Daily Gold Newsletter Archives - Page 7 of 9

Posted on March 17, 2023 by Richard

Gold – Banking Woes – Higher Prices

Commentary for Friday, March 17, 2023 (www.golddealer.com) – Today gold closed up $50.80 at $1969.80, and silver closed up $0.76 at $22.35. The gold trade was surprised by the surge in prices today. Perhaps this is misplaced because questions about banking liquidity continue, but what makes this a confusing picture is that our central bank does not seem concerned from a liquidity standpoint. Even though the Federal Reserve has lent $300 billion in emergency funds to US banks this past week. Nearly half that money went to the initial red flags, Silicon Valley Bank and Signature Bank. But there are questions about who received the rest of the money. Biden’s response was that the government would guarantee losses at Silicon and Signature. But what about further failures? And who will pick up the tab? Widespread banking failure is not likely, the government would not allow such a thing. But who else is going to pay for this cleanup besides the American taxpayer? Last Friday gold closed at $1862.00 / silver at $20.38 – on the week gold was up $107.80 and silver was up $1.97.

Please note and thanks – 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 new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.

On Monday gold quickly moved above $1900.00 as the safe haven demand created last Friday by the failure of a large Silicon Valley bank continued to worry the banking community.

This second surge in the price of gold surprised me. I would have bet my 10-year-old car that today’s gold market settled, turning into a very quiet trade. One which continues to wait for more concrete information about the coming FOMC interest rates.

Today’s strong move is impressive because the price of gold has now shown its ability to set up a challenge of yearly highs ($1950.00). It reminds the faithful that gold bullion is most valued during a crisis. It should also remind us to avoid distractions. This is a classic Chicken Little story. The sky is not falling, and the Fed will not abandon its fight against inflation.

Reuters (Ashitha Shivaprasad) – Safe-haven gold accelerates as traders assess SVB fallout – “Gold raced towards the key $1,900 level on Monday, emboldened by bets that the Federal Reserve may now have to tone down its rate hikes as investors sought cover from uncertainty triggered by the collapse of Silicon Valley Bank. On Friday, gold gained 2% after California regulators closed tech startup-focused Silicon Valley Bank (SVB). Regulators also shuttered New York-based Signature Bank on Sunday. “Recent events show that gold remains a safe haven asset as it is able to benefit from market uncertainty. Also, market participants pricing out rate hike expectations is lifting gold,” said UBS analyst Giovanni Staunovo. Lower interest rates decrease the opportunity cost of holding zero-yield gold. After the SVB collapse, traders now expect the Fed to no longer raise interest rates by 50 basis points this month, in contrast to a 70% probability before the event. Rate cuts have also now been priced in by end-2023.”

The latest Reuters is a bit too optimistic in that assuming that bank failure will create a domino effect in the wider banking system. But the threat of such an event brought out President Joe to assure the public that their money was safe. Which I thought was interesting because your money really is safe even in our fractional banking system. But the fact that the President considered the SVB failure important enough to address it publicly suggests an underlying apprehension which has been created by the aggressive FOMC interest rate policy.

On the day gold closed up $49.70 at $1911.70, and silver closed up $1.41 at $21.79.

Zaner (Chicago) “While a lower low for the dollar and the lowest trade since February 16th certainly justifies strength in gold, some portion of the significant overnight pulse up move is likely to be flight to quality interest surrounding the California Bank failure. Furthermore, Goldman Sachs over the weekend predicted the Fed will not hike rates later this month because of the current stress in the financial sector! The flight to quality buying of gold and treasuries without purchases of the dollar highlights some concern of a US financial contagion but contagion is not widely feared as of this writing. It should be noted that Indian gold ETF holdings saw a record inflow last month, but that inflow was preceded by massive withdrawals over the prior 3 months. Apparently, Indian gold investors are attracted to gold now on price weakness! While the gains in gold last Friday were outsized and overdone, if the trade sees the upcoming wave of global inflation readings signaling inflation continues to rise the gains in gold could become surprising. However, both consumer and producer price readings for last month were highly divergent throughout the world with China posting soft inflation readings, Switzerland expected to produce soft producer and import prices, Spain expected to post a steady but still hot 1% month over month gain and the US is expecting consumer prices to tick down by 0.1%. The CFTC continues to catch up on its positioning reports with the delay now shortened to two weeks. Fortunately for the bull camp the net spec and fund long in gold has come down 64,000 contracts from the 2023 high and likely saw that net long decline further with the post COT position report slide of $34 into the late February low. The Commitments of Traders report for the week ending February 21st showed Gold Managed Money traders net sold 4,896 contracts and are now net long 52,457 contracts. Non-Commercial & Non-Reportable traders net sold 4,497 contracts and are now net long 145,018 contracts. On the other hand, the large range up rally last Friday was forged on the highest trading volume since November 15th of 2022, suggesting the bull camp does have some breadth. Unfortunately for the bull camp, the gold market will continue a lockstep inverse relationship with the dollar which in turn will fluctuate off fresh market assumptions on the magnitude of the next US interest rate hike. With the silver market showing significantly less upside action than gold from the May contract low on Friday, the silver bull camp is likely narrower in scope than in the gold trade. Furthermore, generally concerning global economic expectations look to leave headwinds hanging on physical commodities like silver. However, silver has seen consistent net spec and fund long liquidation action from the 2023 high spec long position registered early in January and the market has displayed some respect for consolidation support around $20.00. The February 21st Commitments of Traders report showed Silver Managed Money traders are net long 5,564 contracts after net buying 40 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 2,502 contracts to a net long 24,141 contracts.”

On Tuesday the early New York cash market for gold sold yesterday’s rally. Gold dipped below the important $1900.00 support. Traders then bought the weakness ($1896.00). The recovery was not convincing, and the bulls were disappointed that yesterday’s buzz did not repeat.

With gold higher by $100.00 these past 7 trading days it makes sense to approach this trade with caution. I do not disregard the latest rhetoric. But the claim that the banking crisis will force the Fed to halt its predictable interest rate program should be questioned.

Especially considering today’s rising Treasury yields. Crises usually support the price of gold. And it always pays to keep in mind that crisis also drives funds towards the might US dollar. Another powerful and safe choice held in high esteem by the financial community.

Reuters (Bharat Gautam) – Gold pauses banking-driven surge as bond yields rise – “Gold prices dipped on Tuesday as higher Treasury yields blunted a recent surge driven by the U.S. banking crisis, while a steady rise in U.S. inflation in February raised uncertainty over the outcome of the Federal Reserve’s policy meeting next week. Gold showed little reaction to U.S. Consumer Price Index (CPI) data, which showed CPI rose 0.4% on a monthly basis in February, as expected, after accelerating 0.5% in January. “There is nothing in the print to scare off gold bulls who’re searching for financial instability hedges at a time where the Fed may (indirectly) accept that inflation will stay higher for longer,” said Nicky Shiels, head of metals strategy at MKS PAMP SA. Traders are now largely expecting only a 25-basis-point interest rate hike by the U.S. central bank this month. Considered a hedge against economic uncertainties, gold becomes a more attractive bet in a low interest rate environment. Bullion prices rallied more than 2% in the previous two sessions as investors sought cover after the collapse of U.S. lender Silicon Valley Bank (SVB) spooked the market. “As long as the contagion risks stemming from the ongoing SVB saga remain, potentially ramping up recession risks along the way, safe-haven assets are set to remain well bid in the interim,” said Han Tan, chief market analyst at Exinity. “We expect a greater-than-even chance of spot gold staying above the psychologically-important $1,900 in the lead-up to next week’s FOMC meeting, provided that the US dollar remains subdued and risk-off mode remains in place,” Tan said, referring to the Federal Open Market Committee.”

On the day gold closed down $5.50 at $1906.20, and silver closed up $0.14 at $23.93.

Zaner (Chicago) – “With the gold market this morning sitting more than $100 above last week’s low, the net spec and fund long positioning signaling long liquidation potential and the dollar showing a minimal recovery effort early today, the bear camp has an edge until the CPI report release. From a technical perspective, traders are pointing to the significant jump in trading volume on the $100 rally over the prior 3-days and have concluded the core of the bull case in gold is strengthening. However, the gold bulls might see very temporary support from further confirmation of declining gold output from South Africa where their January gold output declined by 3.7% versus year ago readings. In another positive development gold ETF holdings yesterday saw an inflow of 73,629 ounces but remained 2% lower year-to-date. Silver also saw an inflow to ETF holdings yesterday of 584,134 ounces putting year-to-date gains at 1.2%. It should be noted that gold and silver over the last two decades have not typically benefited from a flight to quality developments, but both markets appear to be displaying bullish sensitivity to uncertainty. On the other hand, after the fear of contagion moderated and US equity markets recovered yesterday gold, silver, palladium, and platinum continued to hold their gains giving further credibility to the bull camp. Looking ahead today’s US CPI readings (combined with several other global inflation measures) could result in significant debate over the next week’s US rate hike size, hot readings could enhance limited concerns that inflation will not be contained by monetary policy and the outlook for the global economy could be downgraded significantly if global rate hikes are expected to become “large” again. Last month, US consumer prices increased by 0.5% and those type of month over month gains are clearly residually inflationary! Those with long gold and silver futures positions should seek protection against downside volatility with the purchase of April expiration put options (15 days to exp).”

On Wednesday gold bounced higher on another round of safe haven buying as European banking stocks moved into the red and customers asked questions about banking liquidity. This time around the perceived threat comes from problems within Credit Suisse. The timing here makes this latest information more problematic. The failure of Silicon Valley Bank on Monday has set the stage for those who believe a banking contagion is inevitable because of what they believe to be a reckless interest rate policy by the FOMC.

In my opinion there is a lot more huff and puff in the so called “banking failure” prophecy than anything else, but the media still loves to pounce on the sensational. In the early days of newspapers, a sensational headline (true or not) was guaranteed to increase circulation.

Reuters (Rachna Uppal) – Credit Suisse’s biggest backer says can’t put up more cash; share down by a fifth – The head of Credit Suisse Group’s largest shareholder, Saudi National Bank, said on Wednesday it would not buy more shares in the Swiss bank on regulatory grounds. “We cannot because we would go above 10%. It’s a regulatory issue,” SNB chairman Ammar Al Khudairy said in an interview with Reuters. The Saudi bank holds a 9.88% stake in Credit Suisse, according to Refinitiv data. Trading in the Swiss bank’s shares was halted late morning as they fell by a fifth to fresh record lows, having been pummeled earlier in the week in market fallout from the collapse of Silicon Valley Bank. Switzerland’s second-biggest bank is seeking to recover from a string of scandals that have undermined the confidence of investors and clients. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs ($120 billion). Al Khudairy said SNB was happy with Credit Suisse’s turnaround plan and did not think it would need more money, but also described his bank’s investment as an opportunistic one that was not time-dependent. The Saudi bank would exit when proper value to the shares had been acquired, he added. “We are happy with the plan, the transformation plan that they have put forward. It is a very strong bank,” Al Khudairy said on the sidelines of a conference in Riyadh. “I don’t think they will need extra money; if you look at their ratios, they’re fine. And they operate under a strong regulatory regime in Switzerland and in other countries.”

On the day gold closed up $20.40 at $1926.60, and silver closed down $0.16 at $21.77.

Zaner (Chicago) – “While the dollar index rejected a new low for the move overnight, the breakdown to the lowest level since early February provides only a minimal amount of cushion for gold and silver prices which are under an early liquidation wave. While some analysts indicate the aggressive reversal action in gold and silver this week is the result of market sentiment decreasing the prospects of a 50-basis point hike by the US Fed, it is possible the reversal was the result of a reduction in prospects that inflation might show it is immune to higher rates. With the gold and silver trade facing another inflation reading in the form of Producer Prices today and the trade expecting a minimal downtick from the prior month (which could still be considered inflationary) the bear camp looks to retain control. In our opinion, the New York Empire State manufacturing report and US retail sales will be of little impact today unless both come in uber-strong. While Chinese economic data released overnight registered “positive forward movement” many commodities market this morning are showing disappointment in the lack of even stronger recovery action. We discount overnight suggestions that gold and silver are under pressure because of rising treasury yields as yields this morning sit significantly below the levels posted at the beginning of this week. Clearly, gold is not benefiting from an ETF inflow of 300,404-ounces yesterday which was the largest single day inflow since June of last year. Unfortunately for the bull camp in silver, ETF holdings saw an outflow of 1.09 million ounces yesterday. In retrospect, the prospect of shifting into an old-fashioned inflation driven rally were dashed yesterday by mundane US CPI readings and we suspect more of the same will be seen today following US PPI. Therefore, we give the edge to the bear camp today with logical corrective targeting seen in June gold at this week’s gap which begins down at $1,892.50. Closer in support but less reliable pricing is $1,906, but we think the onus is on the bull camp to find a fresh theme capable of discouraging the market from a further corrective setback. The CFTC released another weekly positioning report yesterday reducing the number of delayed reports caused by hacking.

On Thursday gold settled mildly in the red as banking woes cooled in the US and Europe. Some reliable analysts consider this routine profit taking but I’m less sanguine and remain worried about what looks like guaranteed higher interest rates. That being said, if banking problems keep making the news the fear factor may take over, pushing gold prices higher.

The banks, these days are stressed but I can’t get my head around some type of banking contagion which will create a domino type failure of the system. The solution to banking stress, which happens on a regular basis is liquidity. The reason that the Swiss Credit liquidity issue was settled is because the Swiss National Bank made $54 billion available to Swiss Credit.

Such a large loan is unusual but not unprecedented. Bank of America had a similar credit crisis in 2008. Treasury Secretary Paulson then created the Emergency Economic Stabilization Act. The government lent Bank of America $20 billion dollars and the loan was paid back in full.

How much trouble Swiss Credit is in today remains to be seen but its stock was down 30% before its liquidity problem was solved. Of course, all this commotion created an updraft in the price of gold. Safe-haven buyers are usually anxious, especially in these troubled times.

But consider that gold’s initial rise was the result of two independent factors. Safe haven demand and short covering by the paper trade. Both may have been a knee-jerk reaction from investors already worried over higher interest rates.

The safe-haven portion could grow if the public continues to lose faith in the banking system. Short covering introduces volatile price swings. This market remains unstable because in the middle of these cross currents the ECB still raised interest rates in its fight against inflation.

Reuters – “The European Central Bank raised interest rates as promised by 50 basis points on Thursday, sticking with its fight against inflation and facing down calls by some investors to hold back on policy tightening until turmoil in the banking sector eases. A rout in global markets triggered by last week’s collapse of Silicon Valley Bank (SVB) and made worse by doubts around the future of Switzerland’s Credit Suisse had prompted some to question whether the ECB would pause its rate-hiking cycle.”

On the day gold closed down $7.60 at $1919.00, and silver closed down $0.18 at $21.59.

On Friday gold moved to its higher level since April of 2022 as financial fear grows and the public questions banking liquidity. For the present, it is the bears who are now hiding under the bed, even with the assured prospect of higher interest rates. European Central Bank President Christine Lagarde just raised interest rates a half point and is not concerned with bank liquidity. But notes that with rising uncertainty business as usual is not in the cards. This banking issue is overplayed in my book, but it does fit well into the preconceived ideas of the well-established physical bullion market. We are selling anything that is not nailed down.

Jim Wycoff (Kitco) – Technically, the gold futures bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at the February high of $1,975.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,875.70. First resistance is seen at $1,950.00 and then at $1,965.00. First support is seen at the overnight low of $1,922.30 and then at Thursday’s low of $1,911.50. The silver bulls have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $22.25 and then at this week’s high of $22.525. Next support is seen at the overnight low of $21.785 and then at $21.465.”

Reuters (Bharat Gautam) – Gold sparkles in tumultuous week for markets – “Gold prices surged over 2% on Friday as a wave of banking crises shook markets in bullion’s biggest weekly rise in four months, while bets solidified for a less aggressive U.S. Federal Reserve in its fight against inflation. “Gold is surging on fears that more bad banking news could appear over the weekend and hopes that the Fed will pause its rate hikes next week,” Tai Wong, an independent metals trader based in New York, said. The collapse of Silicon Valley Bank in the U.S. has highlighted banks’ vulnerabilities to sharply higher rates, while a rout in Credit Suisse shares has added to market turmoil. “Gold is likely to shine through the chaos as investors adopt a guarded stance,” said Lukman Otunuga, senior research analyst at FXTM. The dollar and stock markets slid, making bullion a more attractive investment. While it is considered a hedge against economic uncertainties, gold’s opportunity cost rises when interest rates are increased. The Fed will raise interest rates by 25 basis points on March 22 despite recent banking sector turmoil, according to a strong majority of economists polled by Reuters who were divided on the risks to their terminal rate view. “The sudden tightening in financial conditions won’t help palladium whose usage is largely industrial though it is technically in the precious complex,” Wong said, adding that platinum “has just been a chronic underperformer and is struggling to shake its reputation.”

On the day gold closed up $50.80 at $1969.80, and silver closed up $0.76 at $22.35.

Platinum closed up $2.00 at $976.70, and palladium closed down $23.60 at $1372.20.

Zaner (Chicago) – “The action in the gold market this week has been very impressive as the bull camp has seemingly managed to shift fundamental focus away from bearish influences and embrace fundamentals that are supportive. In our opinion, the ability to shift focus to embrace positive themes is a hallmark of a “bull market”. However, the bull case in gold is still tentative because fundamental headwinds of rising rates, periodic fears of global slowing and a lack of consistent investment inflow to ETF holdings. Fortunately for the bull camp, gold ETF holdings this week have reversed the early pattern of outflows and have now posted two large back-to-back daily inflows. Yesterday gold ETF holdings saw 175,788 ounces flow in which narrowed the year-to-date contraction to 1.4%. Unfortunately for the bull camp in silver, ETF instruments yesterday saw another massive outflow of 5.1 million ounces which reduces the year-to-date gain to a mere 0.5% Obviously, gold will remain responsive to financial developments flowing from equities, treasuries, currencies, and central bank dialogue. Furthermore, it seems that gold and silver will continue to see money flows from residual global bank contagion fears but a significant slide in implied US treasury yields this week adds a secondary supportive force for the bull camp. While we saw yesterday’s nearly unchanged close as a possible sign of a temporary blowoff top from the Wednesday rally, seeing prices rally significantly this week on what is likely to be the largest weekly trading volume since the days leading into the US Covid lockdown indicates the market can attract fresh buyers. While not a definitively supportive development the latest release of delayed CFTC positioning reports showed further reductions in the net spec and fund long position thereby putting the net spec and fund long position at the lowest level since December earlier this month and that should have resulted in significant money sitting on the sidelines, part of which might have fueled the recovery rally this week. Obviously, critical resistance is this week’s high at $1959.10 with a failure price today seen with a trade below $1928. Gold positioning in the Commitments of Traders for the week ending March 7th showed Managed Money traders are net long 24,106 contracts after net selling 15,802 contracts. Non-Commercial & Non-Reportable traders were net long 119,907 contracts after decreasing their long position by 12,567 contracts. Clearly, the silver charts are definitively less positive than gold but still favor the upward tilt. Unfortunately, as mentioned already investors have turned cool toward ETF instruments and silver is mostly missing out on flight to quality buying interest. However, the latest positioning report showed the net spec and fund long in silver at the lowest level since September last year, thereby leaving silver less vulnerable to massive stop loss selling and potentially holding some additional buying potential.”

Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special visit – talk to Harry or Eric. Most employees have been vaccinated – if this is a concern ask for more information. We continue to enforce ridged safety standards between people and product. Be careful, the contagious Omicron variants remain dangerous. At the same time trust that God will get us back to normal and our traditional business model. Thank you for your patience. Richard Schwary

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Posted on March 10, 2023 by Richard

Gold – Surges on Growing Bank Fears

Commentary for Friday, March 10, 2023 (www.golddealer.com) – Today gold closed up $32.70 at $1862.00, and silver closed up $0.35 at $20.38. Traders got the Full Monty this week as hawkish Fed rhetoric was overshadowed by bank failure, which focused safe haven demand and created higher gold prices. The Dollar Index joined the chaos by moving down from 105.83 to 104.00 since Wednesday. A drop of almost 2 points, as traders scratched their heads and wondered if this was the beginning of another round of safe haven buying. Reuters (Seher Dareen) – Gold climbs on safe-haven rush as banking rout grips markets – “Gold prices jumped more than 1% on Friday, driven by a slide in U.S. Treasury yields and broader financial markets as worries over a fallout in the banking sector eclipsed a strong U.S. jobs report and drove safe haven flows into bullion. U.S. tech lender SVB’s troubles rippled through global markets and hit banking stocks, shoring up interest in bullion often seen as a safe store of value during uncertain times. “I think the main focal point is yields and with yields dropping today, that is a boost for the gold market,” said David Meger, director of metals trading at High Ridge Futures. Gold, which does not yield any interest, benefited as Treasury yields slid amid the financial market turmoil and after U.S. jobs data showed hourly earnings rose by less than expected last month. That gave hope that the Fed can be less aggressive in its path of interest rate hikes, even though job creation was strong. “As the marketplace sees it, the wages component of the U.S. jobs report was tamer than expected, which has apparently mitigated the higher-than-expected rise in non-farm payrolls,” wrote Jim Wyckoff, senior analyst at Kitco Metals. “There is keener risk aversion in the marketplace to end the trading week, and that is likely prompting some safe-haven demand for gold and silver.” Last Friday gold closed at $1847.70 / silver at $20.09 – on the week gold was higher by $14.30 and silver was higher by $0.29. Don’t let the tight spreads fool you, this market turned into a whipsaw trade which caught everyone by surprise.

On Monday gold opened choppy, trading between $1845.00 and $1853.00 – likely a nervous trade waiting for Powell’s testimony to Congress scheduled for Tuesday and Wednesday. And the February US jobs report is due on Friday (Reuters). The jobs report is always a big deal and stronger data would suggest the Fed has less wiggle room on their interest rate decisions.

“San Francisco Fed President Mary Daly on Saturday said that if data continue to come in hotter than expected, interest rates will need to go higher and stay there longer. “Currently, gold is in a wait-and-see mode,” said UBS analyst Giovanni Staunovo. “There’s unlikely to be a change of script from Powell, reiterating the need for further rate hikes to bring inflation under control.”

In typical fashion today’s stronger opening was sold because of this long-standing worry. It is a “plus” for gold that traders bought the “dip” in prices. But this conviction is thin, and pricing uncertain – gold finished the day on “lows”, almost unchanged.

Will we see a repeat of last week’s tight trading ranges in gold? Not likely, with the Chief’s speech on deck and perhaps better jobs data. The bears are patiently waiting on the sidelines.

This latest “information package” does not contain enough new information to change the already “heavy” Fed sentiment. Traders are bracing for higher interest rates and an aggressive FOMC – prices will head south if the Fed remains resolute, and Powell does not suggest options.

But if the Chief sounds a bit more “dovish” tomorrow traders would believe current gold pricing already reflects these fears and there would be little downside in the near term. This bullish “optimistic view” flies in the face of repeated Fed dialogue stating that inflation is a threat, and they will act accordingly. Many analysts see higher interest rates and lower gold prices.

On the day gold closed down $0.20 at $1847.90, and silver closed down $0.11 at $20.98.

Zaner (Chicago) – “While the initial high in April gold this morning failed to take out the Friday high, prices remain significantly above last week’s low and near the highest level since February 15th. Both gold and silver could have been undermined because of the Peoples National Congress meeting in China failed to present a major stimulus package. While there was a lack of definitive flows in gold ETF holdings last week, holdings increased by 49,406 ounces, while silver ETF holdings increased by 998,372 ounces. In a negative overnight psychological headline, gold demand was questioned by a survey in India which indicated 65% of Indian women think housing investments are more important than gold investments. In retrospect, gold and silver bulls were extremely fortunate last week that bearish outside market influences did not send prices reeling to the downside. In fact, the gold market showed extremely impressive strength in the face of growing interest rate adversity and recent signs of a deterioration in investment interest. However, evidence of very strong buying from the Turkish central bank and news from the IMF that global central bankers purchased record gold for reserves last year should provide gold with a strong injection of important internal fundamental support. In other words, gold may be less of a hostage to fluctuations in the dollar and perhaps even less sensitive to further gains in US interest rates. While a very unlikely development at present, market chatter suggesting rate hikes are not containing inflation could be a “switch” capable of turning on classic inflation, speculation and flight to quality buying of gold. Unfortunately for the bull camp, the sharp range up rally in gold at the end of last week was done on very low trading volume and a very minimal uptick in open interest. While the COT reports continue to be delayed by several weeks, the most recent positioning report showed Gold reducing its net spec and fund long further from the 2023 highs and with the market at last week’s lows $75 per ounce below the level where the report was measured the net spec and fund long in gold today is probably the lowest in 4 months. Gold positioning in the Commitments of Traders for the week ending February 7th showed Managed Money traders net sold 32,701 contracts and are now net long 78,839 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 37,075 contracts to a net long 172,696 contracts. Near term support in April gold is $1,840 and upside targeting/resistance is $1,871. The silver market action has been significantly less impressive than gold action since the late February low, but the bull camp has regained a slight edge. Unfortunately for the bull camp, the large range up move last week was forged on softening trading volume and declining open interest. However, silver ETF holdings remain 1.7% higher year-to-date and have seen a developing pattern of very large daily holdings change, potentially indicating increased investor activity or simple attention to the asset class. While the most recent COT positioning report remains outdated because of technical issues, the latest net spec and fund long in silver adjusted for the post report slide of $1.90 should put the net spec and fund long near the lowest level since early December. Silver positioning in the Commitments of Traders for the week ending February 7th showed Managed Money traders were net long 6,064 contracts after decreasing their long position by 18,782 contracts. Non-Commercial & Non-Reportable traders net sold 13,620 contracts and are now net long 29,878 contracts. We see a thin resistance line at $21.52 with higher resistance at $21.81. To start the new week, key pivot point support in May silver is pegged at $20.76.”

On Tuesday a shaky gold market opened at $1840.00 and quickly tumbled to $1815.00 as Chief Powell spoke to Congress and reaffirmed the Fed commitment to taming inflation. Why Jerome’s hawkish resolve seems to be a revelation is hard to understand. In the recent past Powell and the FOMC have been consistently hawkish. But left the interest rate door open in the hope that inflation rates would continue to decrease. Today the Chief delivered the bad news. Inflation rates continue to rise, and the Fed will raise interest rates accordingly.

Reuters (Bharat Gautam) – Gold down after Powell’s hawkish testimony boosts dollar – “Gold prices fell more than 1% on Tuesday, as the dollar jumped after Federal Reserve Chair Jerome Powell indicated rate hikes could come at a faster pace from the U.S. central bank in his testimony to a congressional committee. The Fed will likely need to raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell told U.S. lawmakers on Tuesday. “This direct reference to ‘faster tightening’ even if mitigated by ‘if warranted’ is more of a shove than a nudge, putting the precious metals complex under pressure as the dollar surges,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York. The dollar index gained almost 1% following Powell’s comments, making bullion less affordable for overseas buyers. “Gold had already retreated from Friday’s strong close, but so far Powell is more direct and aggressive than the market had anticipated.” U.S. stock indexes also fell after the remarks. The U.S. jobs report for February is due on Friday. If Friday’s jobs data shows significant resilience in the U.S. labor market, it would pave the way for even higher U.S. rates and could unwind the month-to-date gains garnered so far by gold, said Han Tan (Exinity).”

The dip in prices today should not surprise us. We have experienced dramatically changing bullish and bearish sentiment several times in the past 12 months. Look at this latest turn to the bearish side as an opportunity to meaningfully test support. Gold will quickly turn into a value trade if the cash market approaches $1700.00.

At that time, we will likely see a nice bounce to the upside if the Fed does not get crazy with interest rates. During this process keep in mind that as much as Powell claims political independence, he owns the problem if Wall Street crashes. This threat alone will help stabilize both gold and silver prices as this dog and pony show continues to unwind. The big question is not how much the price of gold will be this summer – it is how much it will be next summer.

On the day gold closed down $34.00 at $1813.90, and silver closed down $0.93 at $20.05.

Jim Wycoff (Kitco) – “Technically, April gold futures bulls have lost their slight overall near-term technical advantage. The Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $1,850.50. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,835.00 and then at $1,850.00. First support is seen at the February low of $1,810.80 and then at $1,800.00. May silver futures prices hit a five-month low today. The silver bears have the firm overall near-term technical advantage and gained fresh power today. Prices are in a steep five-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $21.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $20.50 and then at $21.00. Next support is seen at $20.00 and then at $19.50.”

On Wednesday gold managed to steady itself, waiting for Powell’s second day of testimony, as traders look for further FOMC clues and speculate as to the Fed’s next rate hike. Analysts believe we will see a half point rate hike the next FOMC meeting (March 22^nd and 23^rd). If this is the case, it would obviously be a negative for the gold bulls. But Powell, even in testimony today claims that no decision has been made on the next rate hike.

And there are cross currents which support the bulls. The Bank of Canada displayed caution last night, halting the rise in their interest rates (4.5%), helping to stabilize this downdraft. Today’s bounce to the upside in the price of gold was insipid – the market closed almost unchanged. Still, the bounce may suggest a short-covering rally or the early stages of an oversold market.

Reuters – “There are still several more event-driven risks the gold market needs to absorb – Powell today, jobs data on Friday, CPI on Tuesday,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, adding prices had near-term support around $1,800. The Fed will likely need to raise rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell said on the first day of his semi-annual two-day testimony before Congress. U.S. private payrolls increased more than expected in February.”

On the day gold closed down $1.20 at $1812.70, and silver closed down $0.04 at $20.01.

Zaner (Chicago) – “Both gold and silver face a 2nd day of US Federal Reserve Chairman testimony to the US Congress where discussions of more aggressive and longer in duration tightening policy are expected to flow again. Unfortunately for the bull camp the dollar index has forged a higher high extension this morning following yesterday’s sharp range up move thereby pulling currency-related pressure on gold and silver into another session. Not surprisingly, expectations for the March 21st/22nd FOMC meeting have boosted the odds of a 50-basis point rate hike and that should leave gold and silver in a general downward motion. In what might be a delayed reaction to recent declines in prices, both gold and silver ETF holdings continue to plummet with gold holdings yesterday shedding 226,383 ounces for a 6th straight daily decline and silver posting the biggest one-day decline (5.1 million ounces) in holdings since last September. In another minimal negative demand development, the Perth Mint indicated February gold sales declined while the sale of silver coins and minted bars increased. Apparently, the gold trade has a different opinion on what constitutes a noted amount of Chinese central bank gold buying, as a bullish story on Bloomberg yesterday regarding a 25-ton purchase from the Chinese Central bank had little supportive impact on gold which fell by more than $35 per ounce yesterday. Nonetheless, seeing the Chinese central bank buy 25 tonnes of gold last month and with that purchase the 4th straight month in a row of purchases that looks to be the beginning of a trend of reserve building by the central bank representing the world’s largest gold consuming nation. In our opinion, reports that Chinese central bank gold reserves are roughly 2,100 tonnes are a wild guess, with the Chinese central bank likely building gold reserves consistently over the last several years in a bid to raise Chinese status in global financial markets. It should also be noted that the World Gold Council recently indicated that 2022 saw record central bank gold purchases and we see no reason to expect the “trend of buying” to come to an end as many central banks liquidate extensive bond portfolios. However, in the near term a strong dollar and talk of even higher rates should leave the bear camp in gold and silver with the edge.”

On Thursday gold traders created that oversold bounce and short covering rally suggested in yesterday’s commentary. This modest underpinning was also encouraged by “calm and collected” Chief Powell, in a second day of commentary Wednesday. He did not equivocate but displayed that professional expertise which engenders the Wall Street faithful – and that is all he needs for the present. Wall Street and the metals are not out of the interest rate woods by a long shot, but the Chief managed to calm the waters for today.

Another round of anxiety, however, is right around the corner. The US jobs report for February will be out tomorrow. Analysts are expecting a solid gain in the number of people employed. This employment dynamic was one of Powell’s talking points yesterday.

More people working creates competition and higher wages. Which in turn fuels higher inflation. If the jobs number tomorrow comes in hot, the Fed will double down on its hawkish sentiment. And the gold bulls will struggle to hold this psychologically important $1800.00 floor. If this is not the case, you could see gold rising in the shorter term.

One way or the other I expect this “grind” toward higher interest rates will hinder short term gold prices. At the same time, the possibility of a Fed induced crisis underpins physical demand. The physical bullion trade also holds the wider view that world inflation is more than troubling – and will fuel higher gold/silver prices over the longer term.

On the day gold closed up $16.60 at $1829.30 and silver closed up $0.02 at $20.23.

Zaner (Chicago) – “While the US Federal Reserve Chairman this week indicated the Fed is data dependent and undecided on the magnitude of the March 22nd rate hike, the pendulum continues to swing toward a 50-basis point hike. However, despite Fed insistence that they are not targeting jobs, today’s US economic report slate will be limited to jobs data and therefore the gold and silver markets will be especially sensitive to interest rate and US dollar action. According to some economist’s strong jobs readings are threatening to the Fed and gives them the latitude to be more aggressive without increased threats of recession. Nonetheless, the path of least resistance remains down in gold and silver with inside and outside market factors expected to pressure prices again today. Certainly, the passage of 2 days of very hawkish US Federal Reserve testimony provided significant pressure to gold and silver prices, especially with higher US rate talk resulting in a upside explosion in the dollar. In retrospect, given US jobs-related data released so far this week, we expect today’s US jobs data to show lingering strength which in turn should add to chatter of a 50 basis point March US Fed funds rate hike. Furthermore, solid jobs data is likely to add to Fed inflation concerns and add to the ongoing movement to raise the terminal rate target. Unfortunately for the bull camp, gold, and silver ETF holdings this week have seen outflows indicating that bargain hunting investment buying has not surfaced yet on the recent slide in prices. Therefore, in today’s action we see a further slide in gold toward $1,800 and a decline in May silver to an old gap down at $20.045/$19.715. The silver market should see added pressure from news of higher-than-expected Chinese February silver production with a 2.6% month over month rise and a 17% year-over-year silver production increase. The CFTC yesterday released positioning data as of February 14th and is continuing to “catch up” to the hacking shutdown delay of positioning reports. Gold positioning in the Commitments of Traders for the week ending February 14th showed Managed Money traders were net long 57,353 contracts after decreasing their long position by 21,486 contracts. Non-Commercial & Non-Reportable traders net sold 23,181 contracts and are now net long 149,515 contracts. The Commitments of Traders report for the week ending February 14th showed Silver Managed Money traders are net long 5,524 contracts after net selling 540 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 3,235 contracts to a net long 26,643.”

On Friday the move of gold prices to weekly highs was very surprising. Most traders were looking for a strong jobs report (which they got today) and this should have left gold struggling at $1800.00. It might be a bit early to claim the “fear factor” has again come crashing through the front door. That will take price confirmation, and a new bullish technical picture.

This looks like an overreaction to a failed Silicon Valley bank which was seized by regulators after failing to raise needed capital. Still, it was a big deal. The bank had 17 locations, and this was the largest bank failure since the Great Recession.

It has unnerved even the wider world market. Those presupposed to the “disaster theory” will claim that gold is ahead of the curve. Throwing up a red flag and providing a warning about how much fiat money has been created worldwide since the onset of the pandemic.

I remain suspicious and believe this rally will be sold, sooner than later. The metals will then revert to the usual back and forth pricing action we have seen for months, as everyone waits for further Fed clarification as to its interest rate intensions.

Investor’ Business Daily – Dow Jones Dips, Tech Stocks Pressured; First Republic Plunges 60% As Contagion Fears Hammer Financials. Yahoo! Finance – Stocks sink amid jobs beat, bank jitters. CNN – Fear overtook Wall Street Thursday after SVB Financial Group, a bank that lends primarily to tech companies, told investors it had to sell $1.75 billion in shares at a loss in order to cover rapidly declining customer deposits. That triggered losses across the banking sector and concern that the Federal Reserve’s interest rate hikes are preventing banks from raising capital. Bank stocks fell by their largest levels in nearly three years on Thursday, bringing all three major indexes down with them.

On the day gold closed up $32.70 at $1862.00, and silver closed up $0.35 at $20.38.

Platinum closed up $12.90 at $959.70, and palladium closed down $11.30 at $1348.10.

Posted on March 3, 2023 by Richard

Gold – Technical Boost

Commentary for Friday, March 3, 2023 (www.golddealer.com) – Today gold closed up $14.20 at $1847.70, and silver closed up $0.32 at $21.09. The price of gold was off to a good start today in New York, closing in on $1850.00. Traders initially sold the first rally and gold reversed direction, bouncing off $1839.00. But they bought the second rally, which was sparked by bargain hunting and short covering. This reversal was interesting in that neither the Fed talk, or pricing variation was significant. But the fact that gold finished in the green 4 out of the last 5 trading days was not overlooked. Last week’s technical picture for gold was bearish. This week’s pricing advances were enough to place the bulls and bears on equal footing. Which discourages bear raids and provides needed cover for the bulls during this transition. Last Friday gold closed at $1808.80 / silver at $20.81 – on the week gold was up $38.90 and silver was off $0.28.

On Monday gold moved higher on the open ($1820.00) and traders sold the rally, in typical fashion. Buyers then reappeared ($1812.00), creating another updraft and eventually our shiny friend managed to close in the green for the day, and at the higher end of the range. But these pricing spreads are tight suggesting traders continue to “sell” the rallies and “buy” the dips.

Reuters (Bharat Gautam) – Gold gains as dollar rally cools; rate-hike fears linger – “Gold prices ticked up on Monday as the dollar retreated, although worries of further interest rate hikes from the U.S. Federal Reserve kept bullion near a two-month low. The dollar index fell 0.4% after hitting a seven-week peak, making gold less expensive for overseas buyers. Gold has support around $1,806 but it has been sliding on higher-than-expected inflation and economic data continues to be firm, Bart Melek, head of commodity markets strategy at TD Securities, said. After hitting their highest since April 2022 this month, gold prices have fallen by more than 7% after U.S. data pointed to a resilient economy. Data on Friday showed U.S. consumer spending increased by the most in nearly two years in January, while inflation accelerated, adding to market fears the Fed could continue raising interest rates. “Given how the Fed’s favored measure of inflation accelerated in January, appetite for zero-yielding gold may be soured by rate-hike bets in the near term – ultimately dragging prices lower,” Lukman Otunuga, senior research analyst at FXTM, said. “Gold (will) remain highly sensitive to chatter by Fed officials, key economic data and any topic relating to inflation as we head into the new month.”

On the day gold closed up $8.20 at $1817.00, and silver closed down $0.14 at $20.67.

Zaner (Chicago) – “Gold fell to its lowest level since December 22 overnight as the market fell on expectations that the Fed will continue its tight policy. Scheduled data on Friday suggested more tightening ahead. The Personal Consumption Expenditures price index rose 5.4% in January from a year earlier versus a 5.3% number in December. The month-on-month gain was 0.6% versus 0.2% in December. Goods fell 0.7% from the previous month, but services increased 0.5%. Consumer spending increased 1.8% last month, the biggest increase since March 2021. News overnight was bearish from the fundamental side as well, with China’s net gold imports via Hong Kong reported at 22.24 tonnes in January, down from 42.16 (-47%) in December. Strong economic numbers could be positive for silver industrial demand, but the market followed gold lower on Friday and overnight, reacting negatively to the strong price data with March silver trading to its lowest level since November 4. Bloomberg reports that ETFs cut their holdings by 17,046 ounces in the last session and by 347,017 last week. It was the 11th straight day of declines. Silver holdings fell 3.194 million in the last session, a 1.7% decline. The CFTC has started to release its backlog of Commitments of Traders report. The most recent data was as of January 31, and it showed managed money traders were net buyers of 4,909 for the week, increasing their net long to 111,540. This was their highest since last April. The market has sold off considerably since February 2, so we suspect that net long is quite lower by now. Managed money traders were also buyers of 3,923 contracts of silver, bringing their net long to 24,846 contracts, which was not setting any records. Their net long could be down considerably given how far the market has fallen since that date.”

On Tuesday gold moved lower overnight in Hong Kong/London but reversed losses in our domestic market. Traders bought overnight weakness in New York pushing gold towards $1830.00. Enough of a hint to provide the bulls with some needed breathing room. Do not call this latest impromptu rise a “reversal” in pricing. But it was the result of two factors:

The first being that traders bought the early dip – suggesting mild bargain hunting. The second was today’s swoon in consumer confidence. Consumers are spending less because interest rates are moving higher – which suggests recession fears are growing. Today’s price hike is not significant enough to hinder the recent bearish shift in gold’s technical picture. But it does point to a growing and underlying tension created over uncertainty on the economic front.

Grant on Gold (Zaner) – (1) Gold dropped 1.7% last week. It was the fourth consecutive lower weekly close, as better-than-expected U.S. economic data, and stubbornly high inflation continue to weigh. (2) Silver tumbled 4.5% last week, notching its sixth consecutive lower weekly close. (3) Platinum was down a little more than 1% last week and recorded a seventh consecutive lower weekly close. (4) Palladium continued its slide last week, reaching a 3-year low of $1353.04.

On the day gold closed up $11.90 at $1828.90, and silver closed up $0.29 at $20.96.

On Wednesday the gold opened choppy, trading back and forth between $1834.00 and $1845.00. In each cycle the drop was met with bargain hunting and mild short covering.

This price pattern was similar to yesterday and driven by a weaker dollar. The Dollar Index lost nearly a full point today, reacting to much stronger than expected economic data from China. There really is still no clear dividing line between the bulls and bears but it does count for something that gold has moved to higher ground three consecutive days this week.

Reuters (Seher Dareen) – Gold hits 1-week high as dollar slides on robust China data – “Gold prices gained 1% on Wednesday as strong Chinese economic data dented the dollar and drove some bets for better physical demand from the top bullion consumer, although the risk of elevated U.S. interest rates capped gains. With strong data out of China and some countries looking to continue with rate hikes, the dollar was weakening against other currencies, providing some support to the gold market, said David Meger, director of metals trading at High Ridge Futures. The dollar hit a one-week low earlier today after China’s yuan gained as the country’s manufacturing activity expanded at its fastest pace since April 2012. Since gold is priced in U.S. dollars, a weaker currency makes it more affordable for foreign buyers. The day’s gains in prices come after bullion posted its worst month since June 2021 in February after strong U.S. data pointed to a resilient economy, suggesting that the Federal Reserve could deliver more rate hikes to curb inflation.”

On the day gold closed up $8.80 at $1837.70, and silver closed unchanged at $20.96.

Zaner (Chicago) – “With the dollar in the early action today matching 5-day highs in the early action, and upbeat global economic sentiment following strong Chinese PMI readings the early strength in gold and silver is justified. In another minimally supportive overnight development Russian gold miner Polymetal indicated their reserves declined with operations suffering indirect negative impacts from sanctions from the difficult in obtaining drilling equipment and other necessary mining materials. Significant volatility in daily gold and silver ETF holding flows continued yesterday with gold holdings declining by 77,532 ounces and silver holdings declining by 935,118 ounces! Obviously, gold, silver, platinum, and copper prices are being lifted this morning following better than expected Chinese PMI results which clearly bolstered hope for improved Chinese metal demand. The trade is also expecting additional stimulus efforts from this weekend’s Chinese National People’s Congress. While only a minimally supportive story (without actual proof of purchases), Bloomberg overnight indicates central banks are likely to continue to build holdings as they hike rates and sell bonds from their quantitative easing efforts. A Bloomberg story overnight also noted that current gold prices are “just above” levels where central bankers were inspired to purchase gold before. It is possible that increased tensions between China in the US (over the origins of the coronavirus) could provide minimal flight to quality buying of gold and silver, but there is an equal chance that severe escalation of US/Chinese tensions could be seen as a slowing threat against the world economy and in turn that cold dent gold and silver physical demand expectations. Not surprisingly, chart action in both gold and silver early this morning has shifted positive with 3-day highs and the markets regaining key chart levels in the early action. However, the US session will also bring an avalanche of US and Canadian PMI readings, with Germany and the US also releasing price (inflation) related measures. Expectations for German and US price data call for minimal increases which could produce negative but temporary weakness in prices.”

On Thursday gold moved on both sides of “unchanged” even though the Dollar Index strengthened. The index drifted from 104.39 through 105.14 on follow through momentum after recent lows (104.14) yesterday. None of this is particularly important in the sense that it will overshadow what the Fed has in mind. But it suggests a highly sensitive trade is still in place despite the fact that today’s pricing spread in gold was an unexciting $8.00.

Today Reuters suggests that U.S. weekly jobs data hinted at a tight labor market that could keep the Federal Reserve on its rate-hiking cycle, underpinning the dollar and Treasury yields. U.S. central bank officials are divided over whether more restrictive interest rates are needed or just maintain a tight monetary policy for a longer period of time to tame inflation that was much higher than the Fed’s 2% target. Spain, France, and Germany earlier in the week indicated that inflation remained sticky, with the European Central Bank leaning towards remaining hawkish.

The EU is caught between a rock and hard place. Which makes our FOMC decisions difficult – we could get drawn into their inflation mess because of factors outside our control.

Patience is the best approach – keep your powder dry. Ignore the noise/opinion which always increases while waiting for definitive Central Bank decisions. These folks are masters at dragging their feet – they are not sure of the outcome and will play on both sides of the street.

Good economic news out of China has pushed crude oil towards $80.00 – a plus for the bulls.

On the day gold closed down $4.20 at $1833.50 and silver closed down $0.19 at $20.77.

Zaner (Chicago) – “With the dollar extending yesterday’s late rebound and ECB officials indicating more rate hikes are possible and Dutch officials taking note of significant food price inflation the bias in gold and silver has shifted down after 2 days of upward action. In fact, according to reports, the US Federal Reserve is discussing the potential for continued rate hikes beyond January, as opposed to more significant near-term rate hikes which should entrench the rate hike story on the front page of the marketplace. Unfortunately for the bull camp gold and silver ETF instruments saw outflows yesterday, further disrupting the pattern of inflows presented at times last month. Clearly, investment in gold instruments has been much more disappointing to the bull camp than in silver, with gold holdings year-to-date down by 1.2% and silver holdings clinging to a year-to-date gain of 1.8%. The divergence between gold and silver yesterday reconfirms gold is almost exclusively tracking action in the Dollar, while the silver market is at least partially focused on classic physical commodity market demand fundamentals. However, gold did manage to hold up yesterday in the face of fresh inflation data and against dialogue from the Fed indicating that Fed funds will likely have to rise above 5.0%. On the other hand, favorable Chinese economic data should help to reinforce current expectations of an economy regaining momentum following the removal of activity restrictions. If the Chinese growth story is backed up by additional positive data tonight that should begin to foster ideas of improved Chinese gold consumption. While some traders might suggest improved Chinese economic activity is a bigger benefit to base metal markets than to precious metal markets, China remains the world’s largest gold consumer (consuming more than double India) and the Chinese central bank has seemingly shifted into a pattern of adding to reserves which have been partially confirmed by the IMF. However, some of the optimism from the prospects of improving Chinese gold demand have been mitigated overnight following estimates from the China Gold Association of a 13% increase in Chinese 2022 gold production over 2021 output. On the other hand, US implied treasury yields continue to climb with 30-year bond rates overnight reaching the highest levels since November 14th and that could begin to pull money from gold into safer in and higher yielding fixed income investments. Another potential negative force for gold and silver prices today is hot consumer price index readings from Italy and the Euro zone with Tokyo price index readings scheduled for Friday morning expected to be hot. Keep in mind, in the current market condition hot inflation readings inspire stronger dollar action and signal even higher interest rates. In fact, overnight US treasury yields reached the highest level since November 10th and the markets were presented with hotter than expected Italian and EU inflation readings overnight. Therefore, the latest inflation results should foster fresh pressure throughout precious metal markets. While we will not argue against additional upside action in gold and silver ahead, the bias this morning has clearly shifted back in favor of the bear camp.”

On Friday gold finished the week on an upbeat note. Our shiny friend heads for its first weekly rise this past month on dollar weakness. Reuters – “Until a new catalyst is found, such as next week’s jobs or consumer prices data, gold is likely to remain range-bound between the $1,830-$1,850 levels, Bart Melek, head of commodity markets strategy at TD Securities, said. With China recovering, there may be continued robustness in gold consumption, with people also buying the metal to hedge against inflation, Melek added. The U.S. dollar index was headed for its first weekly loss in five, making bullion more attractive for other currency holders, while benchmark U.S. 10-year yields crept lower from near a four-month peak. While Fed Governor Christopher Waller said strong economic data could see rates above the 5.1%-5.4% range, Atlanta Fed President Raphael Bostic said he favored a “slow and steady” increase moving forward and a pause by mid or late summer. Traders are now pricing in at least three more 25 basis point rate hikes this year, with rates peaking at 5.43% by September.”

On the day gold closed up $14.20 at $1847.70 and silver closed up $0.32 at $21.09.

Platinum closed up $14.30 at $977.20, and palladium closed up $0.23 at $1431.20.

Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special visit – talk to Harry (vacation) or Eric. Most employees have been vaccinated – if this is a concern ask for more information. We continue to enforce ridged safety standards between people and product. Be careful, the contagious Omicron variants remain dangerous. At the same time trust that God will get us back to normal and our traditional business model. Thank you for your patience. Richard Schwary

Posted on February 24, 2023 by Richard

Gold – Technically Weaker

Commentary for Friday, Feb 24, 2023 (www.golddealer.com) – Today gold closed down $9.20 at $1808.80, and silver closed down $0.49 at $20.81. The price of gold drifted lower in the early New York trade but managed to hold above the psychologically important $1800.00 support on the day. The technical picture, however, for gold and silver is turning bearish. Obviously, gold has been in a downtrend since late January so my defensive guess is that our shiny friend should stabilize between $1750.00 and $1800.00.

I don’t think there is much downside at the lower end of this trough, but higher prices are capped by potentially higher interest rates later this year. Last Friday gold closed at $1840.40 / silver at $21.69 – on the week gold was down $31.60 and silver was down $0.88. We will be closing early today but will be back to regular hours on Monday. Thanks for your patience.

On Monday we were closed, and the domestic markets were closed for Martin Luther King, Jr Day. The banks, Post Office, FedEx, and Brinks were also closed for this national celebration.

On Tuesday gold opened steady as the Dollar Index traded on either side of its weekly highs (104.00) and traders continued to consider the ebbs and flows of interest rate driven trading sentiment. Reuters – The focus this week will be on the release of the Federal Open Market Committee’s January meeting minutes on Wednesday after strong recent U.S. economic readings raised bets for more Fed rate hikes. Money market participants see the benchmark level peaking to 5.3% in July and staying near those levels throughout the year. High interest rates discourage investors from placing money in non-yielding assets such as gold. Also on the radar, U.S. gross domestic product data is due on Thursday and core PCE price index is scheduled for release on Friday. Swiss customs data showed that Switzerland sent 58.3 tonnes of gold worth 3.3 billion Swiss francs ($3.6 billion) to Turkey in January, by far the most for any month in records stretching back to 2012.”

This is a short trading week – there may be little change in the price of gold. Today we saw prices swing between $1831.00 and $1842.00, so another “wait and see” trade with tight spreads. And yet the general bias appears to favor the bearish scenario, in the shorter term.

Across our trading desk I would describe the trading action as “sleepy”. The public is interested enough to buy price dips, especially if you have live and popular bullion choices. But we are seeing increased moderate selling. Nothing particularly large, these seasoned physical buyers/sellers are waiting for a clear FOMC interest rate change – not speculation.

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It may surprise you to find IRA investing is not highly regulated – be cautious. Pricing and storage homework is most important before making choices – there is no reason to hurry.

On the day gold closed down $7.40 at $1833.00 and silver closed up $0.18 at $21.87.

Zaner (Chicago) – “While April gold overnight managed a 3-day high and attempted to sustain a trade above $1850, it ultimately fell $14 from its overnight high. Some of the early weakness in gold is likely attributable to minimal strength in the dollar, risk off in global equity markets and slightly higher treasury yields. Unfortunately for the bull camp the market is confronted with a 7.6% decline in Swiss gold exports in January, with Chinese imports down 58% and Indian imports down by 33%! With the low at the end of last week $150 below the early February high the net spec and fund long positioning in gold has probably moderated significantly from the last reading in January of 206,016 contracts long. However, due to a hacking incident weekly COT report readings have been suspended and the trade is left to estimate market positioning. While the story has not gained traction global speculation that China is poised to supply Russia with weapons in its war against Ukraine if that is the case that could create flight to quality buying interest in gold and will likely result in further deterioration of US/Chinese relations. In a supportive internal supply development for gold leaving gold ETF holdings down Russia’s Polyus estimated its 2022 gold production declined by 11% on a net output of 2.4 million ounces. However, partially offsetting that supportive news is a forecast from the company indicating their 2nd half 2022 production increase by 38% versus the first half 2022. Last week gold ETF holdings declined by 207,259 ounces and gold holdings have declined for seven straight sessions leaving gold ETF holdings 1.2% lower year-to-date. Silver ETF holdings last week declined by 521,062 ounces, but in the last 2 days sessions holdings have increased by nearly 2 million ounces and holdings are currently 2.1% higher year-to-date. We suspect gold and silver will remain under pressure in the near term as the trade fears tomorrow’s release of the FOMC meeting minutes. However, according to the US Federal Reserve Chairman the Fed was not aware of the jobs data in their last meeting. We see solid resistance in April gold at $1856.40 and expect a retest of last week’s low down at $1827.70 in the coming sessions. With March silver initially posting a 4 day high overnight and reversing course the bear camp retains an edge and resistance is now pegged at $21.905.”

On Wednesday the New York domestic market sold off on the open ($1842.00) and trended lower ($1831.00) – creating a defensive trade and increasing bearish sentiment. Traders are again focused on the most recent tea leaves! Trying to “discern” what might happen in the short term. An old story for sure. But one which has not been resolved. Have interest rates peaked? Gold eventually moved off lows on the day and finished almost unchanged.

Our shiny friend yawned at the release of the latest FOMC minutes (Jan 31^st – Feb 1^st). Which is surprising because they sounded hawkish enough to create more selling. On the other hand, there was not much downside swoon over this latest insight. Which might suggest, not so obvious, underlying pricing support, at least for now.

Reuters – Gold flat as investors seek direction from U.S. Fed minutes – “Gold prices were little changed on Wednesday as investor held back from making large bets ahead of the release of minutes from the U.S. Federal Reserve’s latest policy meeting. The Fed raised rates by 25 basis points at that meeting and is expected to lift its benchmark overnight interest rate above 5% by May, with a peak seen at 5.35% in July. Recent strong U.S. economic readings have raised bets for more rate hikes from the Fed, pressuring gold prices which have fallen 4.7% so far this month. The Fed needs to get inflation onto a sustainable path this year or else risk a repeat of the 1970s, when interest rates had to be repeatedly ratcheted up, St. Louis Fed President James Bullard said. Gold is highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion. However, considering central bank activity in the second half of last year, “if gold prices go below the $1,800 mark in the coming weeks, some central bank purchases could emerge (and are) likely to offset substantial weaknesses,” Bank of China International analyst Xiao Fu said. “Markets could be waiting for the FOMC minutes … and also the five-year note auction. Both are important for gold because it’s going to determine which way rates starts to move,” said Daniel Pavilonis, senior market strategist at RJO Futures.”

On the day gold closed down $1.00 at $1832.00, and silver closed down $0.21 at $21.66.

Zaner (Chicago) – “While a dominating risk off theme permeates the markets this morning the dollar index is tracking slightly higher and adding to the negative macro view toward physical commodities. Furthermore, fear of hawkish US Federal Reserve meeting minutes this afternoon combined with a 50-basis point rate hike from the Royal Bank of New Zealand overnight provides the bear camp in gold and silver with several bearish themes. Even though several Fed members have recently pushed for jumbo rate hikes in next month’s Fed meeting, today’s meeting minutes release might not be as hawkish as market expectations as the Fed had not seen the ultra-strong January jobs results. Unfortunately for the bull camp prevailing expectations will likely remain hawkish despite countervailing dialogue in today’s release. However, if the US continues to show mostly positive economic reports, the prospects of an even higher than expected terminal rate in the US will grow. Yet another bearish influence on gold this morning is an 8th straight outflow of gold ETF holdings. In fact, gold ETF holdings are now down 1.2% year-to-date. On the other hand, silver ETFs added 125,304 ounces yesterday and holdings are now 2.2% higher year-to-date. From a supply perspective gold should receive minimal support from a reduction in AngloGold gold production targets for this year as the company shifts its focus to reinforce a waste dam in Brazil. A positive from the demand side of the equation came from IMF news that the Kazakhstan central bank continued its pattern of building gold reserves. Furthermore, the Indian Central Bank added minimally to their holdings in December (according to the IMF). Clearly, gold is not able to benefit from flight to quality buying following a 697-point dive in the Dow yesterday with early global equity weakness today also not yielding flight to quality buying interest in gold. In the near-term, the $1,850 level in April gold is likely to become resistance with support falling below $1,825. We see resistance in March silver developing at $22.00 and prices retesting last week’s low at $21.15.”

On Thursday gold continued its downward drift as the Dollar Index moved back to last Friday’s highs (104.6). Gold is down $95.00 this past month and $75.00 this past year. And the fear that the Fed will use even higher interest rates to control inflation pressure is growing.

Is the public buying or selling this latest confusion? I’m a fan for using “premiums” as an indication of public interest in bullion most of the time. Our business is still a net seller to the public – they are buying weakness – a plus for gold and silver. Still, “premiums” are moving lower which means trading volume is decreasing, suggesting they remain at least wary.

At the same time, the premium over spot for select products (Monster Boxes and US Gold Eagles) remains high. Why? These two bullion products are so popular and widely recognized that premium becomes secondary, even if delivery is delayed!

Reuters (Seher Dareen) – Gold hits 2-month low as Fed rates seen higher for longer – “Gold prices slipped to their lowest in about two months on Thursday, after a drop in U.S. weekly jobless claims numbers favored the Federal Reserve’s stance that interest rates would have to go higher to control inflation. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to a tight labor market and inflationary pressures. Meanwhile, the country’s gross domestic product increased at a revised 2.7% annualized rate in 2022’s fourth-quarter, revised down from 2.9% reported last month. While GDP numbers missed expectations by a bit, the lowered drop in jobless claims keeps the Fed in the driver’s seat such that they can keep raising rates, said Bob Haberkorn, senior market strategist at RJO Futures. Minutes from the Fed’s Jan. 31-Feb. 1 meeting on Wednesday showed policymakers agreed rates would need to move higher, but that the shift to smaller hikes would let them calibrate more closely with incoming data. “The only way to combat inflation is to raise rates and the only way it’s going to go away is when the consumer taps out, but the consumer hasn’t tapped out yet… they’re still buying,” Haberkron highlighted. Fed fund futures now price in three more hikes to 5.25-5.50% scaling back expectations for future rate cuts. High interest rates dampen gold’s appeal as an inflation hedge while raising the opportunity cost of holding the non-yielding asset.”

On the day gold closed down $14.00 at $1818.00 and silver closed down $0.36 at $21.30.

Zaner (Chicago) – “In retrospect, the overall market reaction to yesterday’s release of the FOMC meeting minutes was surprisingly muted but perhaps justified by the lack of fresh and important news from that release. However, the markets will face another inflation reading/test today in the form of US PCE with expectations calling for the readings to be unchanged from last month or down slightly. Unfortunately for the bull camp the dollar has posted a 4-day high early and could with minimal gains reach the highest level since January 6th this morning. Therefore, even if gold and silver fail to react significantly to this morning’s inflation news, rate fears and dollar action should continue to dominate gold and to a lesser degree silver. Unfortunately for the bull camp the gold market is not taking direction from classic supply side developments with Gold Fields LTD overnight projecting 2023 gold production of only 2.25 million ounces to 2.30 million ounces which would be lower production than 2.4 million ounces in 2022. The company indicated a delay in its project in Chile is the cause of the reduction in 2023 output. In another bearish overnight development gold ETF holdings fell for the 9th straight day with a decline of 61,732 ounces resulting in a year-to-date outflow of 1.3%. Furthermore, silver ETF holdings fell by 1.3 million ounces and are now up only 2% year-to-date. Not all news from the Fed yesterday was negative as the Fed’s view that the US economic outlook was becoming “more balanced” should help support gold silver and other physical commodity markets. It is possible that gold and silver will track in tight ranges this morning until the US Fed’s favorite inflation measure “PCE” is released. Nonetheless, we leave the path of least resistance pointing down in gold and silver unless the initial positive equity market action yesterday following the Fed release is rekindled.”

On Friday gold and silver remained defensive. Whether this is because the technical picture is deteriorating, or the Fed threat of higher interest rates is growing remains to be seen. It might well be that the next Fed interest rate hike does not create much of a stir because traders have already adjusted prices lower to the current hawkish speculation.

Reuters (Seher Dareen) – Gold loses ground as further rate hike bets boost U.S. dollar, yields – Gold prices dropped to their lowest in eight weeks on Friday, pushed down by a stronger dollar and bond yields as the market braced for more interest rate hikes by the U.S. Federal Reserve in the coming months. U.S. inflation accelerated while the consumer spending rebounded sharply by 1.8% in January, compared to Reuters forecast of a 1.3% rebound, further reinforcing expectations that the Fed will remain hawkish. Cleveland Federal Reserve President Loretta Mester reiterated on Friday that interest rates would need to be brought above 5% and held there to get inflation on a “sustainable downward path.”

On the day gold closed down $9.20 at $1808.80 and silver closed down $0.49 at $20.81.

Platinum closed down $37.60 at $902.00, and palladium closed down $51.30 at $1374.30.

Jim Wycoff (Kitco) – “Technically, the gold futures bears have the overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at last week’s high of $1,881.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at Thursday’s high of $1.841.20 and then at week’s high of $1,856.40. First support is seen at $1,815.00 and then at $1,800.00. The silver bears have the overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $22.635. The next downside price objective for the bears is closing prices below support at $20.00. First resistance is seen at the overnight high of $21.395 and then at Thursday’s high of $21.67. Next support is seen at $21.00 then at $20.79.

Posted on February 17, 2023 by Richard

Gold – Does Worry Matter?

Commentary for Friday, Feb 17, 2023 (www.golddealer.com) – Today gold closed down $1.60 at $1840.40, and silver closed up $0.01 at $21.69. Gold drifted lower today as the Dollar Index drifted higher. Talk of additional interest rate hikes hurt the bullish scenario. Reuters was working at creating worry this week with “fresh hawkish rhetoric from U.S. Federal Reserve officials, setting bullion up for its third straight weekly dip.” They are doing their job, but I suggest folks would be better off ignoring “official opinion” when it comes to buying or selling the metals. Academics are concerned with monetary policy – my bet is that they are not allowed to own gold. You are concerned with buying or selling an independent financial asset, which becomes more important as debt continues to grow. Stick with the bigger picture. Gold has been in a general downtrend since it failed to move above $1940.00 in early February. Today, buyers can save $100.00 an ounce. Gold is on sale. Could prices move lower? Of course, but even with all of today’s rhetoric gold closed almost unchanged. Does worry help or hinder the process? A reminder that Golddealer.com will be closed Monday (Feb 20^th) for President’s Day. Domestic markets, banks and the post office will be closed. Last Friday gold closed at $1861.75 / silver at $22.03 – on the week gold was down $21.35 and silver was down $0.34.

Important Notice – 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.

On Monday gold was defensive, but relatively steady, waiting for further meaningful inflation data – in the sense that traders want something more than opinion. I think these “data markers” are vague enough to let commentators take either side of the trade. Which is what Fed Chief Powell is looking for – more time to see if their “disinflation theory” holds up, meaning they hope that over time inflation will become less and less of a problem.

On the day gold closed down $10.90 at $1851.90 and silver closed down $0.21 at $21.82.

Grant on Gold (Zaner) – (1) Gold ended last week with a very slight loss. It was the second consecutive lower weekly close. The yellow metal remained defensive on Monday, dropping to a 5-week low of $1850.52. (2) Silver logged its fourth consecutive lower weekly close last week, ending up down 1.5%. A modest downside extension on Monday saw a new 10-week low established at $21.79. (3) Platinum closed down 3% last week, notching a fifth consecutive lower weekly close. (4) Palladium set a nearly 3-year low at $1510.82 on Monday, leaving the 2020 low at $1494.05 vulnerable to a short-term challenge.

On Tuesday the closing price of gold held up but again looked like it was waiting for the other shoe to fall. I believe lower prices are just around the corner. Keep your powder dry and expect sudden shifts in (bullish/bearish) sentiment. This week’s gold pricing will likely be a repeat of last week’s coming and going Fed anxiety. But in the longer term it remains to be seen if bullish gold traders can shake the inevitable “grind” created by higher interest rates.

On the day gold closed up $2.10 at $1854.00 and silver closed up $0.02 at $21.84.

On Wednesday gold weakened in the overnight Hong Kong market. A downdraft which was reflected in the domestic trade as gold moved to lows on the day ($1835.00), and trades showed very little interest in buying the dip in prices. Reuters – “Gold prices dropped to their lowest in over a month on Wednesday, weighed down by a stronger dollar as better-than-expected U.S. economic data raised worries the Federal Reserve could hike interest rates further.” This if of course an old story that keeps reinventing itself and discouraging the bullish scenario.

On the day gold closed down $19.80 at $1834.20 and silver closed down $0.29 at $21.55.

Zaner (Chicago) – “With a sharp range down extension in April gold putting prices to the lowest level since the end of December, the gold market has seen the largest reaction of most financial markets to the US CPI release yesterday. Apparently, gold and silver traders are concerned about the prospect of higher interest rates and slowing physical and investment demand. However, gold should be undermined following news overnight from Indian Trade officials that India gold imports in the April through January timeframe declined. The market should also be undermined following news that Gold Fields LTD projected its 2022 production to rise 3% over 2021. Adding into the initial negative fundamental news for gold and silver today are outflows from ETF holdings yesterday of 6426 ounces in gold and 380,443 ounces in silver. As expected, December gold displayed significant post CPI report volatility with a high to low 1-hour range of $31 with the bias eventually shaking out in favor of the bear camp. Therefore, we think the recent correction in gold will extend, especially with Federal Reserve commentary indicating the CPI result will likely result in a higher-than-expected terminal interest rate level. The silver market through the CPI report carved out a smaller relative range than gold of $0.43 right after the CPI release and ended the action yesterday with slightly less bearish charts than the gold market. Unfortunately for the bull camp, the silver charts have posted significant damage this morning with a range down move to the lowest price since November 30th. Obviously, the CPI report has generated fears of higher and or longer US interest rate hikes which in turn is expected to provide economic headwinds to the world’s largest economy. Therefore, as predicted by the Silver Institute several weeks ago, the silver market is facing demand headwinds well into the first quarter of 2023. However, a lack of financial market consensus on the meaning of the CPI result has allowed the bear camp to partially win by default. Without risk-on sentiment flowing from equities from favorable US retail sales, April gold looks destined to slide to $1,825. Keep in mind, the markets will be facing another US inflation report on Thursday in the form of PPI with expectations pegging a gain of 0.4% on a month over month basis. Given gold and silver reactions to CPI, we expect a smaller bearish PPI reaction on Thursday and then we might find reliable lows in gold and silver.”

On Thursday gold pricing was steady on the open even though the Dollar Index was stronger, and the January Producer Price Index came in hot – suggesting the Fed may have to continue raising interest rates. Still, the early New York cash market traded quietly between $1828.00 and $1838.00 – traders bought weakness and sold strength – a typical “holding pattern”. Until the close when “buying” dominated and gold finished mildly in the green.

This close should be enough optimistic news to keep the bears at bay through the weekend. The domestic markets will be closed for President’s Day; my guess is that traders remain cautious, even defensive – looking for a significant change in Fed monetary policy.

On the day gold closed up $7.80 at $1842.00 and silver closed up $0.13 at $21.68.

Zaner (Chicago) – “In retrospect, it seemed as if precious metal markets and the dollar were the only markets to see significant reaction to the extension of US inflation concerns following US CPI. Therefore, we expect selling in gold and silver again ahead of today’s US Producer Price Index release. After yesterday’s post CPI reaction in metals their nearly exclusive focus on action in the dollar should be expected again this morning. However, we suspect the reactions to the inflation report today will be significantly less than those experienced on Tuesday with the trade already rekindling inflation concern and chattering about even higher terminal rates in the US for 24-hours. It is also possible that traders see the PPI report as a more volatile number involving uneven manufacturing purchase activity and therefore PPI could be discounted by the trade. With a very full slate of US scheduled data beyond PPI today precious metals are likely to see some classic physical commodity market reactions to the data especially on those showing the pace of the US economy. While the markets were presented with news of a 76% decline (32 month low) in Indian gold imports last month, that news should have been factored yesterday. In fact, the Indian economy continues to be a stellar performer relative to the rest of the world and their gold purchases are likely to rebound, especially with those buyers keen to buy breaks. Yesterday gold ETF holdings declined by 11,870 ounces and are now down 0.9% on the year. Silver ETF holdings yesterday increased by 143,708 ounces and are now 1.9% higher year-to-date. In conclusion, we see the bias pointing down but warn of the potential of a significant short covering rally if PPI is 0.3% or lower.”

On Friday gold closed almost unchanged. I my opinion this was yet another “hurry up and wait” week featuring typical changing sentiment. What’s worse is that even with all this indecision we still do not have a clear idea of pricing direction!

Some knowledgeable traders believe a recession is inevitable. They are convinced the Fed interest dialogue remains hawkish. Others, just as qualified, are convinced lower interest rates are in the making – which will support higher metals prices.

I believe the best approach at this point is to wait patiently for the Fed to actually move interest rates. The next Federal Open Market Committee (FOMC) is March 15^th and 16^th. I would not be surprised to see gold prices gyrate but finish the next month right in line with today’s pricing.

On the day gold closed down $1.60 at $1840.40 and silver closed up $0.01 at $21.69.

Platinum closed down $9.60 at $915.50, and palladium closed down $33.20.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have lost their slight overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,881.60. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at Thursday’s high of $1,854.90 and then at Wednesday’s high of $1,870.90. First support is seen at the overnight low of $1,827.70 and then at $1,820.00. The silver bears have the overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $22.635. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at the overnight high of $21.585 and then at $21.875. Next support is seen at the overnight low of $21.155 and then at $21.00.”

Posted on February 10, 2023 by Richard

Gold – Fresh Bullish News Needed

Commentary for Friday, Feb 10, 2023 (www.golddealer.com) – Today gold closed down $3.40 at $1861.75, and silver closed down $0.07 at $22.03. On the day gold eventually drifted lower reacting to a stronger dollar, renewed world optimism and the hope that the FOMC “disinflation plan” is supported by a pattern of lower inflation data points. US consumer price data will be on display Feb 14^th and will likely provide needed fresh trading information. There is, however, a heaviness apparent in gold because money markets expect a peak in the current Fed rate cycle a little over 5% in July. My hunch is that gold will drift lower until the metals have adjusted to this last stage of rising interest rates. Last Friday gold closed at $1862.90 / silver at $22.33 – on the week gold higher by $1.15 and silver was also higher by $0.30.

On Monday gold was firm on the open but even this tepid reaction did not hold up and by the domestic close the price of gold was almost unchanged. Considering the large price drop on Friday, today’s action provided a proverbial “wet blanket” to bullish sentiment. Suggesting that the recent ¼ percent interest rate Fed “pivot” will not be enough to stop inflation. And that higher interest rates over a longer period of time are the FOMC’s primary objective.

Reuters (Seher Dareen) – Gold gains capped by stronger dollar, yields – “Gold rose on Monday, yet gains were limited by a stronger dollar and yields, with investors banking on the precious metal’s safe-haven appeal as concerns about an economic slowdown linger. “Traders will look at gold as a safe-haven asset and buy into it,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. Concerns over a slowdown remain and that is likely to keep demand for gold on a firm footing this year, analysts said. Weighing on gold, the dollar index advanced 0.6% to an almost month-high, making the yellow metal more expensive for buyers holding other currencies, with benchmark Treasury yields rising as well. Gold prices dropped more than 2% on Friday after data showed U.S. job growth accelerated sharply last month, with focus on speeches by a host of Fed officials this week, including Chairman Jerome Powell. The Fed last week increased interest rates by a quarter of a percentage point to 4.5%-4.75% after a year of larger hikes, and investors are now pricing in the policy rate peaking at 5.05% in June.”

On the day gold closed up $3.30 at $1866.20 and silver closed down $0.15 at $22.18.

Grant on Gold (Zaner) – (1) Gold closed down more than 3% last week, but not before setting a new 10-month high at $1959.77 on Thursday. (2) While silver reached a 10-month high at $24.64 last week, those gains could not be sustained, and the white metal ended the week with a 5.3% loss. (3) Platinum closed down 3.7% last week. It was the fourth consecutive lower weekly close. (4) Palladium remains defensive at the low end of the range, with the low from December of 2021 at $1528.00 within striking distance.

On Tuesday the price of gold was choppy to mildly higher on the open, suggesting my comments about a “wet blanket” for the bulls yesterday may have been overstated. Still, I expected a lower open as traders await Chief Powell’s comments today. The Chief will talk about economic policy but may have nothing new to add to this conversation.

So, gold will remain defensive because interest rate hikes are still a big unknown. I suspect professionals can’t get their heads around how the Fed will “fight inflation” and move interest rates lower. Which presents an ongoing problem for bullish sentiment. His comments were as expected “a little bad and a little good”. In the end Wall Street sensed some optimism and the Chief bought more time for inflation to cool in the short term.

Reuters – “Federal Reserve Chair Jerome Powell will address an event hosted by the Economic Club of Washington at 12:40 p.m. ET (1740 GMT) on Tuesday. “We may go a little bit higher but ultimately I think that we are due for more of a correction, and this (rise) is just a pause,” said Daniel Pavilonis, senior market strategist at RJO Futures. Minneapolis Fed President Neel Kashkari on Tuesday said that the U.S. central bank would perhaps have raise interest rates to at least 5.4% to tame high inflation, yet the strength of the U.S. labor market makes it less likely that the economy will fall into a recession. With Fed officials John Williams, Michael Barr, and Christopher Waller due to speak during the week, “(they) are going to talk about having to continue to fight inflation, which would strengthen yields,” added Pavilonis. U.S. interest-rate futures show that markets are expecting the Fed funds rate to peak just above 5.1% by June, compared with expectations of a peak below 5% prior to Friday’s surprisingly strong jobs report. Analysts at Commerzbank forecast gold prices at $1,850 by mid-year and $1,950 by end-2023.”

On the day gold closed up $5.50 at $1871.70 and silver closed down $0.06 at $22.12.

On Wednesday gold was choppy between $1870.00 and $1885.00 as investors mulled over the Chief’s most recent thoughts on the economy and inflation. We are in the same old spot – relative to the interest rate question. But for now, Jerome has bought more time before judgment.

If the FOMC is right and inflation is cooling, the Fed will have room to orchestrate that much talked about “soft landing”. The good part about this old scenario is that investors will not have to wait long before the next round of measurable inflation indicators are on the table.

It is worth noting that gold pricing this past month is higher by a yawn ($13.20) and this past year by a second yawn ($50.80). With all this time and bombast pricing is very sleepy.

Reuters (Brijesh Patel) – Gold eases in choppy trade as investors await U.S. economic data – “Gold prices edged lower in a choppy session on Wednesday due to a slight uptick in the dollar, while investors looked forward to more economic data to gauge the U.S. Federal Reserve’s rate-hike strategy. “The main focal point here has been the shift in sentiment after the jobs report. There were high expectations that (Fed chief) Jerome Powell would take advantage of the opportunity to jawbone the market down a bit, but he did not,” said David Meger, director of metals trading at High Ridge Futures. “We continue to see gold prices to be range bound here. There is some fairly strong support in the $1,850 to $1,870 range. We think dips are going to remain a buying opportunity in the short term.” Powell on Tuesday said interest rates might need to move higher than expected if the U.S. economy remained strong, but reiterated he felt a process of “disinflation” is underway. New York Fed President John Williams on Wednesday said his expectations of future central bank rate cuts is driven mostly by a need to respond to the likelihood of lower levels of inflation in the future. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. Following a robust U.S. jobs report, market participants now await January inflation numbers next week that could offer more cues on the Fed’s rate-hike path. “One factor that could well be keeping the gold price so supported is the strength of buying from central banks, including those in China, India and Turkey,” Kinesis Money analyst Rupert Rowling said in a note.”

On the day gold closed up $5.70 at $1877.40 and silver closed up $0.25 at $22.37.

Zaner (Chicago) – “The gold and silver markets continue to claw their way back from last week’s aggressive break and have rejected the downside extension on Monday with higher highs and higher lows. With the dollar remaining within this week’s sideways consolidation range. the gains in the gold and silver today are likely the result of other forces than the Dollar. In fact, to extend this morning’s impressive initial gains probably requires a fresh lower low for the week in the Dollar with a decline below 102.845. However, today’s US scheduled report slate (on its own) is unlikely to yield significant reactions in financial markets. On the other hand, there will be two Fed speeches today but given the muted response to the Fed chairman speech yesterday we expect only minimal headwinds from the morning and midday speeches. In retrospect, evidence of increased Chinese central bank gold buying from earlier in the week should be seen as a long-term supportive development for gold. In fact, the Chinese central bank posted net buying for the third straight month with holdings increasing by 15 tonnes over the prior month. Therefore, the 3 months increase in Chinese gold reserves is 77 tonnes in 3 months. For an extended period, Chinese gold reserves were not a known figure and the current “estimated” Chinese gold reserves at 2,025 tonnes seems to understate their actual holdings. At 2,025 tonnes, Chinese central bank gold holdings are one quarter of US central bank gold holdings. Unfortunately for the bull camp yesterday gold ETF holdings saw a 3rd straight day of outflows with the 62,439-ounce reduction leaving the year-to-date decline at 0.8%. While current consolidation low support in April gold around $1,880 and that level is not significant, that level should thicken if the Dollar index falls back to the 102.846 level. With gold and silver prices trading in sync with equity prices yesterday, the precious metal trade is considering physical, industrial, and investment demand environments in addition to dollar action. The failure of silver to close positive in the face of strong recovery action in gold highlights prevailing bearish view toward silver. However, the overnight trade in silver was exclusively in positive territory and other industrial metals like PGM’s, Zinc and copper are tracking positive early this morning. Unfortunately for the bull camp, silver ETF holdings yesterday declined by 231,953 ounces, but holdings are still up 1.3% for the year. From a technical perspective, the silver charts are still generally bearish with 4 days of lower highs and lower lows targeting support down at $21.09 if gold fails to hold $1880 today.”

On Thursday the gold pushed higher on the open ($1890.00) but this initial rally was quickly sold by the paper market and gold drifted steadily lower – by closing it had made lows on the day ($1866.00). And our shiny friend lost another $5.00 in the quiet aftermarket.

This suggests the paper trade is booking short-term profits when available. Today’s early rally was created by dollar weakness and fresh data suggesting mildly higher unemployment numbers. None of this is a big deal – this kind of action is intuitive in a defensive market.

Today you saw the almost traditional drift in gold – bullish optimism is offset with pessimism over the ability of the Fed to keep a lid on interest rates long enough to give its “disinflation” scenario time to succeed.

In the meantime, this market is rangebound with little chance of a sustained break to the upside in the short term. Savvy traders are just waiting for “bear raids” testing near term support.

Keep your seat belts fastened but look for moderation in pricing. It just makes good sense.

Ignore the “end of the world is nigh” scenario. This fiction is used by criminal telemarketing hacks to sell overpriced graded bullion junk over the phone. These retched people are not your friends. They will rob you if given the opportunity – don’t let them. Do your due diligence before making decisions. If you are confused send me an email at, Ask an Expert.

Real gold and silver bullion should have a permanent place in your investment planning. Why? Because this asset provides financial counterbalance over the long term. More importantly bullion is truly independent of government edict. That is why the central banks of the world have always used their gold holdings as a measure of their financial strength and reliability.

On the day gold closed down $11.20 at $1866.20 and silver closed down $0.27 at $22.10.

Zaner (Cicago) – “Even though the downside breakout in the Dollar Index this morning is only a few ticks, the gold and silver markets are drafting support from expectations of a downside extension in the dollar, if US jobs data today extends its recent trend of improvement. We also suspect gold and silver are benefiting from risk on psychology flowing from favorable Disney earnings yesterday and from ongoing strong performance of European equity markets. Normally a physical commodity market would get a noted lift from news of a reduction in production from a key output area but another decline in South African gold output in December of 3.3% versus year ago levels is apparently a minor supportive development. Perhaps the trade has long accepted the downtrend in South African output, but severe power supply issues in South Africa are developing and could cause further losses and generate enough headlines to become a more important issue to the trade. Unfortunately for the bull camp gold ETF holdings yesterday declined by 15,457 ounces and remain 0.8% lower year-to-date. Yesterday’s outflow was the 4th straight daily decline in gold holdings. However, the gold trade should garner minimal lift from a noted month over month jump in Perth Mint sales of gold coins and minted bars in January with sales of 64,395 ounces versus 60,634 ounces in the prior month. It should also be noted that stories have surfaced from Russia of significant purchases of gold bars, with one of Russia’s largest gold producers (Polymetal) indicating they have only sold inside the country this year. It is possible that gold and to a lesser degree silver are garnering lift from a slight boost in flight to quality interest from rising concern toward Credit Suisse and from threats from Russia against Ukraine if Western fighter jets are employed in the battle. Looking ahead, a lower low in US initial claims later today could spark a temporary wave of rate hike fears and lift the dollar. Therefore, gold could temporarily retrench and potentially retest support at $1,873. In the silver market, any renewed interest rate fears from US jobs date, a temporary bounce in the dollar from data this morning and brief spillover pressure from a dip in gold could pressure silver and push prices down temporarily to first key support on the charts at $22.20. On the other hand, silver ETF holdings jumped by 3.1 million ounces and are now 1.7% higher on the year.”

On Friday gold pushed to highs ($1868.00) and traders once again sold this modest strength as our shiny friend settled on daily lows ($1854.00). This pattern has repeated itself a number of times this week and suggests a lingering apprehension about FOMC interest rate intension.

Gold’s 60-day pricing chart reflects this ongoing apprehension, as traders also sold gold’s most recent attempt to move above $1950.00. This market has then been settling to the downside for the last several weeks. There is price support at $1850.00 but with worldwide optimism making a comeback and a strong bounce higher in the Dollar Index yesterday I suspect the likely fallback position of gold pricing will eventually be $1800.00 which we last saw in January. Of course, all this depends on those upcoming and still pesky inflation data points.

(Reuters) – “Investors await U.S. consumer price data due on Feb. 14. While concerns abound of a global recession, a strong rally in world markets suggests optimism is returning, which could ease the Fed’s rate hike cycle. “We will have to see significant and sustained progress on the inflation front before authorities on the monetary side of things will feel comfortable to allow rates to pivot lower,” said Bart Melek, head of commodity markets strategy at TD Securities.”

On the day gold closed down $3.40 at $1862.80 and silver closed down $0.07 at $22.03.

Platinum closed down $12.30 at $945.60, and palladium closed down $91.80 at $1521.90.

Posted on February 3, 2023February 3, 2023 by Richard

Gold – Are the Bears Returning?

Commentary for Friday, Feb 3, 2023 (www.golddealer.com) – Today gold closed down $53.40 at $1862.90, and silver closed down $1.20 at $22.33. Gold’s sudden drop in price this morning introduced a new round of uncertainty into an already confusing pricing picture. I would not overreact to this downward swoop, but it does take a significant buzz out of a market which was already looking for a boost in positive bullish sentiment. It reminds everyone that the Fed’s interest rate expectations are always tenuous. The FOMC remains in unchartered waters when it comes to dealing with the debt load created by the extreme pandemic years. (Reuters) – Gold prices dropped over 2% on Friday to more than a three-week low after stronger-than-expected U.S. jobs data raised fears that the Federal Reserve could keep hiking interest rates. U.S. employment growth accelerated sharply in January, with 517,000 positions added, almost double the gain in December. The unemployment rate hit more than a 53-1/2-year low of 3.4%, pointing to a persistently tight labor market. “This (data) is going to add support to the argument that the Fed might have to remain a little bit more aggressive going forward,” said Edward Moya, senior market analyst at OANDA. The dollar jumped 0.9%, reaching a three-week high earlier in the session, making gold a less attractive bet. The yield on 10-year Treasury notes also climbed.” Last Friday gold closed at $1928.60 / silver at $23.53 – on the week gold lost $65.70 and silver was lower by $1.20.

On Monday gold was again choppy – trading between $1930.00 and $1923.00. This was the case most of last week. The closest FOMC meeting (Jan 31^st – Feb 1^st) will help define the short-term picture. And most traders expect a lighter hand on the interest rate throttle – perhaps ¼ point hikes will do the trick! The March 21^st / 22^nd confab will carry more weight because it is associated with what the Fed calls a Summary of Economic Projections on their website.

Keep in mind however that opposing inflation forces create dynamic and changing economic tensions. Reuters notes that US consumer spending fell for a second straight month in December, suggesting a slowdown. However, the number of people filing for jobless benefits keeps dropping – signaling a tight labor market which may force the Fed to keep hiking rates.

It may be best to keep your eye on the short-term speculation. Traders figure the more recent and dovish Fed inclination is already factored into today’s pricing. This is a kind of “working theory” which can to some degree be verified.

Today the focus will be on the upcoming Federal Open Market Committee meeting (Jan 31^st – Feb 1^st). An interest rate hike of ¼ point would help those looking for higher gold prices. It would provide the bullish base with needed encouragement in an otherwise flagging gold market struggling with overhead resistance ($1950.00).

On the other hand, if inflation begins to rise, the Fed does not want to be caught behind the inflation curve like they were the first time around. This could encourage larger interest rate hikes. And the return of bearish sentiments would likely be back in the driver’s seat.

On the day gold closed down $5.70 at $1922.90 and silver closed up $0.12 at $23.65.

Grant on Gold (Zaner) – (1) Gold ended last week with a scant 0.09% gain, but it was the sixth consecutive higher weekly close. (2) Silver closed down 1.3% last week, its second consecutive lower weekly close. The white metal is down over 1% in January. (3) Platinum posted a 3% loss last week, falling to a 5-week low of $1001.12. It was the third consecutive lower weekly close and the market remains defensive in this week. (4) Palladium fell to a 13-month low of $1591.35 last week, leaving the low from December 13, 2021, at $1528.00 vulnerable to a challenge.

On Tuesday the price of gold moved steadily lower in the overnight Hong Kong and London markets. And in typical fashion the New York domestic trade reversed those losses – moving back into the mildly green region on what some experts have called “bargain hunting”. I hope that is the case. And for now, the US trade in gold does remain firm in the short term.

I’m not convinced the talk about slowdown in Fed interest rate hikes is the end of this complicated story. I view “the slowdown” possibility as just another “transitory” piece of gold’s pricing puzzle. In short order the Fed could wake up and see itself as under “inflation attack”. The bears return in large numbers. And recent pricing gains would be turned on their head.

Reuters (Seher Dareen) – Gold set for third monthly rise on softer dollar, Fed slowdown bets – Gold prices on Tuesday were on track for their third straight monthly gain, helped by an overall weaker dollar and expectations around slower rate hikes from the U.S. Federal Reserve. The dollar was heading for its fourth consecutive monthly loss, making bullion more attractive for holders of other currencies. “We have so many event-driven risks throughout this week and investors have to pay attention to that. Gold prices are likely to be volatile,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “(However), $1,950 per ounce is an easily achievable target in the short-term for bullion,”, Streible added. The U.S. central bank policy decision is due at 1900 GMT on Wednesday, followed by a news conference from Fed Chair Jerome Powell. Markets are pricing in a 25-basis-points hike (bps) by the Fed, after slowing its pace to 50 bps in December, following four straight 75-bp hikes. Additionally, the Bank of England and the European Central Bank are likely to be raising rates on Thursday. Lower rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset. Meanwhile, analysts and traders have raised their predictions for gold prices but expect high rates to keep a lid on rallies, a Reuters poll showed. “Given how markets are expecting the FOMC, BoE, and ECB to make a move, the focus is likely to be on what they say rather than the actions they take,” said Lukman Otunuga, senior research analyst at FXTM.”

On the day gold closed up $6.60 at $1929.50 and silver closed up $0.10 at $23.75.

On Wednesday gold was choppy with a tight pricing range ($1923.00 through $1933.00). Most analysts expect a ¼ point interest rate hike today. But the real focus will be on what Fed Chief Powell has to say about further rate hikes in the near future. Traders are more interested in what is around the next corner than what is on the table at the present time.

The Fed raised interest rates a ¼ point today – a plus for gold bullish sentiment. And this rather dovish FOMC move did create a strong after market in the gold trade ($1955.00). But one with a kind of variable offset. (Barron’s) – “In a statement, the central bank acknowledged that price growth “has eased somewhat” but that it remains elevated. It also didn’t alter language that suggests further rate increases are on the horizon, noting that the committee “anticipates that ongoing increases in the target range will be appropriate.” That suggests another rate increase will be on the table when the Fed’s policy-making committee meets again in March, and that more could follow. “For those looking for today to represent a pivot, future increases (emphasis “S”) in the target band means it is still too soon to look for the Fed to shift to an on-hold stance,” wrote Benjamin Jeffery, a strategist with BMO Capital Markets.”

Hawkish commentary continues to make the short-term gold trade pensive. One which will likely favor downward dips, testing support. Even as Powell tiptoes around the interest rate dilemma.

The Dollar Index was drifting lower before Powell’s speech, losing a full point. Obviously supporting the bullish gold scenario and reflecting the expected ¼ point interest rate hike.

This pricing pattern in gold is familiar. We have seen this set of circumstances in the past. The professional trade will likely look for lower prices because of three important reasons.

First, gold is higher by more than $100.00 this past month. This suggests that the paper trade will sell this recent rally and take profits. Second, the Chief has used his public platform on many occasions to remind the faithful that inflation is his primary concern. Today such talk was at least “muted” as Powell was “gratified” that the disinflation process has started.

But he was candid enough to admit that it is too soon to call even this round of the ongoing fight a victory. And third, three weeks ago the gold rally turned flat in a channeling pricing pattern between $1920.00 and $1940.00, suggesting a tired bull. Still, it will be interesting to see how this strong aftermarket will fare in Thursday’s domestic trade.

On the day gold closed down $1.70 at $1927.80 and silver closed down $0.23 at $23.52.

On Thursday the bulls were disappointed as the Dollar Index bounced off recent lows and trended higher today. The early New York domestic market sold yesterday’s strong aftermarket and the price of gold moved from $1955.00 through $1920.00.

Yesterday’s ¼ point rise in interest rates created a kind of “relief” rally which created another chance for paper traders to book profits. This may sound a bit cynical but may help the bullish sentiment if you consider gold is at least holding up considering the potential pounding it might take if the Fed turns back to the dark side of its interest rate program.

Keep in mind this trade may yet get bumpy. Nothing is sure in this “unwinding” mess and traders are anxious to see Friday’s jobs report. If this report comes in “hot” (favoring employment) it might lead traders to believe the Fed will once again turn hawkish. The dovish and favored FOMC position today of “easing inflation” could turn into a busted flush.

On the day gold closed down $11.50 at $1916.30 and silver closed up $0.01 at $23.53.

On Friday gold opened flat but the bears quickly roared as employment numbers beat expectations by a wide margin – unemployment is the lowest seen in this country since 1969. Again, introducing uncertainty into exactly what the Fed might do if inflation does not continue to “ease”. Of course, gold should have weakened, the Dollar Index gained a full point on the strong jobs data. But frankly this looks like an overreaction. Nonetheless the technical picture was damaged, the important $1900.00 psychological level is in the rear-view mirror and traders are dealing with the reality of $1865.00 gold and perhaps even a progressively bearish trade.

On the day gold closed down $53.40 at $1862.90 and silver closed down $1.20 at $22.33.

Platinum closed down $51.70 at $971.80, and palladium closed down $24.20 at $1614.60.

Jim Wyckoff (Kitco) – Technically, the gold futures bulls still have the overall near-term technical advantage but are now fading. A three-month-old uptrend on the daily bar chart has at least temporarily been negated. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at this week’s high of $1,975.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,925.00 and then at today’s high of $1,932.40. First support is seen at $1,885.00 and then at $1,875.00. The silver bulls have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at the January high of $24.775. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today’s high of $23.66 and then at $24.00. Next support – January low of $22.845 and then at $22.50.”

Posted on January 27, 2023 by Richard

Gold – Steady and Quiet

Commentary for Friday, January 27, 2023 (www.golddealer.com) – Today gold closed down $0.50 at $1928.60, and silver closed down $0.40 at $23.53. Gold prices were choppy today as the Dollar Index moved marginally higher. This looks more like a pause in a generally bullish market as traders anticipate a less aggressive Fed interest rate policy. Still, I’m hesitant to call this any kind of consolidation above $1900.00. Too many loose ends if you know what I mean. That is my story and I’m sticking to it – at least for this week. Last Friday gold closed at $1926.40 / silver at $23.83 – on the week gold was higher by $2.20 and silver was lower by $0.30. The metals don’t seem to be too worried about world politics or problems.

On Monday gold dipped on the open on early selling, but traders bought the weakness at $1912.00, and pricing moved back to virtually unchanged. This is typical of the recent and more optimistic sentiment created by the theory that the Fed will indeed be modest when considering their coming interest rate hikes. The cause of the initial weakness was typical. An uptick in the dollar and bond yields (Reuters). Which suggests that not all traders are convinced the Fed will take its foot off the interest rate acceleration pedal. Gold’s technical picture this past month is creating a positive buzz but it looks like pricing may be turning flat around $1900.00.

Can gold move above $2000.00 in the short term? Obviously, the Fed would have to turn seriously dovish on interest rates, an old argument. But bullish gold sentiment may gain steam over an equally old idea. Perhaps moving away from Covid spending will not require higher interest rates – and create the requisite recession. (Reuters) “The likelihood that the United States is already in recession or will fall into one this year has dropped over the past three months to 56% from a nearly two-thirds possibility, according to a survey on business conditions.”

On the day gold closed up $0.70 at $1927.10 and silver closed down $0.38 at $23.45.

On Tuesday the pricing pattern for gold was similar to that seen on Monday – we opened flat, gold dipped in price and traders bought the dip. Today gold offered a modest upward bias in prices as traders anticipate a dovish shift in upcoming interest rates hikes. But gold remains static in the short term, waiting for next week’s FOMC meeting for clues and insight.

Reuters – Gold eases off nine-month peak as U.S. dollar, yields gain – “Gold prices pulled back from a nine-month high on Tuesday due to a slight uptick in the dollar and U.S. bond yields, although hopes of slower interest rate hikes from the Federal Reserve underpinned the market. The dollar index was 0.1% lower against its rivals, making greenback-priced bullion cheaper for many buyers, while benchmark U.S. 10-Treasury yields edged lower from their one-week high. A survey from S&P Global showed price pressures ticking higher for the first time since last spring, indicating that inflation is far from licked despite aggressive measures to contain it by the Fed. “I think gold is still holding quite strong as the market expectations are turning more towards a pause from the Fed potentially, or a turn to a more dovish policy,” said Ryan McKay, commodity strategist at TD Securities. The U.S. central bank delivered four consecutive rate hikes of 75 basis points (bps) before slowing its pace to 50 bps last month to fight soaring inflation. Traders are now pricing in a 96% chance the Fed will raise rates by 25 bps at its policy meeting next week. “As the expectation of inflation continuing to come down, there will be lesser need for Fed interest rate hikes and the market is really focused on the idea of an ending to the Fed interest rate cycle,” said David Meger, director of metals trading at High Ridge Futures.

On the day gold closed up $6.80 at $1933.90 and silver was up $0.20 at $23.65.

Zaner (Chicago) – “While the US dollar is not weak enough to provide definitive lift for gold, startling demand news was presented overnight with reports that Swiss exports of gold reached multiyear highs in 2022. More importantly, Swiss exports of gold to China were pegged at 524 tons up from only 354 tons in 2021 and the highest tally in 5 years! In conclusion, demand for the largest consumer of gold was solid last year despite a lack of Press coverage on the subject. Swiss exports to India in 2022 were 224,464 kg up from 147,760 in 2020. However, Swiss exports to India last year were less than half of the 2021 intake of 507,224 kg. Unfortunately for the bull camp November Swiss export figures showed a 79% decline in Indian gold imports. After a string of daily outflows from gold ETF instruments, Monday saw an inflow of 276,181 ounces bringing the year-to-date tally to a “flat” reading. Silver ETF holdings saw a notable inflow of 2 million ounces, but year-to-date holdings are still down 1.2%. Unfortunately for the bull camp, Indian gold buyers overnight backed away after a new high in gold valued in rupees, which is clearly a pattern in the Indian gold trade. In a minimally negative overnight development Freeport Indonesia estimated this year’s gold production at 1.8 million ounces relative to 1.6 million ounces last year. In retrospect, the gold market deserved a measure of back and fill technical balancing after last week’s stellar rally. In fact, seeing the US dollar recoil from a potential downside breakout on the charts yesterday should temporarily increase overhead resistance and potentially entice profit-taking in the bull camp with a failure of support at $1,938. At present, we see gold and silver as classic physical commodity markets needing progressively lower dollar action, a notable expansion in global uncertainty or a significant drop in US treasury yields to finish the month of January as strong as the market started out the month. Uptrend channel support in the April gold contract today is $1,929.75, with a closer in pivot point seen at $1,938.80. Unfortunately for the bull camp in silver a significant risk-on start to the trading week failed to inspire positive silver price action. However, seeing the trade aggressively reject a spike below $23.00 yesterday and seeing a large inflow to ETF holdings should provide fresh confidence for the bull camp. However, the bull camp has been off balance over the last several weeks and probably needs several more days of gains in equities, a distinct downside breakout in the dollar and or an upside breakout in gold to rekindle notable buying interest.”

On Wednesday gold’s pricing pattern was similar to that which we saw on Tuesday. The dip gives traders the opportunity to buy weakness, and the “up/down/up” pattern is repeated. Normally this would cause the physical bullion trade to lose interest. In this case, however gold pricing has worked itself back to highs on the month, which always stokes the physical market.

This dynamic is not simple to understand because there are several ways of considering the “see-saw”. It is a bit early to consider any of these “as the right option”. Because this puzzle has several moving parts, the tea leaves will likely remain cloudy through the first half of 2023.

Some gold analysis will claim this back-and-forth pattern is simply an easy way for traders to take profits in a normally developing market. And because gold’s technical pattern in the short term suggests higher prices are in the making, this does create interest and buzz.

Others will claim that the Fed “pivot” is already factored into the current price of gold. And this latest upward market will need “fresh” bullish information to sustain higher prices.

Still others believe that ultimate Fed action is becoming less important. Changing world events will first underpin the price of gold. And then reinvent safe-haven demand in a world struggling with political turmoil and rising inflation. Reuters – “Germany announced plans to deliver heavy tanks to Ukraine, and the United States was poised to do so too, a breakthrough hailed as a decisive military boost by Kyiv and condemned by Moscow as a reckless.”

On the day gold closed up $7.30 at $1941.20 and silver closed up $0.19 at $23.84.

Zaner (Chicago) – “While it is too soon to suggest a pattern is developing both gold and silver saw inflows to ETF holdings yesterday of 25,518 ounces with silver posting the largest one-day inflow since February 2021 of 18.6 million ounces. Therefore, both gold and silver ETF holdings sit above the levels at the start of the year. In fact, silver ETF holdings are now 1.3% higher on the year. It is likely that a measure of gold weakness this morning is the result of classic back and fill profit-taking from a recent 9-month high. In fact, the dollar action this morning has been narrow and the index sits at nearly the exact middle of yesterday’s somewhat narrow trading range. While we think it is suspect reasoning some Press outlets are suggesting initial weakness in gold today is the result of signs of lingering inflationary pressure following inflation readings from Australia and New Zealand. Certainly, gold and silver are off balance heading into a likely Bank of Canada 25 basis point rate hike later this morning. Overnight some gold mining companies raised forward production guidance while one major producer saw reduced current production one of which was the result of reduced operations following a fatality. At present supply issues in both gold and silver are likely to remain less important than dollar action and demand signals. However, Chinese gold production was up 13% in 2022 with a gain of 43 tons and that news more than offsets temporary production losses from other gold mining companies. We are not sure of the potential price impacts from reports that Russia’s 2nd largest gold mining company (Polymetal International) is moving its headquarters from New Jersey to Kazakhstan reportedly to move to a friendlier domicile with closer ties and acceptance by Russia. Initial support in April gold today is $1935 and then again down at $1929. Despite a very supportive massive daily inflow to silver ETF holdings yesterday, a forecast from Fresnillo predicting 2023 silver production to rise to 64 million ounces from 57 million in 2022 justifies early weakness in prices. However, Fresnillo silver production last year came in 3 million ounces below the company’s forecast. Like the energy markets, we see gold and silver as temporarily overbought from both technical and fundamental perspectives. However, gold bulls are likely to jump into the market with fresh buy orders if the US dollar index falls below 101.26. While not as powerful of an impact as a downside breakout in the dollar, seeing treasury prices return to last week’s highs could spark a rally without specific support from a weak dollar. In our opinion, gold and silver have settled into a pattern where the dollar will still need to pull precious metal prices higher with periodic downside extensions. Key uptrend channel support today in March silver is $22.99 and at $23.06 on Thursday.”

On Thursday gold pricing was typical for this week – the New York cash market pushed to $1942.00, and traders sold the rally (profit taking). Gold then trended lower, finally catching a solid bid at $1924.00. On the day our shiny friend closed modestly lower supported by the belief that the Fed will be less aggressive in fighting inflation, especially in the short term.

Looking at the bigger picture, gold continues to struggle with traditional overheard resistance. The bulls are holding above $1900.00 (a plus), but conviction looks thin. Do not be surprised to see traders dance around these higher numbers and expect dips to the downside.

At the same time, give credit to traders of both stocks and the metals for adjusting to these crazy times. I don’t think either asset is out of the doghouse – but both are holding up, considering.

Reuters – “While gold is still somewhat pressured by the fact that the data has given the Fed room to be higher for longer, on the other hand, concerns about a slowdown, especially with recent headlines on layoffs, are limiting the downside,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York. “This is giving bulls the momentum backed by strong technical moves in the past couple of months.” Initial jobless claims also fell more than expected, signaling a tight labor market. The data likely sets the tone heading into the Fed’s policy-setting committee’s two-day meeting next week.”

On the day gold closed down $12.10 at $1929.10 and silver closed up $0.09 at $23.93.

Zaner (Chicago) – “While gold and silver prices are lower to start today because of strength in the US dollar, most markets could set their trends for the coming days following today’s 7:30 wave of US scheduled data. Obviously, the initial claims reading will be important considering the downside breakout last week, but overnight sentiment seems to have shifted up off hopes of solid US growth evidence from GDP this morning. In other words, the dollar will be presented with fresh impactful data which we think will fail to provide sustained gains. Therefore, gold and silver could see an early knee-jerk reaction dip from the data flow this morning, but ultimately, we see the bull trend in gold returning. As indicated several times earlier this week, several days of inflows to gold and silver ETF holdings do not represent a solid “trend”, but a modest pattern of inflows is in place with the magnitude of daily inflows material. Yesterday gold ETF holdings increased by 115,207 ounces putting year-to-date holdings above the level at the start of the year. Furthermore, silver ETF holdings have exploded this week with over 23 million ounces added and holdings 1.6% above levels at the beginning of the year. In retrospect, action in gold and silver yesterday was very impressive with the markets forging gains in the face of a Canadian rate hike, minimal weakness in the dollar and ongoing economic slowing fears. In our opinion, it is possible that gold and silver are beginning to look beyond the final stages of the rate hike cycle and/or there is a growing fear of recession prompting flight to quality buying. While many markets did not show a definitive reaction to favorable Chinese Covid news from the Chinese Center for Disease Control indications that current infections were 72% below their peak, traders are skeptical. However, the Chinese government also indicated that 82% of their population has been infected and that should be seen as building national immunity. In another suspicious bullish development, a major Russian gold producer expects significant Russian government buying of gold ahead. The bias is up but further gains will need a downside breakout in the dollar index below 101.26 which is only 3 ticks below the dollar index price as of this writing.”

On Friday the trade looked like it needed a rest – perhaps information fatigue. The professional trade believes that interest rate uncertainty caps higher gold prices. The US economic picture remains a mixed bag of “some good” (no recession) and “some bad” (recession this year). Hedge funds may be reinventing their interest in gold because they too are looking for some way to balance the possibility of a Fed “mistake” during this transition period.

I would not say our physical market is hot – but it remains steady. Some larger bullion selling by the public has reappeared, but these transactions are from veteran players taking profits at these higher levels. Some of these trades are simply “adjustments” – trading one metal for another.

On the day gold closed down $0.50 at $1928.60 and silver closed down $0.40 at $23.53.

Platinum closed down $6.20 at $1007.40, and palladium closed down $64.10 at $1591.20.

Jim Wyckoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $2,000.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,885.00. First resistance is seen at this week’s high of $1,949.80 and then at $1,962.50. First support is seen at Thursday’s low of $1,918.40 and then at this week’s low of $1,912.50. The silver bulls have the overall near-term technical advantage. However, trading has been sideways and choppy recently. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at the January high of $24.775. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today’s high of $24.12 and then at this week’s high of $24.415. Next support is seen at $23.50 and then at $23.26.”

Posted on January 20, 2023 by Richard

Gold – Interest Rate Uncertainty

Commentary for Friday, January 20, 2023 (www.golddealer.com) – Today gold closed up $4.30 at $1926.40 and silver closed up $0.08 at $23.83. Gold dipped in price on the New York open, recovered and settled, holding a tight $9.00 spread on the day. A typically choppy market at the end of a short trading week. Supported by a reasonable technical picture and minor safe haven buying. This week’s gold trade brings to mind a modified Shakespeare quote (Macbeth). Pricing, potentially full of sound and fury, signifying nothing. Gold was down two days and up two days, finishing the week relatively unchanged. Trading sentiment moved from bearish to bullish to neutral. Still, gold is holding above the psychologically important $1900.00 level, which is a plus for the bulls. But traders continue to ponder FOMC intent so gold’s pricing fate will ultimately be reflected in future interest rate decisions. Last Friday gold closed at $1919.40 / silver at $24.23 – on the week gold was higher by $7.00 and silver was off $0.40.

On Monday – GoldDealer.com was closed for Martin Luther King Jr. Day. Domestic commodity markets, post offices and banks were also closed for this Federal holiday.

On Tuesday gold saw mild profit taking after reaching 8-month highs. This less bullish sentiment was encouraged as the Dollar Index seems to have settled – channeling between 102.00 and 102.5 since last Friday. Traders have priced in a one quarter point rate hike in February which is dovish enough to supply some bullish sentiment. But as usual I believe conviction on either side of this trade is thin. Any suggestion the Fed is turning more hawkish will likely send gold lower. The professional trade has already adopted a “wait and see” attitude relative to the FOMC. Which leaves the door wide open to sudden changes in trading sentiment.

The Basics: In the past month gold has moved up $100.00+ because traders are expecting a change in Fed policy due to the speculation that inflation is slowing. While this does encourage the bulls it also suggests further profit taking might be in order. I would also note that these elevated gold prices have traditionally cooled Asian demand. Finally, the New York paper trade sold today’s rally in gold at $1916.00, hardly a bullish endorsement.

MarketWatch (Myra Saefong) – Gold prices traded lower on Tuesday as the latest rally took a breather after settling at the highest levels since April at the end of last week. Gold has led a rally in precious metals as a weaker U.S. dollar has given prices a boost, while China’s economic reopening after lifting COVID restrictions has spurred hopes for rising demand. The ICE U.S. Dollar Index DXY, 0.10% was down 0.2% at 101.97 in Tuesday dealings, and trades around 1.5% lower month to date. “Among the precious metals, gold stands out for having risen by more than 5% to reach its highest level since the end of April 2022. The other precious metals are lagging behind, however,” said a team of precious metals analysts at Commerzbank in a Tuesday note. The Commerzbank analysts cautioned against betting that the rally in gold will “simply continue,” arguing that there’s still a “discrepancy” between the market’s interest-rate expectations and the Federal Reserve’s projections and messaging, which could make gold vulnerable to a pullback. “Nonetheless, we would warn against assuming that the price upswing will simply continue. There is still a considerable discrepancy between the interest rate path anticipated by the market and that indicated by the Fed,” they said. “If the market changes its view and moves more into line with the Fed, the gold price risks facing serious setback potential.” For now, Rhona O’Connell, head of market analysis, EMEA & Asia, at StoneX, believes the gold market is “clearly overbought and ready for a correction, but underlying sentiment remains friendly.” Whether gold has “fully priced in a slowdown in the Fed’s rate cycle is debatable, but the uncertain economic environment in Europe and the risk to emerging markets of a too strong dollar and high rates are all supportive for gold, as is the geopolitical climate,” she said in a daily note. Silver is likely to continue to ride on gold’s coattails, having paused for a much-needed breath.”

On the day gold closed down $11.20 at $1907.20 and silver was down $0.29 at $23.94.

Zaner (Chicago) – “With the gold and silver markets overbought with upside extensions forged to start today, it appears that the dollar has prompted a reversal and perhaps a measure of long liquidation or stop loss selling. However, the dollar has not forged a significant upside in morning trade action and the index could pull the index back into the prior two days trading range. Overnight according to Reuters South African November gold output declined by 4.6% on a year over year basis while South African October gold output was revised downward to a decline of 6.6% year-over-year. In the prior trading session gold ETF holdings declined by 7,062 ounces and silver ETF holdings declined by a notable 2.2 million ounces. Apparently, the reduction in gold ETF holdings was the 7th straight day of outflows. Overnight Chinese economic data was positive with respect to Industrial production expectations but was disappointing in retail sales and that could be consider a slight net negative result. We think gold and to a lesser degree silver are benefiting from Bank of American claims that inflation has peaked as that should help move the needle toward a Fed pivot which in turn should pressure the Dollar and improve economic sentiment for physical commodities. The trade should begin to look forward to this week’s US PPI release on Wednesday which has expectations of a month-over-month drop of.01%. Therefore, bullish fundamentals largely remain in place but risk-off, a higher Dollar, and a higher US rate environment give the bear camp temporary control. Platinum – The PGM markets should draft support against the risk-off vibe this morning because of a 22% November year-over-year decline in South African PGM production! Unfortunately for the bear camp, the Palladium charts are negative to start the holiday shortened week with a 7-day low forged and the lowest trade since January 5th. Near-term downside targeting is $1,700 unless the Dollar sustains a breakout above 102.395 and then targeting becomes $1,674. While April platinum has not technically broken down in the early going today, the charts are negative and a retest of $1,050 is probable if the Risk-off vibe becomes more serve and or the Dollar breaks out above the 102.395 level. The platinum market has another negative from a 1,737-ounce outflow from platinum ETF holdings.”

On Wednesday gold opened firm optimistically moving to $1925.00 on further news that inflation is cooling. This upward swing was encouraged as the dollar weakened and the Dollar Index dipped below 102.00 in early trading. But in typical fashion paper traders sold this rally at $1925.00, and gold closed virtually unchanged.

The latest US Producer Price Index declined by the most since the start of the Pandemic driven by lower costs for gasoline and food (Bloomberg). This may further encourage the Fed to reduce the size of interest rate hikes. Most professionals believe the FOMC will keep its options open. This caution produces the typical “give and take” process we see in pricing. A trade which supports the current trading range and remains defensive. This “worry mode” is seen in stocks today with the DOW down 400 points. Fed intention keeps Wall Street on a short leash.

I’m surprised that we are not seeing a great deal of physical selling at these elevated prices. There is some but generally the public seems to also be in a “wait and see” mode. Product premiums for quality bullion continue to move lower, which suggests someone is selling. But our average holding time for popular bullion products is still only a few days.

On the day gold closed down $2.80 at $1904.40 and silver closed down $0.41 at $23.53.

Zaner (Chicago) – “With the dollar rejecting a 4-day high upside breakout overnight and returning to the vicinity of this week’s low the potential for technically driven volatility today is very high. Obviously, the potential for fundamental volatility in gold and silver prices today is justified with December US producer price index readings for December scheduled for release and that data thought to be a very important Fed policy input. Expectations call for a contraction in producer prices of 0.1% which would clearly provide gold and silver with fresh buying interest. Furthermore, a decline in the dollar index below 101.46 will probably ignite a wave of currency-related buying. From the other hand, the gold market should draft fresh support from supply news over the last 24 hours, with confirmation of a continuation of a multiyear pattern of declining South African gold production and from news this morning of a 30% decline in full year gold production at Antofagasta. In a modest negative for gold this morning, ETF holdings yesterday were reduced for a 7th straight day with an outflow of 71,008 ounces and a year-to-date posting decline of 0.1%. Going forward gold and silver will obviously take a significant longer-term direction cue from today’s US PPI report as the markets micromanage inflationary expectations to predict the ultimate trajectory of US interest rates. In the end, traders should expect chain reactions in financial markets which in turn should prompt reactions in interest rates sensitive physical commodity markets. However, the gold market enters today’s action moderately overbought from a 3-week rally of $102. It should be noted that February gold saw wild trade following the US CPI release last week with the hour after the CPI release producing a trading range of $34. Similarly, the March silver contract following the CPI report forged a significant range of $0.70. While the most recent COT report was delayed due to a US holiday, adjusted for the gains after the last COT report was calculated, both gold and silver made significant gains leading us to conclude that the net spec and fund long in gold and silver this week are moderately understated! In fact, adjusted for the rally at the end of last week, we think the net spec and fund long in gold has reached 6-month highs with silver net spec and fund long positioning reaching the highest level since May of last year. Trends are up but would-be buyers should wait for retracements before entering the markets.”

On Thursday gold moved higher on the open touching $1922.00 before turning choppy at the higher end of today’s trading channel. This is interesting in that the Dollar Index was actually stronger, recovering from yesterday’s lows (101.5). And yet, gold is trending higher, suggesting perhaps that safe-haven buying is beginning to creep in around the edges of this trade.

Some analysts suggest that gold is overbought and hawkish comments from Federal Reserve officials have fueled recession worries. Boston Fed President Susan Collins said the Fed would need to raise interest rates to “just above” 5% and hold them there, the latest central banker to suggest a higher policy rate to combat inflation. (Reuters).

Gold’s technical picture looks solid. Still, our shiny friend must show pricing conviction above the important psychological level of $1900.00.

If this newfound confidence wavers in the face of higher interest rates traders will sell and gold will return to a defensive trade, at lower levels. Some believe that if recession fears become a reality this year, the gold market would move higher on the subsequent lower interest rates.

This is a logical conclusion, but a recession might prompt gold selling in a market looking for liquidity to cover other leveraged positions. It is not obvious but backing away from lavish Covid spending has created the most predictable and unpredictable market I have ever seen.

On the day gold closed up $17.70 at $1922.10 and silver closed up $0.22 at $23.75.

On Friday gold finished the day slightly higher, but higher, nonetheless. This may represent a small concession to those traders who believe the Fed is slowing down. But I’m suspicious of still higher prices in gold as long as the interest rate issue is not settled. And “settled” might take longer than anyone thinks because the mounting debt question is still a big loose end.

Reuters – “Commentary from Fed officials has pointed to a terminal rate above 5%, but traders still bet on rates peaking at 4.9% by June and see a 93.7% chance for a 25-basis point rate hike in February. Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion. While there has been an accumulation of gold by various central banks and agencies, gold ETFs held by individuals have been decreasing. Were ETF buying to return, that would limit any overbought dip in the metal, said Caesar Bryan, gold portfolio manager at Gabelli Funds.”

On the day gold closed up $4.30 at $1926.40 and silver closed up $0.08 at $23.83.

Platinum closed up $6.10 at $1038.10 and palladium closed down $45.30 at $1713.70.

Posted on January 13, 2023 by Richard

Gold – 8 Month Highs – Fresh Hopes

Commentary for Friday, January 13, 2023 (www.golddealer.com) – Today gold closed up $22.90 at $1918.40 and silver closed up $0.37 at $24.23. Gold finished the week on renewed hopes of a less hawkish Fed and the first CPI signs of slowing inflation. The bulls own the short-term technical picture, which usually brings in fresh speculative money. But I think long lived professional traders are abundantly cautious. The recent significant weakness in the dollar could be an overreaction. And veteran traders ask a reasonable question: Suppose the Fed does not follow through and slow interest rates hikes? The bulls needed this latest positive shift in sentiment. And it will encourage the physical market. But I would not bet the farm on anything the FOMC has in mind either publicly or privately. They are still punching around in the dark hoping for a soft landing. And the real inflation fallout from worldwide Covid spending may take years to fully understand. Last Friday gold closed at $1864.20 / silver at $23.82 – on the week gold was higher by $54.20 and silver was higher by $0.41.

We will be closed Martin Luther King Jr. Day (Monday, January 16^th). Domestic commodity markets, post offices and banks are also closed for this Federal holiday.

On Monday gold pushed to 8-month highs ($1880.00) as the dollar weakened and traders again considered the possibility of a less hawkish Fed interest rate agenda. Gold prices eventually settled as traders sold the rally, which is surprising considering the Dollar Index dropped 2 full points between Friday and today. Still, I believe this market will waver considerably depending on what looks to be “continual sentiment shift” as traders discern the latest Fed intention.

The prime mover of this sentiment in the short term will be the January CPI Report. Keep in mind that the Forbes January “snap shot” is considering December data. That fresh information is expected to show inflation trending lower. This will give the Fed more room, suggesting they could get away with a smaller quarter point hike the next time around. Most professionals believe that rising inflation rates over the longer term will take stronger Fed medicine. If this theory is correct positive gold sentiment will continue to come in and out of focus.

(Reuters / Seher Dareen) – Gold hits 8-month peak as dollar slips on Fed slowdown bets – Gold prices hit an eight-month high on Monday, helped by a drop in the dollar after U.S. economic data late last week raised hopes for slower rate hikes from the Federal Reserve going forward. The dollar slipped 0.7% to its lowest in seven months, making gold cheaper for overseas buyers. Benchmark U.S. 10-year Treasury yields were hovering near a three-week low. “Interest rates are looking like they’re going to continue higher. But they do have a limit of what they can do and the market is pricing that in,” said Bob Haberkorn, senior market strategist at RJO Futures. Money market bets show 75% odds of a 25-basis point hike at the Fed’s February policy meeting, with the terminal rate expected just below 5% by June. Higher interest rates dim bullion’s appeal as an inflation hedge and raise the opportunity cost of holding the non-yielding asset. Traders now await Fed Chair Jerome Powell’s speech at a central bank conference in Stockholm on Tuesday and closely watched U.S. consumer price index data due later this week that could offer more cues on the U.S. rate hike path. “We are also seeing some flight to safety. Technically, gold looks like it has more room to go because it’s been strong through all these resistance points that we continue to see.” Gold prices jumped nearly 2% on Friday after data showed a moderation in U.S. wage growth and a contraction in activity in U.S. services industries in December.

On the day gold closed up $8.50 at $1872.70 and silver closed down $0.11 at $23.71.

Zaner (Chicago) – “With the upside breakout in gold prices today, the market should attract positive headline coverage, especially with growing hope for soft landings surfacing from economists on both sides of the Atlantic. Apparently, the gold and silver markets have become more patient with significant gyrations in the US Dollar seemingly resulting in a return to the down trend status in place prior to the recovery last week. Clearly, several US financial markets at the end of last week took the US jobs data and have begun to look for a case to bring the Fed to a less hawkish stance. In our opinion, the jobs data Friday, and data over the last several weeks have been “Goldilocks data” which for equities, gold, treasuries, and many physical commodities could be the best overall market condition for the coming quarter. With gold and silver price strength extending into a third month and positive inflows to gold and silver ETFs at the end of last week, perhaps investors will be attracted to the sector. However, gold holdings are up only 0.1% and silver holdings are down 0.3% year-to-date. In yet another potential major bullish development signs of increased central bank gold buying are surfacing and extending a developing pattern of buying with reports overnight that the Peoples Bank of China bought 30 tons of gold last month after purchasing 32 tons in the month of November. As indicated by the IMF back in the 4th quarter of 2022, central bank gold activity can be delayed in reporting with many central bank purchases not confirmed until months and quarters after the fact. Furthermore, with many other markets displaying “chop” seeing the gold market reach the highest level since June and seeing the silver market last week fill a series of gaps from last April, that should create some bullish buzz. Unfortunately for the bull camp, the gold and silver bulls are likely to need consistent support from a weaker dollar and steady to lower US treasury yields. After the silver market forged a very significant 3-day correction of $1.50 it should be bought on a test of uptrend channel support this week down at $23.34. The Commitments of Traders report for the week ending January 3rd showed Gold Managed Money traders net bought 5,473 contracts and are now net long 72,805 contracts. Non-Commercial & Non-Reportable traders net bought 8,258 contracts and are now net long 178,119 contracts. While the silver market forged an aggressive washout from the COT positioning report, the spec long last week was the highest since April 2022! Silver positioning in the Commitments of Traders for the week ending January 3rd showed Managed Money traders were net long 29,385 contracts after decreasing their long position by 802 contracts. Non-Commercial & Non-Reportable traders added 1,117 contracts to their already long position and are now net long 46,370.”

On Tuesday gold was surprisingly steady, which suggests Chief Powell’s comments this morning about the necessity of Fed independence helped hold together the “right” forward expectation. Jerome was not hawkish enough to discourage Wall Street and yet struck a dovish enough tone to counterbalance yesterday’s hawkish comments from both San Francisco Fed President Daly and Atlanta Fed President Bostic. This is another great example of how adept the Fed has become at avoiding those bumps along the way, while they continue to consider higher interest rates. Some analysts saw the Chief’s comments as hawkish enough to prompt short-term profit taking. But this was not the case. The big question, however, remains – how long can the Fed keep this top spinning? While avoiding recession and keeping Wall Street happy?

This is not an easy path as 2023 presents a unique set of clashing monetary and political forces. Most of which do not have simple solutions. The interest rate “adjustment” will be a matter of doing the math, not easy but workable. And we could get lucky.

At any rate Jerome was agile enough to persuade traders to refocus on this Thursday’s Consumer Price Index (CPI). Rick Santelli’s (CNBC) semi-joke today was that investors should hope that these latest numbers show significant slowing of inflation. The implication being that if they do not the financial markets and by extension Wall Street could be facing big storm clouds.

There are other problems also being ignored for the moment. Like Russia’s determination in the Ukraine and the continued worldwide damage created by Putin’s paranoia. Let’s also not forget the dangerous reversal of the strict Covid protocols in China. This could deliver another world health menace if Beijing fumbles the ball. These two factors alone present enough uncertainty to underpin gold prices in the short term. And may already be creating fresh safe-haven demand.

On the day gold closed down $1.10 at $1871.60 and silver closed down $0.20 at $23.51.

On Wednesday gold saw a mild downdraft on the open on light profit taking as traders braced for tomorrow’s latest inflation reading. Still gold sentiment remains naively optimistic as traders bought the dip and gold pricing stabilized around $1872.00.

(Reuters) – “The U.S. consumer price report will be closely watched for cues on Fed’s strategy after the U.S. central bank slowed the pace of its rate hikes to 50 basis points in December after four back-to-back 75 bps hikes. Traders see a 77% chance the Fed will raise the benchmark rate by 25 bps to 4.50%-4.75% in February and see rates peaking at 4.92% by June. “This could be a big report if we get another good reading that shows inflation falling faster than anticipated,” said Craig Erlam, a senior market analyst at OANDA, adding it could be enough to change the hawkish tone the markets are continuing to hear from the Fed. While worries remain about over the scale and impact of the COVID outbreak in top gold-consumer China, “over the longer term, China is expected to bounce back strongly which could stimulate additional demand.”

On the day gold closed up $3.00 at $1874.60 and silver closed down $0.18 at $23.33.

Technical Analysis by Jim Wycoff (Kitco) – “February gold futures prices hit a seven-month high again today. Bulls have the solid overall near-term technical advantage. A two-month-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the $1,900.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at today’s high of $1,890.90 and then at $1,900.00. First support is seen at this week’s low of $1,869.30 and then at $1,850.00. March silver futures bulls have the firm overall near-term technical advantage. However, a four-month-old uptrend on the daily bar chart has stalled out again. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.00 and then at this week’s high of $24.285. Next support is seen at the January low of $23.26 and then at $23.00.”

On Thursday gold bulls got a wonderful surprise, when CPI numbers suggested that inflation is cooling! And there were several frostings on this cake. The dollar dropped to seven-month lows and Fed Bank of Philadelphia leader Patrick Harker said the end stage for the central bank’s rate hike campaign is in sight. Reuters – “Gold prices pared gains after earlier jumping more than 1% to above the key $1,900 per ounce pivot on Thursday after data showing signs of cooling inflation in the United States boosted bets for slower rate-hikes from the Federal Reserve ahead. U.S consumer prices unexpectedly fell for the first time in more than 2-1/2 years in December amid declining prices for gasoline and other goods, suggesting that inflation was now on a sustained downward trend. “The expectations clearly look like at this point, we’re going to see two more 25 basis point rate hikes at the next two Fed meetings,” said David Meger, director of metals trading at High Ridge Futures. “We continue to focus on the idea that the Fed is getting that much closer to the end of their interest rate hike cycle … the underlying environment for gold remains strong.” Money market participants see a 89.6% chance the Fed will raise the benchmark rate by 25 basis points in February. Following the CPI report, the dollar dropped 0.5% to its lowest since early June, making gold more attractive for other currency holders. While a separate report from the Labour Department showed initial claims for state unemployment benefits fell last week, signs of inflation decreasing took precedence.”

So, with all this good news, why did the paper trade sell this rally at $1900.00? In my opinion they are not fully convinced. Analysts may want to see something more than the first signs of slowing inflation. An actual slowdown in the number and size of the next round in rate hikes would get more people on the same page. I’m still not convinced the price of gold can compete with higher interest rates. The physical market might continue with prolonged range trading, not necessarily at the higher end of its recent pricing spread. At the same time premiums may continue to move lower, depending on how this dynamic plays out worldwide.

On the day gold closed up $20.90 at $1895.50 and silver closed up $0.53 at $23.86.

Zaner (Chicago) – “With February gold into an extremely important CPI report sitting nearly $60 above the January low and recent gains forged on surging volume and open interest, a definitive up trend will probably be tested with a measure of two-sided volatility today. Gold prices were likely held back overnight by disappointing Indian gold demand news after the country reported its 2022 gold imports declined 34% from year ago levels and reported a 79% month over month decline in December imports. Obviously, lingering slowing from Covid, a very weak Indian currency and a global rate hike regime discouraged Indian buyers. However, according to the World Gold Council Indian gold demand is expected to rebound from pent-up demand and because of a recovering Indian economy. According to market sources Indian buyers in December were discouraged by gold prices at 6-month highs. While it is extremely difficult and might be a coin flip, predicting today’s US CPI is extremely difficult, especially given the minimal range of expectations. In other words, predicting a 0.1% change in a volatile pricing environment is fraught with peril. There does appear to be a whisper number calling for a contraction with one economist yesterday predicting a much bigger than expected contraction in consumer prices today. We favor a soft reading given lower price component readings from 2nd and 3rd tier reports over the prior 3 weeks. In fact, purchasing managers, the ISM, and the US jobs report all registered slight moderation in inflation components. As we indicated yesterday, seeing gold and silver bulls need signs that inflation is softening is a complete deviation from gold and silver price action through previous inflation periods. Nonetheless, the gold and silver bulls need a positive chain reaction of a soft CPI, which fosters weakness in the dollar, promotes strength in treasury prices which in turn lend support to equities and markets like gold and silver. In conclusion, the fundamental case favors the bull camp while technical indicators are modestly short-term overbought. Certainly, the uniform uptrend pattern in gold into the recent high should provide confidence to the bull camp going forward. However, with the rally putting February gold prices $61 above the January low, $100 above the December low and $160 above the late November low there is a scope for a moderate corrective dip. Traders intending to hold gold and silver positions long-term should consider purchasing at the money bear put spreads for a 12-hour hedge. Uptrend channel support from the November and January lows today is moderately below the market at $1,853.40 and for fresh longs we suggest waiting for a pullback to that vicinity. Obviously, the silver market has corrected its overbought condition from the beginning of the year but has continued to trade near support levels which erodes the bullish set up from the uniform and solid uptrend pattern. Given the moderate corrective setback in silver it might suffer less selling if inflation is minimally higher but given the recent breakdown in bullish sentiment, silver prices today could see a range of $1.00 today.”

On Friday gold pricing continued to impress. This latest technical success began in early November around $1650.00 and pushed to $1900.00 + today. All this bullish happiness created over just the possibility of a significant change in Fed interest rate policy.

There may be a lesson in these tea leaves. In February of 2022 gold pricing was the same as it is today ($1900.00 +). But the region between $1900.00 and $2000.00 proved to be gold’s Achilles Heel. Gold failed to hold these lofty prices and in 6 months was trading around $1650.00.

Gold’s impressive price rise this week is nicely reflected in the dollar’s renewed weakness. The Dollar Index last Friday was approaching 106.00. Over the past 5 trading days the index has lost nearly 4 full points, which is extraordinary. And highlights the change in trading sentiment which welcomes lower interest rates.

It is a bit early to assume this fundamental change is set in cement. There are too many moving parts to the equation. There is a growing sense that we may be in the early stages of an important monetary transition. One which is closer to the pre-pandemic interest rate normal. And one, hopefully, in which gold can coexist with higher interest rates. But this remains a one-of-a-kind mix of economic and political theory. Batten down the hatches and expect a volatile market.

On the day gold closed up $22.90 at $1918.40 and silver closed up $0.37 at $24.23.

Platinum closed down $10.90 at $1063.70 and palladium closed down $3.60 at $1777.50.

Zaner (Chicago) – “February gold was higher overnight, continuing Thursday’s sharp rally and trading to its highest level since May 5. Gold was supported by a slightly lower dollar, which followed Thursday’s steep selloff. However, March silver was mixed to lower and was confined to Thursday’s wide range. At times yesterday, the bull camp in gold was disappointed in the magnitude of the gains following definitively supportive US economic news from inflation and jobs-related data. However, the action in outside markets supports the case for more gains. Certainly, the Dollar Index is short-term oversold, but the market has embraced ideas of a longer-term downtrend. Furthermore, US Treasury yields declined, energy prices showed strength, and the risk-on vibe should facilitate expectations for improved physical demand for gold. December gold has regained the psychological $1,900 level but could be presented with some week-ending profit-taking. We estimate that the spec and fund net long in gold, adjusted to the highs this week, is at its highest level since last May, which could be construed as overbought. There is also the potential for corrective balancing, as the November and January uptrend channel support today is down at $1,855.30, which is well below the current market. The sharp gains in gold and the sharp declines in the dollar have been a major component of this week’s modest recovery in silver, but it continues to take direction from the level of risk-on sentiment in the marketplace, and it will likely need confirmation improvement in global prospects the equity markets. Consolidation support in March silver is $23.34. A trade above $24.28 could set the stage for a rally to $25.00.”