2020. The focus this week will be on U.S. retail sales data on Tuesday, followed by the minutes of the Federal Open Market Committee’s July meeting on Wednesday that could shed light on the appetite for higher rates.”

On the day gold closed down $2.30 at $1910.60, and silver closed down $0.03 at $22.64.

On Tuesday the gold bulls frowned on the open as gold broke through the important $1900.00 support touching $1896.00 before buying interest developed. A few hours after the dip paper traders pushed prices back to highs on the day ($1912.00), not a spectacular recovery but enough strength to douse the building bearish sentiment, at least for this trading day.

Still, I expect gold to stay left footed as the US economy continues to show strength. Not that one good day makes the case, but our economy has had enough good days to suggest that calamity is not around the corner and improvement may indeed be a developing trend.

This gives the FOMC reason to believe they can continue to fight inflation with a more aggressive interest rate agenda. Or at least venture into these waters with the idea that if the economy looks like it is heading south, a course correction for the FOMC would be no big deal.

Reuters (Brijesh Patel) – Gold drops as bond yields rally on US retail sales data – “Gold prices fell to a 1-1/2 month low on Tuesday as Treasury yields jumped after data showed U.S. retail sales rose more than expected in July, fueling worries that the Federal Reserve will likely keep interest rates higher for longer. U.S. retail sales jumped 0.7% last month, the Commerce Department said on Tuesday, suggesting the economy continued to expand early in the third quarter. Economists polled by Reuters had forecast retail sales would climb 0.4%. “Another impressive retail sales report, which suggests the economy is not weakening and that’s going to force the Fed to keep the prospect of more rate hikes on the table,” said Edward Moya, senior market analyst of the Americas at OANDA. “The $1,900 per ounce is a key level for a lot of traders when they focus on gold. At times it can trade extremely technical and we can see some key support around this level for gold prices.” Benchmark 10-year U.S. bond yields hit almost 10-month highs after the data, decreasing the appeal of non-yielding gold. According to the CME’s FedWatch Tool, the probability that the Fed will leave rates unchanged this year is at 57%. The Fed has since March 2022 raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range. High interest rates increase the opportunity cost of holding bullion. Indicative of sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since January 2020 on Monday.”

On the day gold closed down $8.10 at $1902.50, and silver closed down $0.04 at $22.60.

On Wednesday the price of gold seemed to be waiting on the next FOMC headline. In the early trade it held above the important $1900.00 support. This is the likely result of a steady Dollar Index trading flat around 103.00 since Monday.

But ultimately the price of gold broke down and moved to lows of the day ($1892.00) giving the already worried bulls more trading woes.

But there may be a small silver lining in this slow decline below $1900.00.

It is worth noting that the index has moved two full points higher this past month. If this uptrend continued it could of course be a big negative for gold. But I believe the index is now in overbought territory and will settle lower, helping the flagging bullish sentiment.

The reasoning here is worth consideration because of contrarian theory. With most of the bad news about gold already known it figures that potential sellers have sold. This process helps create the typical classic bottom in a weak market, so don’t be surprised to see the price of gold channel at the lower end of its current trading range.

Reuters (Deep Kaushik Vakil) – Gold ticks up as dollar eases before Fed’s July minutes – “Gold edged up on Wednesday on a weaker dollar and bond yields, recovering some ground after retreating below the key $1,900 level in the previous session following robust U.S. economic data. Bullion traders also positioned for minutes from the Federal Reserve’s July policy meeting for further cues on interest rate strategy, as well as U.S. homebuilding and factory output data due later in the day. Gold has found short-term support from a weaker dollar as the pound strengthened after data showed British core inflation stayed strong in July, said Quantitative Commodity Research analyst Peter Fertig. Non-yielding gold, priced in dollars, also gained as benchmark 10-year Treasury yields retreated from near 10-month highs. “Economic data out of the U.S. thus far has provided room for rates to be kept high for longer. We have the U.S. retail sales data yesterday pushing back against recession concerns and potentially keeping safe-haven flows at bay,” said Yeap Jun Rong, a market strategist at IG. Gold fell to its weakest level since end-June after the data on Tuesday. Indicating investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since January 2020. No inflows have been reported since late July. Minneapolis Fed President Neel Kashkari on Tuesday said interest rates may still need to go higher to tame inflation. “The main factor slowing gold’s decline is the lack of confidence in the health of the global economy with the latest data out of China adding to that negative sentiment,” Kinesis Money analyst Rupert Rowling said in a note.”

On the day gold closed down $6.40 at $1896.10, and silver closed down $0.12 at $22.48.

On Thursday the price of gold pushed higher on the open today ($1903.00) but failed to hold gains as traders sold the small rally and gold finished on lows for the day ($1884.00). This of late is the typical trading pattern as gold moves slowly lower as traders fear further interest rate hikes. I think there are two lessons to be learned from these recent trading cycles.

The first is that few should now question this downward drift. But it would be a mistake to dwell too much on the negatives because this market remains very transitory.

The second is that while bullish sentiment is being kept left footed by uncertainty, bargain hunting and short covering have mitigated weaker prices.

Gold, while weaker as interest rates continue to climb, does not look like it is anywhere close to capitulation even at the higher end of its recent trading range.

Reuters (Brijesh Patel) – Gold ekes out gains as softer dollar counters higher yields – “Gold prices edged higher on Thursday as a dip in the dollar offered some respite from rising Treasury yields and U.S. rate hike concerns that has pushed bullion below the key $1,900 per ounce level. “Gold has been down over the course of the last several sessions due to rising interest rates and bond yields,” said David Meger, director of metals trading at High Ridge Futures, adding, “we did see a bit of bargain hunting at these levels.” “We noticed yesterday in response to the FOMC minutes the market portended that the Federal Reserve still might need to be a bit more aggressive than previously expected in regards to continuing to raise rates.” Minutes of the Federal Reserve July 25-26 meeting on Wednesday showed most policymakers continued to prioritize the battle against inflation, while few participants cited risks to the economy if rates were pushed too high. The expectation that U.S. interest rates will likely be higher for longer has boosted benchmark 10-year U.S. Treasury yields to their highest since October, making non-yielding bullion less attractive for investors. Data showed the number of Americans filing new claims for unemployment benefits fell last week, pointing to a still tight labor market. “Markets are looking for cracks in the U.S. labor market to really change the current trajectory and until such time, bullion may remain under pressure,” DailyFX analyst Warren Venketas noted.”

Ernest Hoffman (Kitco) – Gold prices oscillating around $1900 as Philly Fed survey beats expectations to turn positive in August – The gold market is trading on both sides of the key $1,900 level with neither bulls nor bears able to establish a clear direction after the Philadelphia Federal Reserve said its manufacturing sector survey surged dramatically into positive territory. Thursday, the regional central bank said its manufacturing business outlook for August was much improved, climbing back into expansionary territory to 12, compared to July’s reading of -13.5. The data significantly beat expectations as economists were looking for only modest improvement to a -10 reading. August is the first month the survey has given a positive reading after eleven consecutive months in negative territory. The gold market is not seeing a massive reaction to the latest surprising economic data. Spot gold last traded at $1,898.90 an ounce, down 0.37% on the day, and has been trading only slightly above or below $1,900 since the minutes before the 8:30 AM EDT release. The components of the index were mixed. The New Orders Index saw massive improvement, rising to 16 from July’s reading of -15.9, while the Shipments Index also turned positive, improving to 5.7 from the previous reading of -12.5. On the other hand, the labor market component continued to worsen, with the Employment Index dropping to -6.0, down from -1.0 in July.” The report also noted a rise in inflation pressures, which should be a concern for Fed watchers. The Prices Paid Index increased to 20.8, well up from July’s reading of 9.5. “The survey’s indicators for general activity, new orders, and shipments were all positive for the first time since May 2022,” the Philly Fed wrote in the report. “The price indexes remained near long-run averages. Expectations for growth over the next six months were less widespread, as most of the survey’s future indexes remained positive but declined.”

On the day gold closed down $12.00 at $1884.10, and silver closed up $0.19 at $22.67.

On Friday the price of gold wavered between $1885.00 and $1896.00, finishing mildly in the green but still defensive and looking for a short-term bottom. The week-over-week close was again a tight trading range, suggesting a fair degree of trader indecision.

The technical picture favors the bears so there are plenty of them in the woods. The bulls have been stubborn suggesting trading caution is a good idea during this transition period.

Still, even with this week’s usual speculation about the end of the world, this market feels like a typical summer trade. The public is not standing in line and may even be disinterested.

Reuters (Seher Dareen) – Gold heads for third weekly fall on fading bets for Fed cut – “Gold gained on Friday as the dollar and bond yields eased but remained on course for a third straight weekly dip as strong U.S. economic data reinforced bets that the Federal Reserve will keep interest rates elevated. The dollar was down 0.1%, making gold cheaper for holders of other currencies. “Ultimately, the medium-term outlook for gold is set to be influenced by Powell’s highly anticipated speech at Jackson Hole. In the meantime, $1,900 remains a key level of interest,” said Lukman Otunuga, senior research analyst at FXTM. “Sustained weakness below the $1,900 level may open a path toward $1,870.” Traders expect the Fed to hold rates in the 5.25%-5.5% range until 2024, according to CME’s Fedwatch tool. “If the market interprets what is said there as making another rate hike more likely in the U.S., the gold price could fall somewhat further still,” said analysts at Commerzbank in a note. “In general, we are convinced that U.S. interest rates have already peaked.” Benchmark 10-year U.S. Treasury yields eased from their highest levels since October, propping up zero-yielding bullion. On Thursday, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, registered the biggest drop since July last year. UBS cut its year-end target for gold from $2,100/oz to $1,950/oz, highlighting that the next boost in gold prices would require a renewal of ETF demand, expecting gold to remain range-bound until such a time. However, the Swiss bank forecast central bank gold-buying would remain strong for the rest of the year.”

Jim Wycoff (Kitco) – “Technically, the gold futures bears have the firm overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,980.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at Thursday’s high of $1,933.50 and then at Wednesday’s high of $1,938.20. First support is seen at this week’s low of $1,914.20 and then at $1,900.00. The silver bears have the overall near-term technical advantage. Prices are trending lower on the daily bar chart. Silver bulls’ next upside price objective is closing September futures prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at this week’s high of $23.07 and then at $23.255. Next support is seen at Thursday’s low of $22.39 and then at this week’s low of $22.265.”

On the day gold closed up $2.00 at $1886.10, and silver closed up $0.03 at $22.70.

Platinum closed up $19.60 at $909.20, and palladium closed up $39.50 at $1249.10.

Posted on August 11, 2023 by Richard

Gold – Dovish September Pause?

Commentary for Friday, August 11, 2023 (www.golddealer.com) – Today gold closed down $1.50 at $1912.90, and silver closed down $0.08 at $22.67. This looks like another week of tight pricing spreads and a small amount of underlying tension as paper traders prepare for the upcoming FOMC meeting this coming September. The public is yawning, and the fear of higher interest rates has not created fresh buyers or sellers of bullion products. It appears that the price of gold and silver has turned lethargic in a mild downward arc, typical of the summer season. Gold did, however, manage to finish almost unchanged today despite weekly highs in the Dollar Index – a small plus for the bulls. Last Friday gold closed at $1939.60 / silver at $23.62 – on the week gold was down $26.70 and silver was down $0.95.

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 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 touched $1940.00 in the early trade, in typical fashion however traders sold this mild rally and gold moved lower ($1932.00). This is indicative of a trading pattern we have seen for some time now as higher gold prices are stymied over the threat of rising interest rates.

At the same time there is a definite “drift” to the downside which has been in place since gold’s recent high in mid-July ($1980.00). I would not say our parking lot is crowded these typically slower summer months. I think the public has become ambivalent, waiting to see if the government will indeed create the much talked about “soft” landing.

Reuters (Brijesh Patel) – “Gold slips as comments from U.S. Fed governor dent sentiment – “Gold prices were on the backfoot on Monday after Federal Reserve Governor Michelle Bowman indicated that additional interest rate hikes will likely be needed to rein in inflation. Bowman, in remarks prepared for delivery to a “Fed Listens” event in Atlanta that largely repeated comments she made to a banking group on Saturday, said she backed the latest interest rate increase because inflation remains too elevated. “The dollar index and Treasury yields drafted a bit higher on that and gold futures having a muted to lower reaction,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “If we get lower-than-expected CPI data, we could get some of these Fed officials to stop with their hawkish outlook on rate hikes and we have a much better shot at getting some stabilization in prices.” John C. Williams, president of the Federal Reserve Bank of New York, expects that interest rates could begin to come down next year, the New York Times reported. Although gold is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding nonyielding bullion. Focus this week will be on U.S. consumer price index (CPI) data due on Thursday that could offer more clarity on the Fed’s policy stance. “Our expectation is still that the trend points to low inflation and therefore the Fed doesn’t have to hike rates,” UBS analyst Giovanni Staunovo said. “Palladium prices could be near a temporary bottom as supply risks could resurface driven by geopolitical tensions,” Intesa Sanpaolo economist Daniela Corsini said in a note.”

On the day gold closed down $6.10 at $1933.50, and silver closed down $0.48 at $23.14.

On Tuesday the price of gold dipped on the open, likely reacting to a stronger dollar. The Dollar Index moved from102.00 through 102.75 in the early hours of today’s trade. Which suggests that investors still highly value the dollar as the “other” safe haven during times of trouble.

The case in point being world anxiety created over the fear that China’s most recent economic numbers were disappointing enough to raise the issue of a government stimulus package.

The downward trend in the price of gold, which began in early July ($1980.00) remains a prominent trading feature, but this market is a difficult call because traders are unsure about what the Fed has in mind relative to interest rates.

There is good short-term support for gold in the $1920.00 range, but if that gives way traders will be looking at $1850.00. At that point, however, I suspect gold will be oversold, bargain hunters will steady the trade and the Fed intention will be better understood.

The smart money will expect choppy waters looking for a “value” number relative to interest rates. Once that number becomes clear this market should settle and present less drama. Giving the gold investor a break from this daily speculative chatter about “higher” or “lower” prices.

Reuters (Brijesh Patel) – Gold drops to near one-month low as dollar rallies – “Gold prices fell to a near one-month low on Tuesday as investors took refuge in the dollar after weak Chinese trade data, while caution prevailed ahead of U.S. inflation figures later this week. “A lot of nervousness about global growth outlook and it is probably going to be a lot weaker than people anticipated and that’s triggered a move into the dollar,” said Edward Moya, senior market analyst of the Americas at OANDA. The dollar rose 0.6% against its rivals, making gold less attractive for other currency holders. All eyes will be on U.S. consumer price index data due on Thursday. U.S. inflation likely accelerated slightly in July to an annual 3.3%, while the core rate was likely unchanged at 4.8%, according to a Reuters poll of economists. “U.S. inflation report matters, but the one that’s more important is the one we’ll get next month and that will probably suggest that we’re going to see some choppiness in gold in the near-term,” Moya said. Fed Governor Michelle Bowman on Monday outlined the likely need for additional rate hikes to lower inflation to the Federal Reserve’s 2% target, while New York Fed chief John C. Williams expected rates could begin to come down next year. All eyes will be on U.S. consumer price index data due on Thursday. U.S. inflation likely accelerated slightly in July to an annual 3.3%, while the core rate was likely unchanged at 4.8%, according to a Reuters poll of economists. “U.S. inflation report matters, but the one that’s more important is the one we’ll get next month and that will probably suggest that we’re going to see some choppiness in gold in the near-term,” Moya said. Fed Governor Michelle Bowman on Monday outlined the likely need for additional rate hikes to lower inflation to the Federal Reserve’s 2% target, while New York Fed chief John C. Williams expected rates could begin to come down next year. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. Reflecting downbeat sentiment in gold, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to a five-month low on Monday. “While central banks recorded a record first half in terms of gold demand, traders and investors in futures and ETFs remain skeptical about the current upside potential,” said Saxo Bank’s head of commodity strategy Ole Hansen.”

On the day gold closed down $9.40 at $1924.10, and silver closed down $0.42 at $22.72.

On Wednesday the price of gold favored the downside, closing on lows for the day ($1915.00) in the typically quiet summer trade. Most of the interest rate bad news about gold and silver is already in yesterday’s newspaper. And the technical picture for both metals has turned bearish.

What our shiny friend needs is some reason not to continue this drift towards the psychologically important $1900.00 support line. Most of the time the contrarian would find the silver lining in today’s fresh news that China’s economic machine is moving towards recession.

Yet, even the threat of higher FOMC interest rates, perhaps sooner than later, may be more than offset by safe-haven demand for the metals in a world full of trouble, inequity and injustice.

The US public does not seem particularly worried, and Wall Street has turned stoic under these changing circumstances. I’m never very hopeful the politicians will provide solutions but cannot believe the Democrats and Republicans have not already brought in fresh leadership.

Reuters (Brijesh Patel) – Gold struggles for traction as traders await US inflation report – “Gold prices fought for traction on Wednesday as investors stayed on the sidelines ahead of key U.S. inflation data that could offer more cues on the Federal Reserve’s stance on monetary policy. “Tomorrow’s CPI will be a pivot point for Fed policy… It’s kind of wait and see mode now,” said Daniel Pavilonis, senior market strategist at RJO Futures. “Gold has been this inflationary kind of hedge also, but it is fighting an uphill battle with a 10-year yield. Gold will likely struggle if inflation is still there and the Fed is looking to raise rates too fast,” Pavilonis added. U.S. consumer price index (CPI) data, due on Thursday, is expected to show inflation slightly accelerated in July to an annual 3.3%. Most traders expect no change from the Fed at its policy meeting in September. There is just a 13.5% chance of a quarter-point rise, according to the CME’s FedWatch Tool. “For a sustained recovery (in gold), we believe the market will need to see increased certainty on 2024 U.S. rate cuts,” said Baden Moore, head of carbon and commodity strategy at National Australia Bank. Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar. Offering some respite to gold, the dollar fell 0.1% against its rivals after data showing the Chinese economy slipped into deflation last month lifted hopes for more stimulus.”

On the day gold closed down $8.70 at $1915.40, and silver closed down $0.07 at $22.65.

On Thursday the price of gold rose on the open approaching $1930.00 but in typical fashion could not hold early gains. Traders sold the rally and gold drifted to lows on the day around $1913.00 but managed to claw its way back to almost unchanged on the day.

The fact that gold is slowly moving lower is indicative of the higher interest rate threat. The bulls manage to keep the bears slightly left footed in this fight to soften the downward trend approaching $1900.00 support. It is worth noting that the chance of a September rate hike has dropped from 20% last week to 10% this week. Traders are again pondering a dovish shift.

MarketWatch – “Gold prices firmed after the release of the U.S. inflation data, but those gains withered away as major stock indexes opened higher with the Dow Jones Industrial Average up over 400 points in the morning trading. “A peak in the dollar might be in place, but gold won’t be surging if Wall Street continues to buy up stocks,” said Edward Moya, senior market analyst at OANDA. The U.S. consumer-price index rose 3.2% in July from a year earlier, up from 3% in the year through June, the first increase in the headline rate in 13 months, but the core annual rate, excluding food and energy prices, slipped to 4.7% from 4.8%, the Labor Department said Thursday. “Crucially for the Fed, these figures are consistent with inflation moving lower towards its 2% target,” said Jamie Dutta, market analyst at Vantage. “Shelter costs remain a key wildcard but rent inflation should cool from an elevated pace in the months ahead, due to the typical lag associated with softer rents seen last year.” However, Dutta said the importance of Thursday’s CPI report is “slightly diluted” as investors will get one final set of inflation data before the next Federal Reserve policy meeting in September. “Focus will also turn to Jackson Hole at the end of this month which could see Chair Powell confirm the Fed’s rate hike intentions,” he wrote in emailed commentary on Thursday morning. Fed-funds futures traders currently price in a 9.5% chance of a September interest rate rise by the central bank, down from more than 20% a week ago, according to the CME’s FedWatch tool.

On the day gold closed down $1.00 at $1914.40, and silver closed up $0.10 at $22.75.

On Friday gold closed with zero fanfare or buzz, a still defensive market confused over interest rate direction. Paper traders are scratching their heads, trying to decide whether the FOMC will leave interest rates unchanged in September. A month ago, the idea of a “pause” in the Fed’s interest rate agenda was not a consideration. Most analysts believed the “best” outcome was a smaller rate hike. Today the odds surprisingly favor a “dovish pause”. This is not a new idea but a dovish shift at this point would be a big help to the flagging bullish scenario.

Reuters (Deep Kaushik Vakil) – Gold set for worst week in seven on dollar, yields strength – “Gold prices on Friday were on track for their worst week in seven, hurt by an overall stronger dollar and elevated bond yields as investors digested the latest U.S. inflation numbers and awaited for more economic data later in the day. Bullion has slid about 1.2% so far in the week as the U.S. dollar index and benchmark 10-year Treasury bond yields were on track for their fourth consecutive weekly gain. “Investors have been coming in at these low-1900s levels and they’ve been buyers, but equally, when gold has strengthened, they’ve been sellers. That’s helped to cap that range,” said Philip Newman, managing director of Metals Focus. Data on Thursday showed U.S. consumer prices increased moderately in July, with the smallest annual increase in core inflation in nearly two years, lifting hopes that the Federal Reserve is at the end of its rate hike cycle. However, San Francisco Fed Bank President and CEO Mary Daly said that more progress is needed before she would feel comfortable the Fed has done enough to rein in inflation. Focus now shifts to U.S. producer prices and consumer sentiment data due later in the day. “Investors are very focused on the expectation element of interest rates, as opposed to where they are actually, because of the Fed’s consistent messaging that it’s not about to lower rates and any rate drop has been pushed out into 2024,” Newman added. Interest rate increases tend to lift bond yields and also raise the opportunity cost of holding non-yielding bullion.”

Jim Wycoff (Kitco) – “Technically, the gold futures bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen at Thursday’s high of $1,963.50 and then at Tuesday’s high of $1,972.80. First support is seen at the overnight low of $1,942.70 and then at $1,939.20. The silver bears have the overall near-term technical advantage. Prices are trending lower on the daily bar chart. Silver bulls’ next upside price objective is closing September 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 June low of $22.34. First resistance is seen at Thursday’s high of $23.06 and then at $23.255. Next support is seen at $22.50 and then at the June low of $22.34.”

On the day gold closed down $1.50 at $1912.90, and silver closed down $0.08 at $22.67.

Platinum closed down $0.30 at $907.90, and palladium closed up $3.60 at $1298.20.

Posted on August 4, 2023 by Richard

Gold – Interest Rate Quandary

Commentary for Friday, August 4, 2023 (www.golddealer.com) – Today gold closed up $7.60 at $1939.60, and silver closed up $0.03 at $23.62. It looks like another quiet week for gold and silver considering the weekly price spreads. According to the experts the technical picture for gold and silver is back to a push between the bulls and bears. So, the momentum players are not interested, and the proprietary trading platforms are in the same boat. The plus for gold even in this quiet market is that it is holding up on both sides of $1940.00. The plus for silver is that $23.50 may turn out to be its next staging area for higher prices, even though the technical picture is less optimistic. Both metals are a bit surprising, I thought this market would be defensive, even worried about higher interest rates. The smart money now claims that the Fed will leave interest rates unchanged in September. Last Friday gold closed at $1960.40 / silver at $24.37 – on the week gold was down $20.80 and silver was down $0.75.

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 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 opened flat but quickly moved to daily highs. I would question whether the dollar’s weakness is pushing gold higher. The Dollar Index has been trending lower since late June when its most recent top reached 104.00 but it has been steady around 101.62 since last Thursday. It makes sense that some experts believe today’s push to higher ground may be the result of an improving technical picture favoring the bulls.

I would be suspicious of, yet another wave of bullish optimism based on the Fed changing its aggressive interest rate policy. Still, gold moving above $1970.00 this morning encourages the bulls. And this move will at least keep the short paper trade at bay for the time being.

Still, I don’t think this recent interest is sustainable. It is too early to claim some sort of transition period that would favor gold. The Fed’s interest rate position needs more definition.

In the meantime, the fact that gold is closer to $2000.00 than $1900.00 encourages the physical trade. Especially during these traditionally slower and quiet summer months.

Reuters (Brijesh Patel) – Gold set for best month in four as rate-hike cycle nears end – “Gold prices rose on Monday, putting them on track for their best month in four as an overall weaker dollar and expectations that major global central banks are nearing a peak with interest rate hikes boosted investor sentiment. The dollar index, meanwhile, was heading for its second straight monthly decline, making gold more attractive for other currency holders. Recent data showing signs of cooling inflation in the United States has raised expectations that the Federal Reserve was closer to ending its fastest rate hiking cycle since the 1980s. According to the CME’s FedWatch Tool, the probability that the Fed will leave rates unchanged this year is at 60%.”

On the day gold closed up $10.10 at $1970.50, and silver closed up $0.48 at $24.85.

On Tuesday gold dipped on the open this morning, quickly falling to daily lows of $1940.00 driven by several factors. The dollar is moving higher, pushed over expectations of further interest rate hikes. Gains for gold last month were solid, perhaps suggesting profit taking.

The main reason gold is moving lower is an old dynamic. Yesterday’s weekly high of $1970.00 stirred the trading pot but with no follow through this happiness turned into a busted flush.

The enthusiasm speculation that the Fed will “pause” is usually short lived. It does not make any sense that the Fed will take its foot off the interest rate pedal when interest rates are beginning to move lower. This and a deteriorating technical picture caps higher prices for gold.

At the same time, there does not seem to be any improvement in the amount of money still sloshing around these closed systems. So, it also makes sense that the downside for gold and silver is also limited in this upside-down financial world, pulled in dangerous directions by leaders who are basically crazy, some even threatening nuclear options.

Be patient in this interest rate transition. The physical market is looking for that “price” which offers “relative value”. Something low enough to compete with higher interest rates. And a option that is “real money” if this grand experiment goes off the track.

Reuters (Brijesh Patel) – Gold slips 1% as US dollar, Treasury yields tick higher – “Gold prices fell 1% on Tuesday, weighed down by a stronger dollar and an uptick in bond yields, while investors looked forward to more U.S. economic data this week that could influence the Federal Reserve’s policy stance. “Gold prices are softening as we see movement higher in the U.S. dollar. There is also some profit taking ahead a nonfarm payroll report in the week,” said Edward Moya, senior market analyst at OANDA. The dollar index rose 0.5% to a three-week high against its rivals, making gold more expensive for other currency holders. Benchmark U.S. 10-year Treasury yields climbed above 4%. Data on Tuesday showed U.S. job openings fell to the lowest level in more than two years in June but remained at levels consistent with tight labor market conditions. Meanwhile, U.S. manufacturing appeared to stabilize at weaker levels in July amid a gradual improvement in new orders. The focus now shifts to the key U.S. nonfarm payrolls report for July due on Friday. Overall payrolls are forecast to rise by 200,000 jobs in July after increasing by 209,000 in June. Gold ended July with 2.5% gains – its biggest monthly increase in four months- driven by hopes that major global central banks are nearing a peak with interest rate hikes amid signs of slowing inflation. “I think the Fed is going to skip rate hike in the next meeting if we see inflation come down … gold prices could be range bound in the near-term, but it will eventually go higher to above $2,000 per ounce,” Moya said.”

On the day gold closed down $29.80 at $1940.70, and silver closed down $0.64 at $24.21.

On Wednesday the bears again tested support as gold opened choppy but again slipped to daily lows, testing support at $1932.00. This trading pattern should now be familiar as the technical picture for gold is slowing turning bearish, likely reacting to the consensus that interest rates will be moving higher, sooner than later.

I’m not saying the bears are out in force these days, there is recent support in the 1920.00 range. We might just be seeing gold traders adjusting their prices relative to short term changes in interest rates. But the closer gold gets to $1900.00 the more emphasis you may see on bear raids, as the proprietary computer trade senses change.

Reuters (Brijesh Patel) – Gold pares gains as US dollar, bond yields resume climb – “Gold prices pared gains on Wednesday, hurt by a stronger dollar and a rebound in bond yields as investors digested Fitch’s U.S. credit rating downgrade and focused on nonfarm payrolls data later this week. “Higher interest rates would ultimately put pressure on gold. Also, we are seeing more strength in the dollar. Prices are trapped below $2,000 and above $1,900 for the time being,” said Daniel Pavilonis, senior market strategist at RJO Futures. The dollar rose 0.4% to more than a three-week high, making gold more expensive for other currency holders. Benchmark U.S. 10-year Treasury yields rose to their highest since July 10. Data showed U.S. private payrolls increased more than expected in July, pointing to continued labor market resilience that could shield the economy from a recession. The Federal Reserve raised interest rates by 25 basis points last month. According to the CME’s FedWatch Tool, the probability that the Fed would leave rates unchanged at the September meeting was at 83%.”

On the day gold closed down $3.30 at $1937.40, and silver closed down $0.46 at $23.75.

On Thursday gold remained choppy on both sides of $1934.00 in a typical and sleepy summer trade. Our trading desk has also turned quiet, likely reacting to higher interest rates, and a deteriorating technical outlook for the bulls. What this market really needs at this point is some fresh buzz to create interest. Continued flat prices is like watching the grass grow.

Reuters (Brijesh Patel) – Gold at three-week low as higher dollar, yields dim shine – “Gold was near a more than three-week low on Thursday, dragged by a robust dollar and elevated bond yields, while investors remained cautious ahead of July U.S. nonfarm payrolls data. The dollar rose to a four-week high, making gold more expensive for other currency holders. U.S. 10-year Treasury yields rose to their highest since November. “There is a lot of focus heading into the jobs numbers tomorrow, especially as we’ve had some stronger data lately, which has weighed on the sentiment and sort of fueled the idea that the Fed may have to keep the higher rates for longer,” said Ryan McKay, commodity strategist at TD Securities. Data on Wednesday showed U.S. private payrolls increased more than expected in July, pointing to continued labor market resilience. The U.S. jobs report due Friday could influence the Federal Reserve’s policy stance. The number of Americans filing new claims for unemployment benefits rose slightly last week. Rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion. “Gold prices could drift down towards the $1,900 level, but there is probably strong support there as well, just because we are certainly getting towards the end of the hiking cycle,” McKay said. Earlier in the day, the Bank of England raised its key interest rate by a quarter of a percentage point to a 15-year peak. While investors digested Fitch’s downgrade of the U.S. credit rating, independent analyst Ross Norman said gold’s failure to rally on that news may be behind redemptions seen in gold exchange-traded funds.”

On the day gold closed down $5.40 at $1932.00, and silver closed down $0.16 at $23.59.

On Friday gold drifted mildly lower on the open ($1930.00). Yet moved higher on the latest jobs number, which should have you scratching your head – it came in as expected. Yet the Dollar Index dipped on the news, so speculation is gaining speed around the water cooler.

Yet, this speculation did create a modest yet firm upward pressure in the price of gold. This underscores how starved traders are for fresh information that might suggest a change in price direction is in the wind.

Reuters (Brijesh Patel) – Gold gains as US dollar, yields tick lower after jobs data – “Gold prices rose on Friday after a slightly weaker-than-expected U.S. jobs report pushed the dollar and Treasury yields lower, offering some respite to bullion which was still on track for its worst week in six. Nonfarm payrolls increased by 187,000 jobs last month, the Labor Department said in its closely watched employment report. Economists polled by Reuters had forecast a gain of 200,000 jobs. “The jobs report has allowed the market to propose that the Federal Reserve is not as likely to raise interest rates. As a result, we’ve seen bond yields drop along with the dollar and that is certainly supporting the price of gold,” said David Meger, director of metals trading at High Ridge Futures. Following the data, the U.S. dollar fell 0.6% against its rivals, making gold less expensive for other currency holders. Benchmark U.S. 10-year yields retreated from a nine-month high. According to the CME’s FedWatch Tool, the probability that the Fed leaves rates unchanged at its September 19-20 meeting is now around 85% from around 78% just prior to the data coming out. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. “The data was bit weaker-than-expected, but not dramatically so, which is why a slight rise in prices this morning… Any dips (in gold) over the course of the next couple weeks, is likely going to be a buying opportunity,” Meger said.”

Jim Wycoff (Kitco) – “Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the July high of $2,028.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen at $1,975.00 and then at Wednesday’s high of $1,992.20. First support is seen at the overnight low of $1,954.50 and then at $1,950.00. The silver bulls and bears are also on a level overall near-term technical playing field. Prices are starting to trend lower on the daily bar chart. Silver bulls’ next upside price objective is closing September futures prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at $24.00 and then at $24.50. Next support is seen at the overnight low of $23.275 and then at $23.30.”

On the day gold closed up $7.60 at $1939.60, and silver closed up $0.03 at $23.62.

Platinum closed up $6.60 at $919.40, and palladium closed up $7.20 at $1253.70.

Posted on July 28, 2023 by Richard

Gold – Is Inflation Cooling?

Commentary for Friday, July 28, 2023 (www.golddealer.com) – Today gold closed up $15.00 at $1960.40, and silver closed up $0.13 at $24.37. Can’t say this was a great week for gold, even though the reaction to Powell’s interest rate hike was muted. And this rate hike was not even a watershed moment if you consider the larger timing picture. Jerome’s aggressiveness might suggest his political patience is thin. The firm rise in the price of gold today suggests that investors bought yesterday’s dip. Whether they will remain interested depends on how aggressive the Fed becomes over the longer term. Gold holding in the $1900.00 range is a nice plus for the bulls going into the weekend. It should be clear that the FOMC is rolling the dice and hoping for a good outcome. As usual the price of gold and stocks will adjust along the way. But my feeling is that we are back to a Goldilocks market for both – not too hot and not too cold. Last Friday gold closed at $1964.30 / silver at $24.70 – on the week gold was down $3.90 and silver was down $0.33. Another quiet summer week in the metals despite the ruckus.

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 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 remained stuck in neutral waiting for the fresh Fed interest rate news. The FOMC is meeting Tuesday and Wednesday of this week, and Fed Chair Jerome Powell will have comments at the ready at the press meeting after the markets close on Thursday. The notion that the Fed will “pause” this time around is getting attention. But the result of such a change in pace does not mean gold will push substantially higher.

Powell will likely suggest that interest rate hikes are right around the corner. This will at least support our shiny friend in the established channel between $1940.00 and $1960.00.

I’m worried about higher interest rates. It is worth noting, however, that the prices of both gold and silver look stable. Gold at $1950.00 and silver at $24.00 suggests a bit of optimism.

Inflation is slowing, which figures with interest rates at 5% but a continued downtrend may not be in the cards. A 3% inflation rate makes Wall Street happy and really is still cheap money when viewed from the longer term.

It is interesting that this is the definition of a “soft landing”. And has been Powell’s favored outcome since the beginning of this unwinding mess. But there are plenty of doubters in the peanut gallery, and the process will continue in some form through next year.

Reuters (Deep Kaushik Vakil) – Gold trades narrow range as Fed verdict draws near – “Gold prices traded a tight range on Monday as traders braced for a widely anticipated interest rate hike along with clues on future monetary policy from the Federal Reserve this week. “Gold is slow and steady, with traders betting that the Fed is getting close to their point where they stop hikes,” said Bob Haberkorn, senior market strategist at RJO Futures. Bullion may have found some safe-haven demand after Russia destroyed Ukrainian grain warehouses on an export route for Kyiv after pulling out of the Black Sea grain deal last week, Haberkorn added. But the focus was still on the Fed’s decision on interest rates on Wednesday, followed by the European Central Bank on Thursday, with both seen hiking rates. Gold is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion. “Any dovish surprise, particularly from the Fed, could be positive for gold, with good chances of seeing a new attack to the $2,000 mark,” said Carlo Alberto De Casa, market analyst at Kinesis Money, in a note. The dollar index inched 0.2% higher, limiting gold’s upside by making it more expensive for holders of other currencies. Gold priced in euros hit its highest since July 5 earlier in the day after data showed euro zone business activity shrank much more than expected in July. UBS analysts in a note predicted platinum would be under-supplied for the rest of 2023 due to substitution in auto catalysts and lower South African production.”

On the day gold closed down $4.00 at $1960.30, and silver closed down $0.26 at $24.44.

On Tuesday gold weakened in early trading touching daily lows ($1952.00). But managed to claw its way back to almost unchanged on the close. A plus for the short-term gold scenario.

On the minus side of the gold ledger – consumer confidence is now at two-year highs and the DOW is on a record 12-day winning streak, suggesting less safe haven demand.

This week will give traders something more than speculation as the Fed unwraps their latest interest rate intention. To raise or not to raise is the question? The public is feeling better about the economy, but the analytics fear recession. I believe the US economic picture is a mixed bag which may or may not influence the metals in the short term.

Today business has been quiet across our trading desk, but volume numbers are increasing because the public bought this latest dip. Which is surprising considering that gold is coming off recent highs ($1980.00). The CFTC claims that hedge funds are reconsidering gold. Perhaps because these higher interest rates do not have investors hiding under the bed.

Reuters (Brijesh Patel) – Gold firms as spotlight shifts to U.S. Fed meeting – “Gold prices edged higher on Tuesday on expectations that the U.S. Federal Reserve will likely end its monetary tightening cycle after a widely expected rate hike this week. “Gold is expected to be in a range-bound trade before the Fed decision. But there is optimism here that the Fed is almost done with rate hikes and that will support the market,” said Edward Moya, senior market analyst at OANDA. The focus is on a series of central bank meetings this week, starting from the Fed policy decision on Wednesday, followed by the European Central Bank (ECB) on Thursday and the Bank of Japan a day later. Markets anticipate 25 basis-point rate hikes from both the Fed and the European Central Bank, but investors will await clues on the outlook from policymakers, especially from Fed Chair Jerome Powell. “The market will be looking out for Powell’s speech tomorrow and if it seems like they’re more likely leaning towards one more rate hike, then that would be bad news for gold,” Moya said. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding it. Meanwhile, the dollar and benchmark 10-year U.S. Treasury yields ticked higher on the day, reducing the appeal of non-yielding bullion. China’s top leaders pledged on Monday to step up policy support for the economy, focusing on boosting domestic demand. “The remarks out of Beijing to work on more stimulus for the economy will be positive for retail demand for gold by Chinese consumers,” said Peter Fertig, analyst at Quantitative Commodity Research.”

On the day gold closed up $1.80 at $1962.10, and silver closed up $0.24 at $24.68.

On Wednesday the gold market closed quietly, waiting for the latest Jerome Powell pronouncement. The decision to raise interest rates a quarter point was unanimous. So much for all the speculation about a “pause”, as Jerome and his cohorts came out swinging. I’m not surprised. The Fed’s top priority has been and will continue to be the fight against inflation.

It is a bit surprising that the aftermarket trade in gold and silver showed little reaction to the quarter point hike in interest rates. This might suggest a certain kind of consistency in gold pricing these days, as the market had already adjusted to the change. But tomorrow will be a better gauge as to how traders paper traders see this latest hike.

The point to keep in mind is that the Chief was characteristically subtle in the scheduled press conference. When asked about improving inflation numbers, his answer was clear, one good month does not make a trend.

When pushed on the subject, he gave the same answer and claimed there is plenty of time between now and the next meeting to assess trends. What sense does it make to speculate at this point? This process could easily turn into a political football, so his caution is smart.

FXEmpire (James Hyerczyk) – Fed Eyes Economic Resilience, Inflation: Powell’s Hawkish Surprise? “The Federal Reserve faces an important decision at its upcoming meeting: whether to raise interest rates by 25 basis points or maintain the status quo. While it is widely accepted that a rate hike is likely, the real debate lies in the Fed’s future actions. Based on the current economic indicators, it is arguable that the Fed can and will raise rates in September while hinting at a subsequent pause after that. Here’s why:

The Economy’s Resilience – The economy has shown remarkable resilience despite cooling inflation. The recent 2.5 percent gain in the S&P 500 and a surge in consumer sentiment about the economy indicate continued confidence. This positive outlook may support the notion of a soft-landing for the economy.

Inflation and Employment – The Fed is closely monitoring inflation and employment levels. While inflation remains above the target, the strong job market is providing consumers the means and confidence to keep spending. However, officials believe that wage inflation needs to cool down further to reach the Fed’s 2 percent target. Striking a balance between tighter labor markets and moderating inflation will be crucial.

Caution and Contingencies – The Fed must exercise caution to avoid overdoing rate hikes, which could lead to new risks such as excessively low inflation. It is important for the central bank to keep its options open and consider the implications of each rate hike carefully.

Optimistic Economic Outlook – Recent data showing a slowdown in inflation and steady job growth have led economists to be more hopeful about the economy’s resilience. Goldman Sachs’ reduced odds of a recession and a decline in downturn expectations in other surveys are positive indicators.

Balancing Trade-offs – The Fed needs to strike a delicate balance between controlling inflation and supporting a robust job market. While rate hikes have effectively brought inflation under control, they have also led to higher borrowing costs and tighter credit flows. The central bank must weigh these trade-offs carefully.

Forward Guidance – Federal Reserve Chair Jerome Powell’s remarks have indicated a potential pause in rate hikes after July, signaling a more moderate pace in future increases. But he has also expressed his desire to bring inflation down to the Fed’s target zone. With the economy strong, I believe Powell will step on the gas pedal one more time before braking. Forward guidance will be crucial for investors to anticipate the Fed’s future actions.

Conclusion: Don’t Be Surprised by Powell’s Hawkish Tone – The Federal Reserve’s path towards a soft-landing for the economy remains uncertain. However, based on current economic indicators, a rate hike in July is expected, with the possibility of further increases in September. The Fed’s cautious approach and forward guidance will play a critical role in shaping the trajectory of future rate hikes. Striking a balance between inflation control and supporting a strong job market will be the key challenge for the central bank moving forward. As the economic outlook remains dynamic, the Fed will remain vigilant in responding to data and developments, ensuring a prudent and well-calibrated approach to monetary policy. That being said, don’t be surprised if Powell comes across as hawkish.”

On the day gold closed up $6.80 at $1968.90, and silver closed up $0.15 at $24.83.

On Thursday gold was not too happy about the Fed’s quarter point hike. Prices dipped on the opening and eventually touched $1940.00 before flattening out and trading on both sides of $1945.00. It is probably too early to say this is the end of short-term weakness, this market may remain defensive through next week.

The professionals will debate whether this is the end of the higher interest rates. And the best gold enthusiasts can do is wait for the Chief’s next inflation assessment. And while this does not sound overly optimistic – it may lay the foundation of higher gold prices throughout next year.

Reuters (Brijesh Patel) – Gold drops over 1% as upbeat US data lifts dollar, yields – “Gold prices slipped more than 1% on Thursday, weighed down by a stronger dollar and an uptick in bond yields after stronger-than-expected U.S. economic data. “There was a one and two punch on gold with a better-than-expected initial claims numbers showing that the strength of the U.S. labor market is resilient,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “Then also that surprise upside expectation in GDP data as well shows you that if there is any recession, it’s just not no one seeing it right now. So it paves the way for higher for longer on interest rates.” Data showed the U.S. economy grew faster than expected in the second quarter as labor market resilience underpinned consumer spending. A separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 221,000 for the week ended July 22. Following the data, the dollar index jumped 0.7% against its rivals, making gold more expensive for other currency holders. The benchmark U.S. 10-year yield climbed to 3.90%. On Wednesday, the U.S. Federal Reserve raised interest rates by 25 basis points as expected. Markets priced in 57% odds of the Fed holding rates for the rest of the year, according to the CME FedWatch tool. Meanwhile, the European Central Bank (ECB) raised interest rates for the ninth consecutive time on Thursday and kept the door open to further tightening.”

On the day gold closed down $23.50 at $1945.40, and silver closed down $0.59 at $24.24.

On Friday the price of gold was firm, supported by a half point dip in the Dollar Index. A short-term plus for the bulls. In my opinion Chief Powell will now work at tapping down Wall Street expectations and interest rate speculation. The next FOMC meeting is September 19^th and 20^th and is described as a Meeting associated with a Summary of Economic Projection. Gold and silver pricing are a difficult call but by that time a range of “value” might be established.

Reuters (Brijesh Patel) – Gold rebounds as dollar eases after US inflation data – “Gold rose on Friday after a sharp fall in the previous session, helped by a slight retreat in the dollar after signs of cooling U.S. inflation raised bets that the Federal Reserve will likely end its monetary tightening cycle. U.S. annual inflation slowed considerably in June. Inflation as measured by the personal consumption expenditures (PCE) price index increased 0.2% last month, the Commerce Department said on Friday. “The core PCE, which is what the Fed really looks at, came in line with estimates. It really wasn’t much of a surprise. Also, the dollar is weaker today and is giving a bit of a boost for gold,” Edward Meir, a metals analyst at Marex, said. “I think the Fed does not really mind seeing the stronger data as long as the inflation numbers continue to come down. The Fed is probably done raising rates and I would in general be inclined to buy the dips on gold.” Gold slipped nearly 1.4% on Thursday to register its worst day in nearly a month after data showed the U.S. economy grew faster than expected in the second quarter and weekly jobless claims fell, boosting the dollar. However, the dollar was down 0.1% against its rivals on Friday, making gold less expensive for other currency holders. Both the U.S. central bank and the European Central Bank raised interest rates this week and kept the door open to further tightening. Rising interest rates increase the opportunity cost of holding non-yielding bullion.”

On the day gold closed up $15.00 at $1960.40, and silver closed up $0.13 at $24.37.

Platinum closed up $0.60 at $937.60, and palladium closed down $3.00 at $1228.70.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. A four-week-old uptrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the July high of $1,989.80. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,960.00 and then at $1,975.00. First support is seen at this week’s low of $1,941.70 and then at $1,925.00. The silver bulls have the slight overall near-term technical advantage. However, a four-week-old uptrend on the daily bar chart has been negated. Silver bulls’ next upside price objective is closing September futures prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.00 and then at this week’s high of $25.325. Next support is seen at this week’s low of $24.18 and then at $24.00.”

Posted on July 21, 2023 by Richard

Gold – Steady Eddie – For Now

Commentary for Friday, July 21, 2023 (www.golddealer.com) – Today gold closed down $4.00 at $1964.30, and silver closed down $0.11 at $24.70. Can’t say gold was impressive this week because it failed to deliver on what looked like a promising break to the upside. Still the trade was steady, even consistent considering all the chatter, and the developing notion that it was “reasonable” for the Fed to not raise interest rates next week. In my book, wishful thinking has crept back into the bullish dialogue. The Fed will raise interest rates sooner or later, the real question then is whether higher interest rates and higher gold prices can be happily married. The fact that gold pricing is still north of $1900.00 is a plus for the bulls. And all things considered our shiny friend is holding up rather well, in what continues to look like a sleepy summer trade. Last Friday gold closed at $1960.10 / silver at $25.01 – on the week gold was up $4.20 and silver was off $0.31.

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 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 moved between $1945.00 and $1960.00 in early trading with a mild downward bias as analysts eyed the latest Chinese economic data with a frown. The Dollar Index has been flat since Friday and looks to have settled (100.00). The 2-point selloff since last Tuesday has supported the current trading range but has failed to create much bullish buzz.

This mild dip in prices feels like profit-taking to me and if you consider gold’s 30-day pricing chart this makes sense. A month ago, gold peaked at $1960.00, then traded sharply lower eventually reaching $1910.00 in 2 weeks. The bounce to higher ground took an additional 2 weeks but gold finally worked its way back to $1960.00, and again stalled.

For now, it looks like we are channeling between $1910.00 and $1960.00. Both limits work, but neither is strong enough to dominate. Until the FOMC is more definite about their interest rate intentions this market may drift within these limits. According to the experts, gold’s technical picture is now a push between the bulls and bears. The technical outlook for silver on the other hand favors the bulls, but I expect further volatility in both markets.

Reuters (Ashitha Shivaprasad) – Gold struggles for traction on doubts about Fed pause – “Gold eased on Monday as the dollar ticked up, with bullion traders still doubtful about whether the Federal Reserve may soon signal an end to its monetary tightening path. The dollar ticked up from a more than one-year low, making gold more expensive for other currency holders. Benchmark Treasury yields also edged higher. “(Gold) investors at this point are quite reluctant to go fully bullish despite last week’s inflation data,” said Bart Melek, head of commodity strategies at TD Securities. Bullion posted its biggest weekly gain since April last week on bets that the Fed could pause rate hikes after July after U.S. data hinted at a disinflationary trend as consumer prices grew at their slowest pace in over two years. Traders largely expect the central bank to hike rates in its July 25-26 meeting. “Gold is likely to be under pressure as the U.S. economy continues to be quite firm, particularly on the employment front. In my view it is very unlikely that the Fed is going commit to a tilt towards a more dovish policy stance,” Melek added. Higher interest rates dull gold’s allure as they increase the opportunity cost of holding the non-yielding asset. Investors also took stock of data from China that showed the top bullion consumer’s economy grew at a frail pace in the second quarter. “While sentiment may be good towards silver investment, industrial applications retain the majority of market share,” Heraeus analysts wrote in a note. “An improvement in activity in China and Europe may be needed to see the (silver) price rise much further in second half of 2023.”

On the day gold closed down $7.70 at $1952.40, and silver closed down $0.17 at $24.84.

On Tuesday the strength in the price of gold surprised even veteran traders. The Dollar Index was mildly weaker but not enough to create another round of positive buzz. My theory yesterday of gold being range bound and subject to profit taking is becoming a busted flush.

The technical picture has shifted from a push between the bulls and bears, to favoring the bulls. The shift in the technical picture has refueled the momentum players to the upside, but there is an underlying force here that is difficult to define. But powerful enough to get everyone’s attention.

Consider that the price of gold has quickly moved from struggling around $1900.00 to challenging $2000.00. Creating trader whiplash and sending the “short paper” to the woodshed.

A few analysts have been theorizing about how higher gold and rising interest rates may not be mutually exclusive. The thinking being that, considering the huge number of dollars still sloshing around the world, the price of gold is cheap in a relative kind of way.

This reasoning has been a core belief in the physical market but how the price of gold can compete with a 5% interest rate requires a leap of faith. Perhaps we will need Sherlock Holmes to figure out what is creating this excitement. At the beginning of “The Adventure of the Abbey Grange,” he awakens Watson by saying, “Come, Watson, come. The game is afoot. Not a word!

But let’s not get carried away with this pop to the upside, without seeing a shift in Fed policy or something similarly important. Recent overhead resistance for gold is more than challenging between $1950.00 and $2050.00. Short term upside gains should be approached with caution.

Reuters (Ashitha Shivaprasad) – Gold scales more than one-month high on softer dollar, lower yields – “Gold scaled more than a one-month high on Tuesday, bolstered by a softer dollar and lower Treasury yields, while investors focused on the outlook for the Federal Reserve’s monetary policy path beyond its July 25-26 meeting. The dollar index wobbled near more than a one-year low, making bullion more affordable to buyers holding other currencies. Benchmark Treasury yields ticked lower for the second straight day.”

On the day gold closed up $24.80 at $1977.20, and silver closed up $0.24 at $25.08.

On Wednesday the gold bulls were disappointed that the momentum fizzled after all the hoopla on Tuesday. And I will leave it up to the reader to decide if Tuesday’s nice jump to the upside was technically driven or simply a short-covering rally in disguise.

This trading pattern is very familiar and highlights opposing bullish and bearish forces, still looking for solutions. The two most important short-term factors in my mind being the interest rate variable and gold’s stubborn overhead resistance.

Gold dipped mildly in early trading, but the bulls managed to claw their way back to unchanged on the close. And this resilience continues to be a plus for the gold enthusiast.

Still, you can see that overhead resistance and underlying support are being tested. The range on both sides of $1975.00 is small but this price still places us in no man’s land – so uncertainty rules. The public remains sidelined to some degree so from a practical standpoint this stalling of prices as traders test overhead resistance is slowing physical action across our trading desk.

Reuters (Ashitha Shivaprasad) – Gold stalls near 8-week highs on Fed pause hopes – “Gold prices hovered on Wednesday near an eight-week peak hit in the previous session after recent economic data re-ignited hopes that the U.S. Federal Reserve may soon hit pause on its interest rate hiking cycle. On Tuesday, gold hit its highest since May 24 at $1,984.19 before settling about 1.2% higher after U.S. retail sales rose less than expected in June. “The market is very confident that rate hikes will end soon and disinflation is in place. After the Fed meet, if the market is convinced the Fed will no longer maintain the extremely hawkish stance, gold prices could reach $2,000,” said Edward Moya, senior market analyst at OANDA. A Reuters poll predicted the Fed will raise its benchmark overnight interest rate by 25 basis points on July 26, with most economists expecting that will be the last increase of the current tightening cycle. Higher rates make interest bearing investments more attractive than zero-yield bullion. Investors will also keep a tab on weekly jobless claims data due on Thursday. But “with the Fed set to hike next week, and a level of uncertainty and data dependence thereafter, speculators have been unwilling to fully buy-in to the bullish gold narrative,” TD Securities wrote in a note. “Until there’s more confidence in China’s recovery and an improved demand outlook, the industrial metals market might struggle in the near-term,” Moya added. Data showed China’s fiscal revenue grew at a slower annual pace in the first six months, signaling broadening economic pressures that have fanned expectations of fresh stimulus.”

On the day gold closed up $0.30 at $1977.50, and silver closed up $0.14 at $25.22.

On Thursday gold sold off from recent highs, touching $1966.00 before seeing a round of mild bargain hunting. The dip was likely the result of a bounce in the dollar’s strength. The Dollar Index, steady around 100.00, moved to 100.76 – a mild upturn but enough to draw attention.

And perhaps encourage a round of profit taking considering gold made 8-week highs yesterday. The next FOMC meeting is less than a week away (July 25^th and 26^th) and expectations are a mixed bag, at best. Some believe the Fed will “wait” to assess the current situation to see if higher interest rates are warranted. Some believe they will “settle” for a small increase just to keep still rising inflation at bay, with the hope that the general inflation trend is heading lower in the United States. What makes this a difficult decision for everyone is that foreign banks remain interest rate aggressive, taking current rates of inflation seriously.

Reuters (Brijesh Patel) – Gold eases off 2-month peak as US dollar, yields edge up – “Gold eased from a two-month high on Thursday as the dollar and bond yields ticked higher, although hopes for a pause in rate hikes by the U.S. Federal Reserve after July meeting limited the decline. “The yields and dollar have actually bounced a little, so we’re seeing a slight reverse effect in gold. Also this $2,000 area is going to be a bit of a challenge for the gold market in the short-term,” said David Meger, director of metals trading at High Ridge Futures. The dollar gained 0.2% against its rivals after the U.S. jobless claims data, making gold more expensive for other currency holders. Benchmark 10-year U.S. Treasury yields rose to 3.828%. Data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, touching the lowest level in two months amid ongoing labor market tightness. Investors focus now shifts to the U.S. central bank policy meeting next week, with markets pricing in a 25 basis-point rate hike from the Fed. Most economists polled by Reuters expect that a hike at July meeting would be the last increase of the current tightening cycle from the Fed. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. “The recent reversal in gold prices is very much driven by the expectation that the Fed is almost done in terms of interest rate hikes,” said Julius Baer analyst Carsten Menke. “That said, we believe interest rates are set to stay high and a rapid reversal of monetary policy is not imminent due to the resilience of the U.S. economy.”

On the day gold closed down $9.20 at $1968.30, and silver closed down $0.41 at $24.81.

On Friday gold trended lower, moving between $1967.00 and $1958.00 without fanfare or drama, in a week which could have been interesting but failed to deliver. Gold stumbled most likely because of the nice rebound in the dollar.

Since Monday the Dollar Index moved up a full point, which suggests traders believe the Fed will raise interest rates next week. Higher interest rates are in transition so the smart money will bet that the coming hike is already priced into this trade. Which should encourage the bulls and may be the fundamental reason gold has been steady this week.

Patience should prove rewarding. The physical trade in metals really has a life of its own. We are not seeing much in the way of large sellers of gold bullion even at these higher levels. Which is surprising. You might also think the public is not going to stand in line to invest in silver bullion above $24.00 an ounce. But surprisingly the public remains a net buyer in both areas. It might be that they will continue to ignore interest rates and the traditionally slower summer months.

Reuters (Brijesh Patel) – Gold slips as dollar firms, focus on US Fed meet next week – “Gold fell on Friday, moving further away from a two-month peak hit in the last session, due to a stronger dollar and as investors remained cautious ahead of the Federal Reserve policy meeting next week. The dollar index rose 0.2% to a more than one-week high after a positive weekly U.S. jobless claims data, making gold more expensive for other currency holders. “Usually, we will see a softer gold market ahead of the interest rate decision and we’re seeing the metals in a softer environment ahead of that – I think rates are going to be somewhat strong for the foreseeable future,” said Daniel Pavilonis, senior market strategist at RJO Futures. “Also, gold is having trouble getting above $2,000 per ounce level and we’re stuck right in the middle of the $1,900-$2,000 range for quite some time here.” The Fed is widely expected to raise rates by 25 basis points on July 26, and hopes that this increase would be its last had driven gold to its highest in about two months on Thursday. Rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion. “If the Fed pours cold water on the notion that its rate hikes are coming to an end, that could prompt bullion to unwind some of its recent gains and falter back into the mid-$1,900s,” Exinity Chief Market Analyst Han Tan said.”

On the day gold closed down $4.00 at $1964.30, and silver closed down $0.11 at $24.70.

Platinum closed up $8.40 at $963.10, and palladium closed up $11.20 at $1281.60.

Posted on July 14, 2023 by Richard

Gold – Stubborn Overhead Resistance

Commentary for Friday, July 14, 2023 (www.golddealer.com) – Today gold closed up $0.90 today at $1960.10, and silver closed up $0.24 at $25.01. It is surprising that the price of gold did not move considerably higher this week considering the Dollar Index tested recent lows. Last Friday the index was steady around 103.00 and today it dipped below 100.00. An impressive drop which supports the notion that traders believe the Fed will be less aggressive with interest rates because the economy is slowing. The bullion buying public is even back to kicking the tires during these quiet summer months. Based on the 60-day pricing chart, gold becomes a crowded trade at $1960.00 and will have to push above $1980.00 before drawing further attention. Since July of 2020 the price of gold has attempted to move above $2000.00 on three separate occasions. And failed in each attempt. Which should be a classic reminder as to why overhead resistance remains challenging. Last Friday gold closed at $1926.20 / silver at $23.09 – on the week gold was higher by $33.90 and silver was higher by $1.92.

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On Monday the price of gold dipped on the New York domestic open, reaching $1912.00 before a short covering rally pushed prices back into the $1922.00 range. The Dollar Index has helped the bulls fend off these bear raids in that since last Thursday it has generally trended lower, moving from 103.50 through 102.16 – a short term plus for the bulls.

But gold’s bearish technical picture and the growing belief that the Fed will continue to raise interest rates has created a heavy trade. The bullish scenario is in need of fresh information.

The slide in palladium prices does not help the tenor of this market. And gold’s testing of $1900.00 support suggests the old story of Fed interest rate intervention has moved to the back burner. The focus this week will be on the US CPI (Consumer Price Index) due out on Wednesday according to Reuters. They also note that last week’s Fed minutes indicated that a vast majority of the policy makers expected further policy tightening.

Reuters note that bullion prices have dropped more than 7% since reaching near-record levels in early May as investors scaled back expectations of an end to the Fed’s rate hiking cycle may be a blessing in disguise. This market may already be oversold, which helps soften this downward trend. It also gives the world time to realize that there is no substitute for physical gold.

On the day gold closed down $1.20 at $1925.00, and silver closed up $0.06 at $23.15.

On Tuesday the price of gold was choppy in the domestic trade between $1936.00 and $1929.00, basically moving opposite the dollar. The $7.00 spread supports the notion that gold traders are waiting for fresh news and the bearish pull, while still a big threat is to some degree offset by outside market forces, such as dollar weakness and foreign safe haven buying.

These factors, at present, do not carry enough weight to signal a clear change in the direction or price of gold. They are transitory but do make up a big part of the trader’s playbook so gather worldwide attention.

The practical truth here is that we are stuck in a slow and perhaps even uneventful summer trade. Waiting for the Washington Deep Thinkers to supply interest rate solutions. Their original plan is still in place and centers around the idea that higher interest rates will eventually slow inflation giving the Fed more options. But there is a mountain of misplaced economic mistakes still in the wind created by years of loose monetary policy. The outcome is still very uncertain, and the price of gold and silver could push in either direction over the next few years.

Reuters (Brijesh Patel and Ashitha Shivaprasad) – Gold gains on softer dollar, yields; US inflation data in focus – “Gold prices edged higher on Tuesday, helped by a pullback in the dollar and bond yields as investors looked forward to U.S. inflation data that could offer more cues on the Federal Reserve’s rate hike path. Making gold cheaper for holders of other currencies, the dollar index (.DXY) was down 0.1% after hitting its lowest level since May 11 earlier in the session. Benchmark 10-year U.S. Treasury yields also slipped. “If we have a soft inflation reading, it will be positive for gold and prices might go up to $1,950. I think it will be tough for gold to break below $1,900 level on a hot report,” said Edward Moya, senior market analyst at OANDA. “There are concerns that central banks might tighten this economy into a much harder recession. Rate hikes are not going to break gold’s back, but it might kill the economy. So there is some support for gold due to this reason.”

On the day gold closed up $6.30 at $1931.30, and silver closed down $0.06 at $23.09.

On Wednesday gold surprised traders again by moving higher as the Dollar Index crashed, losing a full point in two hours of early trading. We have seen this before and it should be a reminder of how uncertain these markets have become. Building bearish sentiment can turn into bullish sentiment quickly these days, with just about any plausible story.

Still, overhead resistance for gold remains a big obstacle yet long-term support builds.

The heavy technical picture is also improving, but I think it is a stretch to look at this short-term trading snapshot and conclude the Fed will again embrace the now famous “pivot”. Today’s jump in silver prices recreated a “short squeeze” dialogue overnight, which is also a stretch.

Reuters (Brijesh Patel) – Gold climbs over 1% as cooling U.S. inflation boosts Fed pause bets – “Gold prices jumped more than 1% on Wednesday after signs of cooling inflation in the United States boosted hopes that the Federal Reserve could hit the breaks on its rate hike cycle sooner than previously thought. U.S. consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside. In the 12 months through June, the CPI advanced 3.0%, compared with Reuters estimates of 3.1%. “Gold gapped $10 higher on the softer-than-expected CPI print on hopes that a July hike might be the last one of the cycle,” said Tai Wong, a New York-based independent metals trader. “If gold can break above the 50-day moving average at $1,960, it will trigger more bullish bets.” The dollar tumbled 1% to a more than one-year low against major peers after the U.S. inflation print, making gold more attractive for other currency holders. Benchmark 10-year U.S. note yields dropped to 3.8770%. Inflation is slowing fast enough to allow the Fed to stop tightening U.S. monetary policy after what is still widely expected to be an interest-rate hike at its meeting in two weeks time, traders bet on Wednesday. Markets see a 91% chance of a 25-basis-point Fed rate hike later this month. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. This week, several U.S. central bank officials said that the end to the Fed’s current monetary policy tightening cycle is getting close.”

On the day gold closed up $24.90 at $1956.20, and silver closed up $1.03 at $24.12.

On Thursday gold opened choppy between $1962.00 and $1952.00 which is not usual as most traders will now expect some profit taking and settling after yesterday’s jump to new recent highs. But today’s failure to capitalize on yesterday’s momentum hinders the bulls.

I believe the bullish tone created over the possible slowing of the FOMC interest rates will vanish in the reality of persistently high inflation numbers. But who knows? The US economy is still open for business and recession fears are fading in the bargain.

A better question, at this point is whether the price of gold can move to all-time highs despite high interest rates? Actually 5% is in the “normal” longer term range. It seems high because we are coming off a free money binge. Which provided zero interest rates lasting for years. And respect the FOMC for creating an unorthodox program which got us through the pandemic.

Also consider the price of gold today adjusted for inflation. This is an old argument for gold ownership, but it still carries weight. DollarTimes.com has a neat ap which allows you to calculate this relative value. According to their website gold was worth $614.75 in January of 1980. An equivalent price in 2023 dollars would be $2378.83.

This suggests that today’s close ($1959.20) offers a bargain. It should be $419.63 higher. Still even this number seems lukewarm, what happened to $10,000 gold and the failure of the dollar? That too is a story for another day, the dollar is not collapsing, and in fact is doing rather well.

Reuters (Seher Dareen) – Gold hits 4-week peak as Fed seen nearing end of rate hikes – “Gold prices climbed to their highest in about a month on Thursday on a weaker dollar after U.S. inflation data raised investor hopes that the Federal Reserve would soon stop tightening its monetary policy. The dollar slid to its lowest in more than a year, making bullion more affordable to holders of other currencies. Benchmark U.S. yields were also at their lowest in more than a week, cutting the opportunity cost of holding non-yielding gold. With two weeks left before the Fed’s next meeting, and data showing fewer jobs being added and inflation slowing in June, there are expectations that the next rate hike could be the last, Carlo Alberto De Casa, external analyst at Kinesis Money, said. U.S. consumer prices rose modestly in June, registering their smallest annual increase in more than two years as inflation continued to subside. Investors’ focus turns on Thursday to initial jobless claims data for the week to July 8 – which is expected to deliver a reading of 250,000 versus 248,000 the prior week – and June’s producer price index data. Additionally, markets will parse remarks by Fed Board Governor Christopher Waller to gauge the central bank’s tone on monetary policy tightening. “If, in the coming year, a further decline in inflation and the weakness of the economy even make rate cuts more likely, gold should head for its all-time high,” said Commerzbank analysts in a note. In the wider markets, European shares gained, yet weak trade data from China kept a lid on sentiment. Most base metals rose.”

On the day gold closed up $3.00 at $1959.20, and silver closed up $0.65 at $24.77.

On Friday gold prices remained steady in what now seems to be a stalled upward move, as traders ponder overhead resistance. The optimist will see this as a typical pause in a market generally moving higher and the pessimist will claim gold is stuck in “no man’s land” waiting the for grim reaper. I believe both positions should be avoided. For sure gold is stalled, that was apparent on Thursday when momentum traders failed to create follow through buzz.

Traders, however, have consistently bought weakness, waiting for some mystical sign which might clarify FOMC interest rate direction. This has created reasonable support for the price of gold at current levels. My point here is that the imagined downside here for our shiny friend might be far less than imagined. I’m commenting on the “higher or lower” scenario to the degree that it will likely be a gradual price change, not a decisive lightning bolt.

Reuters (Ashitha Shivaprasad) – Gold poised for best week in 3 months on Fed pause bets – “Gold eased on Friday but was on track for its biggest weekly gain since April after signs of cooling inflation this week sparked some hopes of a pause in the U.S. interest rate hikes. Bullion hit its highest since June 16 earlier this week after data showed U.S. consumer prices in June registered their smallest annual increase in over two years, prompting bets the Federal Reserve could soon end its rate-hike cycle. “With inflation backing off, anticipation of further rate hikes has slightly declined, helping gold this week. But prices are lower today as yields are ticking up,” said Daniel Pavilonis, senior market strategist, RJO Futures. “Prices are going to be range-bound near term. If the Fed begins to say we don’t need to raise rates any further, we can see gold rise further.” Benchmark U.S. yields edged up, making non-yielding bullion less attractive to investors. But cushioning the fall in gold prices, the dollar was on track for its biggest weekly decline since November. On Thursday, Fed Governor Christopher Waller said he was not ready to call an all-clear on inflation and favors rate hikes this year – the sentiment reflected in June’s FOMC minutes. Higher interest rates increase the opportunity cost of holding zero-yield gold. While the long-held bullish view on precious metals has been strengthened, “we remain cautious” considering the risk the Fed may throw another spanner in the works by sticking to its hawkish view, Saxo Bank head of commodity strategy Ole Hansen wrote in a note.”

On the day gold up $0.90 at $1960.10, and silver closed up $0.24 at $25.01.

Platinum closed down $1.30 at $974.00, and palladium closed down $25.40 at $1257.80.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls and bears are on a level overall near-term technical playing field but the bulls have momentum. A nine-week-old price downtrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at this week’s high of $1,968.50 and then at $1,975.00. First support is seen at Thursday’s low of $1,956.60 and then at $1,950.00. The silver bulls have the firm overall near-term technical advantage. A three-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price objective is closing September futures prices above solid technical resistance at the April high of $26.645. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.25 and then at $25.50. Next support is seen at $24.835 and then at Thursday’s low of $24.31.”