Daily Gold Newsletter Archives - Page 8 of 9

Posted on December 22, 2022December 22, 2022 by Richard

Gold – Rocking Santa’s Sleigh

Commentary for Thursday, December 22, 2022 (www.golddealer.com) – Today gold closed down $28.90 at $1787.00 and silver closed down $0.56 at $23.48. Just a confusing reminder that we are closed on Friday (the markets are open) and Monday (the markets are closed) for Christmas. Wishing you all a blessed holiday season. Gold pitched lower this morning over a round of positive US economic signals suggesting growth is better than expected. This should have encouraged Wall Street, but the DOW yawned. Suggesting that no one can stay on the same page for long these days as the world fears higher inflation, recession, and war. And yet these very factors underpin the importance of gold and silver bullion. Because of this uncertainty I would not be surprised to see a sideways pricing market with erratic pricing until future FOMC action is better understood. Last Friday gold closed at $1790.00 / silver at $23.15 – on the week gold was off $3.00 and silver was up $0.33. Another week of swirling FOMC interest rate opinion creating a bumpy price ride. With little real change in prices on the week.

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.

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 was quietly moving toward the Christmas weekend. The pricing spread was tight ($12.00) which is somewhat surprising. The Dollar Index moved a half point higher in early trading, which should have pushed this market lower. Because traders are now preparing for anything which supports expected hawkish FOMC sentiment.

Reuters – “Gold steadies in thin trading as investors look of fresh drivers – Gold prices were little changed on Monday as weakness in U.S. dollar and equities countered pressure from expectations of higher interest rates amid thin trading as markets look for fresh catalysts.”

Holiday trading is typically quiet, but this market continues to invent significant pricing cross currents. The most important one being the strength of the dollar. The Dollar Index lost roughly 8 points this past month. Obviously supporting the bullish gold scenario.

In the short term, however, the index is in a downtrend and technically weak. But at current levels gold has a great support going back to the summer months. Which might suggest that the index is now able to bide its time. Waiting for the FOMC interest rate pattern to fully develop. Chief Powell’s “chosen” or “forced” path should be clear by the first quarter of 2023.

On the day gold closed down $2.30 at $1787.70 and silver closed down $0.12 at $23.03.

Zaner (Chicago) – “The gold and silver bulls hope that the constant buzz of rising rates moderates this week with the markets potentially benefiting from talk that the Chinese government will step up to support its economy next year. In a surprising development gold ETFs on Friday saw the largest inflow in 6-months with funds adding 177,397 ounces. For the week gold ETF holdings increased by 328,719 ounces, while silver ETF holdings declined a massive 8 million ounces last week. Unfortunately for the bull camp, gold ETF weekly holdings (since the beginning of July) have posted only two net weekly inflow readings. However, weekly inflows to ETF holdings were exclusively positive from mid-January through the end of April which in turn sparked the belief some investors were returning to precious metal investments. In the end, year-to-date gold ETF holdings have declined by 4% and silver ETF holdings have declined by 15%. While we think the gold and silver trade has begun to shift to a new paradigm, the recent barrage of aggressive central bank rate hikes and fears of significant global slowing are not conducive to that shift yet. Therefore, gold, and silver look to remain almost exclusively focused on the direction of the US dollar with the bull camp potentially needing a slide and close below last week’s spike low down at 102.875 in the March dollar index to take some lingering control from the bear camp from last week. While the bull camp might draft minimal support from a Commerzbank prediction that February gold will return to $1,850 next year, it expects gold to retest $1,750 into the remainder of the world central bank tightening cycle. In counter intuitive thinking recent moderation of key US and UK consumer inflation readings should help underpin gold and silver prices above the December lows as that news punctures bullish sentiment toward the dollar again and provides impetus for interest rates to remain near 4-month lows. Despite the initial plunge in gold prices last week, the net spec and fund long position as of early last week was near the lowest levels since the beginning of August leaving the market technically vulnerable to fresh stop loss selling and a return to key support at the December low of $1,778.10. The December 13th Commitments of Traders report showed Gold Managed Money traders are net long 56,554 contracts after net buying 18,936 contracts. Non-Commercial & Non-Reportable traders added 12,928 contracts to their already long position and are now net long 153,123. While the massive 4-day washout of $1.66 last week in Silver culminated in a very aggressive rejection of the $22.735 level given silver’s reliance on industrial/physical demand the outlook for the global economy remains a headwind for the silver bull camp. Furthermore, the most recent COT report’s positioning showed the net spec and fund long in silver at the highest level since May! The December 13th Commitments of Traders report showed Silver Managed Money traders are net long 22,034 contracts after net buying 7,377 contracts. Non-Commercial & Non-Reportable traders net bought 5,413 contracts and are now net long 39,270 contracts. Total silver ETF holdings last week were 842-million ounces with a 26 month low posted in September at 832-million ounces and a 2022 high of 947-million ounces. From a shorter-term perspective the March silver contract has established a fresh uptrend channel support line at $22.785, drawn from the November and December lows.”

On Tuesday gold was again full of happy surprises for the bullish scenario. From the open the New York cash market moved to daily highs ($1820.00) and began to move sideways between $1815.00 and $1820.00! Normally traders would look for continued weakness in the dollar on such a jump in price. But in fact, the Dollar Index is holding steady around 104.00. There is some buzz as the Bank of Japan raised interest rates on the 10-year bond. Japanese citizens are big savers, and this might encourage them to keep money at home rather than invest in markets outside Japan. Could this account for higher prices? That is another stretch. Could this be momentum buying because gold’s technical picture now favors the bulls? Not in my estimation. Finally, Reuters claims that cities across China are scrambling to install hospital beds over Beijing’s surprise decision to let the virus run free. New analyses by various modeling groups predict the reopening could result in as many as 2.1 million deaths. That may be another one of those lynchpins considerations which stokes international fear levels.

To me, this modest rally at the higher end of gold’s recent trading range looks like a small return to the “fear” trade. Suggesting that while world markets have calmed down at the possibility of a more dovish FOMC hand, they are not all that convinced we are out of the financial woods.

Somewhere in this developing puzzle there has to be increased safe haven buying coming from this kind of complex reasoning. I would not, however, get too excited because gold has plenty of heavy lifting to do before the powerful paper trading engines continue to bless the remaining, and rather hard-core bulls in this market. Gold must show continued strength above $1800.00. And the Fed must pivot on its interest rate policy. Both of these requirements are big orders if Chief Powell continues to bark at Wall Street and the US economy.

On the day gold closed up $28.20 at $1815.90 and silver closed up $1.06 at $24.09.

Grant on Gold (Zaner) – (1) Gold jumped to a 5-month high of $1824.51 early last week before retreating into the range to close 0.2% lower. (2) Silver ended last week with a loss of 1%, but not before extending to the upside and achieving an 8-month high at $24.13. (3) Platinum fell 3.6% last week, dropping out of the bull channel. The first lower weekly close in four – $796.33 to $1080.14, which comes in at $938.24. The 100-day SMA comes in right around this level as well. (4) Palladium fell to new lows for the year last week and extended lower on Monday.

On Wednesday gold pushed higher but could not hold gains, in a trade which has been typical this week. The pricing spread was $1816.00 through $1823.00 with an upward bias. Still a quiet holiday trade which by the end of the domestic market closed unchanged.

This pattern may prove typical through the New Year – thin trading conditions and tight spreads. But you never know these days, things change fast, so keep your seat belt fastened.

Gold bulls should be happy Santa has delivered a surprise. Gold is still struggling for a price above $1800.00. The price of gold fell to a two year low in late September on hawkish Fed sentiment. But has since risen $200.00 on the expectation of slower rate hikes.

That is the driving force in today’s market as traders anticipate a Fed pivot in interest rates. At the same time the still strong dollar caps higher gold prices. Yet the bulls hold on to the theory that the dollar must eventually lose value. It is difficult to see how these opposing forces can exist in the same trading space. One or the other must eventually give way.

On the day gold closed unchanged at $1815.90 and silver closed down $0.05 at $24.04.

Jim Wyckoff (Kitco) – “Technically, February gold futures bulls have the firm overall near-term technical advantage. A six-week-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 December high of $1,850.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at today’s high of $1,833.80 and then at the December high of $1,836.90. First support is seen at $1,820.00 and then at $1,800.00. March silver futures prices hit an eight-month high today. The silver bulls have the solid overall near-term technical advantage. Prices are in a choppy 3.5-month-old uptrend on the daily bar chart. 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 the December low of $22.19. First resistance is seen at today’s high of $24.525 and then at $25.00. Next support is seen at $24.00 and then at $23.50.”

On Thursday gold again faded on better-than-expected economic news. Reuters – Gold drops 1% after U.S. data lifts dollar, prolonged Fed hike hopes – “Gold turned negative after U.S. economic data showed the country’s economy rebounded faster than previously estimated, boosting the dollar and potentially setting the Federal Reserve on a keener path to fight inflation. New claims for unemployment benefits increased less than expected last week in the United States, while the economy rebounded faster in the third quarter, rising 3.2% against the previously estimated 2.9%. “The economic numbers we’re seeing indicate that there’s most likely going to be a more prolonged increase in interest rates,” said Jeffrey Sica, chief executive officer of Circle Squared Alternative Investments.”

There are other factors as well which may produce a heavy gold trade. The Dollar Index today bounced from early lows (103.80) to daily highs (104.50) creating the typical drag on bullish sentiment. Independent analyst Ross Norman highlighted the issue of book-squaring ahead of year-end or early new positions being put in ahead of the new year rush. “It would be dangerous to read too much into gold’s price action just now given so many market participants are absent for the festive break… and thin markets are often prone to exaggerated moves on small volumes.”

On the day gold closed down $28.90 at $1787.00 and silver closed down $0.56 at $23.48.

Platinum closed down $17.40 at $997.60 and palladium closed up $5.60 at $1650.00.

Zaner (Chicago) – “With an extremely active scheduled report slate today, gold and silver are likely to experience significant knock-on impacts from the dollar. On one hand, February gold managed a 6-day high yesterday and held nearly all this week’s gains. On the other hand, without a declining dollar, the bull camp is without a strong bull case. In fact, if the US dollar continues to build consolidation support, gold is vulnerable to week ending long profit taking selling from this week’s low to high rally of $37.00. However, the bull camp is attempting to entrench the view that the historically aggressive global central bank rate hike cycle is “priced”. Unfortunately for the bull camp, talk of disinflation has surfaced and traders should brace for a brief period of volatility through the Friday morning PCE release. Uptrend channel support in February gold today is $1,804.10 and resistance is $1,836.90. The action in silver prices yesterday was impressive with the trade holding within striking distance of 8-month highs and the rally on Tuesday forged on a significant increase in trading volume. Uptrend channel support in March silver today is $23.25, and targeting is the top of a gap at $24.75 from late April!”

We are closed on Friday (markets are open) and Monday (markets are closed) for Christmas. Wishing you all a blessed holiday. Consider this holy insight – Elizabeth Barrett Browning – “Earth’s crammed with heaven, and every common bush afire with God; and only he who sees takes off his shoes; the rest sit around and pick blackberries.”

My 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. As always, thank you for your patience. Richard Schwary

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Posted on December 16, 2022 by Richard

Gold – “Place Your Bets”

Commentary for Friday, December 16, 2022 (www.golddealer.com) – Today gold closed up $12.80 at $1790.00 and silver closed up $0.02 at $23.15. Gold opened choppy today with a mild yet uncertain upward bias. This trade reminds me of the famous shoot out at the OK Corral. Will the Fed blink or will Chief Powell continue to raise the interest rate ante? The troublesome part of this puzzle is that it will take even more time to figure out a solution. In the process, traders will just have to hope the FOMC proceeds down the right road. During this dilemma – Gold prices have seen their worst weekly decline since mid-November. Commerzbank sees gold falling towards $1,750 per ounce until the Fed’s cycle of interest rate hikes is over. It then expects prices to rise to $1,850 by the end of 2023 (Reuters). Last Friday gold closed at $1798.10 / silver at $23.54 – on the week gold was down $8.10 and silver was down $0.39.

On Monday gold pushed higher (1795.00) in the overnight Hong Kong and London markets but sold off ($1782.00) in the domestic trade. This could be a typical round of profit taking in a market with competing bullish and bearish sentiment. Or it could be that investors remain cautious towards the Christmas holiday season. I expect a kind of “froggy” trade through the holidays. Still, there are opposing trends which will certainly clash in the longer term.

Today traders are expecting a half point interest rate hike at the final FOMC meeting this year (December 13^th and 14^th). The European Central Bank and the Bank of England will announce their plans this week. Data on Friday showed U.S. producer prices rose slightly more than expected in November, reinforcing the view that the Fed may have to keep interest rates higher for longer. Focus now shifts to the U.S. consumer price index (CPI) report for November is due on Tuesday. “Ahead of the key data print, the current strength of the market would be tested on a break below $1,765, a level where support was found on several occasions last week,” said Ole Hansen, head of commodity strategy at Saxo Bank (Reuters).

On the shorter term, the gold price swing might remain surprisingly narrow. But still hopeful for the bulls if inflation remains stubborn or safe haven demand stays in place. The silver trade has been a volatile rodeo this year. Based on today’s close ($23.22), it has been as much as $9.00 higher and $9.00 lower over the past 12 months! World mint premiums remain high and delivery times are growing longer, especially on the popular US Silver Eagle monster boxes.

Reuters (Pitas and Shalal) U.S. inflation will be much lower by end of 2023, Yellen says – U.S. Treasury Secretary Janet Yellen on Sunday forecast a substantial reduction in U.S. inflation in 2023, barring an unexpected shock. “I believe by the end of next year you will see much lower inflation if there’s not … an unanticipated shock,” she told CBS’ ’60 Minutes’ in an interview released Sunday. Asked about the likelihood of recession, the former Federal Reserve chair said, “There’s a risk of a recession. But … it certainly isn’t, in my view, something that is necessary to bring inflation down.” Yellen’s comment came days before the Fed is expected to slow the aggressive pace of interest rate increases it has pursued this year. Fed Chair Jerome Powell has telegraphed a smaller, half-of-a-percentage point increase in the policy rate, to a range of 4.25%-4.5%, after four 75-basis point hikes this year. Yellen told CBS that economic growth was slowing substantially, inflation was easing, and she remained hopeful that the labor market would remain healthy. She said she hoped the spike in inflation seen this year would be short-lived and said the U.S. government had learned “a lotta lessons” about the need to curtail inflation after high prices seen in the 1970s. Shipping costs had come down and long delivery lags had eased, while gasoline prices at the pump were “way down.” “I think we’ll see a substantial reduction in inflation in the year ahead,” she said.

On the day gold closed down $17.60 at $1780.50 and silver closed down $0.32 at $23.22.

On Tuesday gold traders reshuffled the deck and made the same mistake. Reuters – “Gold prices climbed to their highest levels in more than 5 months after data showing a smaller-than-expected rise in US consumer prices cemented bets for a slowdown in rate hikes from the Federal Reserve. “Gold and silver are up significantly on safe-haven bid and also the outlook that rate hikes may be slowing,” said Bob Haberkorn, senior market strategist at RJO Futures. U.S consumer prices barely rose in November amid a drop in the cost of gasoline and used cars, leading to the smallest annual increase in inflation in nearly a year. Following the release of the CPI data, the dollar index dropped more than 1% to a nearly six-month low, making gold less expensive for other currency holders. Benchmark U.S. Treasury 10-year note yields also slipped. Fed funds futures prices now imply a better-than-ever chance that the Fed will follow its expected half-point interest rate hike this week with a smaller 25-basis-point rate hike in February. The inflation print “signals to the market that the interest rate hikes that the Fed’s been doing are working and they might not need to be as aggressive this week or in the coming months,” he added. The U.S. central bank is set to issue its policy statement at 2 p.m. EST on Wednesday, followed by a press conference from Fed Chair Jerome Powell.”

The above word “cement” implies certainty. This fresh information would be more helpful if the analysts said the Fed interest rate policy has turned dovish in the short term. News from the Fed should always be considered “short-term” because they rarely control the world view.

This shift in theory and the significant weakness in the Dollar Index today pushed gold to daily highs of $1825.00. Traders then sold the rally and mild profit taking found support at $1805.00. Gold finished the day in the middle of the pricing range. A good day for the bulls in a still troubled gold market because the “unwinding” process is very uncertain.

You can’t just ignore or walk away from that huge debt mountain which was created during the raging Covid days. For now, the bulls are holding the trump cards and the metals are trending higher. The bears, however, are not close to folding their tent. They are waiting patiently on the sidelines waiting for the next unexpected shift in trading sentiment.

On the day gold closed up $33.40 at $1813.90 and silver closed up $0.58 at $23.80.

On Wednesday gold was choppy again, rising on the open ($1813.00) and falling as traders sold the modest rally. On the day gold was modestly lower, which is surprising considering the Dollar Index made new recent lows (103.30). Still this market is defensive, waiting for this week’s interest rate revelation from FOMC Chief Jerome Powell. The latest and greatest news will be out after the domestic gold market closes today. Today’s aftermarket may provide insight.

Reuters – “Any dovish comment coming from policy makers could give new fuel to gold’s recovery,” Carlo Alberto De Casa, external analyst at Kinesis Money, said in a note. “Vice versa, hawkish rhetoric could determine a consolidation phase or some moderate correction, even if the main trend still appears positive.” Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion. “The market is more focused on the end game or the idea that the Fed will be ending its interest rate hike cycle early in 2023. That continues to be the main focus of many of these asset classes, including gold,” High Ridge Futures’ Meger said. Meanwhile, the dollar hovered at its lowest level in six months, making greenback-priced bullion less expensive for overseas buyers.”

Now this is interesting. The Fed announced the expected half point hike in interest rates, which not long ago would have been considered very dovish. So why did today’s aftermarket move lower on the announcement?

The reality here has to do with a clever though honest bean count on where each of the FOMC gang stands – relating to the interest rate question. Powell heads a sophisticated team of academics which is independent of his thinking and Wall Street.

Believe it or not, the number of hawkish governors increased after this interest rate news was released. In other words, the “insider’s group” still leans towards higher interest rates over the longer term. This is bearish for short term pricing in the metals, but not the end of the world.

Traders will continue to look for a defensive market. Which, I believe, has been their real inside line for months. And the underlining reason we see a “sideways drift” in the price of gold.

The aftermarket in gold dipped below the important $1800.00 – a negative for the metals. But traders bought the flagging market around $1797.00 – which is a minor plus. This suggests a shaky market as traders again embrace negative trading sentiment. Expect the bears to gain strength in proportion to how hawkish the Fed becomes in 2023. But keep in mind this remains a short-term trade, the Fed can’t get too crazy without driving the economy into a bigger ditch.

On the day gold closed down $6.40 at $1807.50 and silver closed up $0.15 at $23.95.

On Thursday gold swooned after the US Federal Reserve said it will deliver more interest rate hikes next year. “The Fed is maintaining its hawkish messaging for the time being, despite the declining growth outlook, and in turn without a cut on the horizon, it’ll be very difficult for speculators to move their capital towards gold,” said Daniel Ghali, commodity strategist at TD Securities. The Fed on Wednesday raised interest rates by 50 basis points (bps) as expected, but bullion fell as much as 0.8% after comments from Fed Chair Jerome Powell indicated that the U.S. central bank expected interest rates to stay higher for longer.

“The inflation data received so far in October and November show a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path,” Powell had said.

Bullion is often considered a hedge against big spikes in consumer prices, but interest rate hikes may curb inflationary pressures while also reducing the appeal of non-yielding gold. The European Central Bank and the Bank of England also raised their key interest rates by half a percentage point on Thursday and indicated that more hikes were likely (Reuters).

While returning Fed hawkishness is bad news for the bullish gold scenario, today’s pricing pattern suggests we are approaching oversold territory. Because the domestic market seems to have put in a short-term floor ($1774.00) early in the day.

The idea of trying to guess what the Fed has in mind is dicey. There are academics even this morning that believe this reaction is overcooked. The idea being that the Fed was slow to tighten and got behind the inflation curve. And now they don’t want to make the same mistake.

But whether they are right or wrong this time around investors should consider the case for bargain hunting at these new lower price levels based on three points.

First, $1750.00 has already provided significant support this past month.

Second, we may see a bear raid testing this level. But if gold approaches $1700.00 physical cash buyers will show up early and be standing in line.

Third, this morning the major stock averages had their biggest drop in more than a month. Wall Street is reaching for the aspirin bottle. Recessionary fears move to the front burner. The Fed will “pivot” rather than open Pandora’s box. Powell will take his foot off the interest rate accelerator rather than admit the Fed was again on the wrong side of this volatile trade.

On the day gold closed down $30.30 at $1777.20 and silver closed down $0.82 at $23.13.

Zaner (Chicago) – “While we think the magnitude of the declines in gold and silver prices this morning is exaggerated given fundamental developments the markets were short-term overbought prior to yesterday’s US rate hike decision. In addition to a precious metal negative environment from the barrage of anticipated rate hikes, the dollar has recovered and is applying additional pressure to gold and silver prices this morning. However, the gold market should draft support from a large 153,583-ounce inflow to gold ETF holdings yesterday, with that inflow the 3rd straight daily build. Unfortunately for the bull camp in silver, ETF holdings of silver yesterday declined by 1.7 million ounces and that decline was the 3rd straight daily decline. Adding into the downward motion in precious metal and other physical commodity markets this morning is a deteriorating view toward the Chinese economy after Chinese economic data overnight highlighted an economy already contracting sharply. Furthermore, headlines regarding the explosion of Chinese infections suggest activity going forward is likely to slow even further. Not surprisingly, Indian buyers stepped back from the gold market overnight citing expensive prices and fear of rising rates. In the end, a paradigm shift might be nearing for gold and silver but residual headwinds from the uncertainty in the global economy in the short-term gives the bear camp the edge. With uptrend channel support in February gold violated the next downside target in February gold is the December consolidation low down at $1778.10. Not surprisingly, the breakneck gains in silver have resulted in a very aggressive corrective setback today with investors potentially losing their appetite for the metal above $24.00. We suspect the deterioration in the Chinese economy and concerns of additional economic headwinds from global rate hikes has also downshifted physical demand hopes for silver. Initial downside targeting in silver today is $22.895.”

On Friday gold dipped to $1782.00 and bounced higher ($1793.00) before traders sold this mild rally and it settled for modest gains on the day. This is somewhat encouraging to the bullish trade considering the beating gold took on Thursday. But today’s bounce does not dissuade that heavy feeling that higher interest rates will continue to take their toll on bullish sentiment.

Keep in mind however that the paper trade and physical market are different animals.

Reuters (Francois Murphy) – Inflation, uncertainty fuel new gold rush at ancient Austrian Mint – VIENNA, Dec 14 (Reuters) – The Austrian Mint, one of the world’s oldest and biggest producers of gold bullion coins, is unable to keep up with demand as people rush to find a safe haven for their money amid surging inflation and economic fears caused by war in Ukraine.

“Demand for gold has never been as high as this year,” the Mint’s Chief Executive Gerhard Starsich told Reuters in his ornate office in a Vienna building where coins have been struck since the 1830s. Behind its quiet facade lies a warren of workshops where modern machines melt metals and thump out money. “At the moment, every gold coin that comes off the coining press has already been sold,” said Starsich. “Right now, we could sell three times as many as we are able to produce.” The Mint’s shop, a modern corner of the building, has had a long queue outside daily for months. Among those standing in line was pensioner Renate, one of the few willing to talk about her purchasing habits. “I’m from an older generation. Whenever things get a bit uncertain, we come back to gold coins and tell ourselves we’ll always be able to sell them,” she said. “Gold has that safety factor.” Starsich said customers were of all ages and from all walks of life. Around a third of the Mint’s sales are to foreign buyers.

The Mint was founded in 1194 to strike coins from the silver paid as a ransom for Richard the Lionheart, after he had been seized and held captive by enemies near Vienna. Today, the Mint says its one-ounce Philharmonic gold coin, named after the world-famous Vienna Philharmonic Orchestra, is the top-selling gold bullion coin in Europe and Japan.

Austria is a financially conservative country in which the public hoards cash and gold in times of crisis. The Mint says demand for gold is the highest it has been since it took on its current form in 1989. The Austrian National Bank, which owns the Mint, said in a presentation on Austrian households’ finances in October that more gold had been bought in the two-and-a-half years since the coronavirus pandemic started than in the five years before that. It noted demand for gold in the first half of this year was higher even than in the first half of 2020, “despite rising prices”, suggesting a rush to an asset seen as a safe haven. “It’s a cascade,” Starsich said of the causes. “It started with the corona crisis, with the pandemic, when people were unsettled. Then in February Russia invaded Ukraine. That boosted sales again. And then the rising inflation over the summer/autumn, which increased sales further slightly.”

On the day gold closed up $12.80 at $1790.00 and silver closed up $0.02 at $23.15.

Platinum closed down $13.20 at $1013.00 and palladium closed down $107.00 at $1684.20.

Zaner (Chicago) – “In retrospect, gold and silver prices were knocked back from recent highs because of the barrage of central bank rate hikes this week which in turn served to lift (likely temporarily) the dollar. Not only did central bankers move aggressively, but they also promised to continue to act aggressively well into the future. Not surprisingly, the central bank action/higher dollar fostered broad-based liquidation of many physical commodities as evidenced by the sharp dive in the Bloomberg commodity index. Not surprisingly, investors pulled 86,204 ounces of gold and nearly 2 million ounces of silver out of ETF holdings yesterday! Adding in the escalating fear of serious slowing in China from the infection explosion and the bear camp should be very confident. In fact, with extremely concerning Chinese economic data released earlier this week upcoming Chinese data is quickly being revised even lower. With Indian buyers already skittish, with prices thought to be expensive into the recent highs, the washout yesterday was justified and did not result in bargain-hunting buying overnight. We see downside follow-through action in gold and silver again today given the severe damage posted on the charts yesterday and a minimal upward bias in the dollar this morning.

Evidence of the breadth of negative sentiment toward gold is noted with Australian gold mining shares falling by roughly 4% this week. In retrospect, minimal trading interest in this week’s downward thrust (falling trading volume and declining open interest) could indicate a lack of downside momentum. A fresh uptrend channel support line in February gold today is $1756 and increases to $1757.50 on Monday. As in gold and other physical commodities, macro signals have turned bearish for silver and damage on the charts has extended this morning with uptrend channel support targeted close this morning at $22.66.”

Posted on December 9, 2022 by Richard

Gold – Are Recent Highs Sustainable?

Commentary for Friday, December 9, 2022 (www.golddealer.com) – Today gold closed up $9.40 at $1798.10 and silver closed up $0.48 at $23.54. Gold opened typically choppy in the early trade and initially sold off ($1792.00) in the face of rising Treasury yields. Traders were caught off guard however when gold bounced off daily lows and quickly moved to monthly highs ($1805.00). I suspect early weakness in the Dollar Index (104.4) encouraged the bulls but if the index is now oversold it might suggest recent gains are capped into next week. Last Friday gold closed at $1795.90 / silver at $23.04 – on the week gold was up $2.20 and silver was higher by $0.50. Surprisingly tight trading ranges considering the growing uncertainty.

On Monday gold moved lower in a familiar trading pattern based on dollar strength. The New York cash market was typically volatile, dropping from $1800.00 highs in the early trade through $1773.00 before the paper trade bought the weakness between $1770.00 and $1775.00. And the market settled off lows on the day but remains jittery.

This sudden drop in the price of gold was caused by two factors. First, the price of gold was higher by more than $100.00 this past month, profit taking is always a consideration because paper traders are experts at sensing the end of the momentum play.

Second, there is a possibility of a bullish reversal in trading sentiment. We have seen this several times before as analysts embrace the less hawkish Fed. And then wonder if they are on the right side of this quickly changing interest rate environment. The latest hot jobs number was all it took to suggest the Fed has less room to maneuver on interest rates, especially in the short term.

For the time being get used to “indecision” being part of the trading picture. This kind of “shifting-sand” trade is seen by looking at the weekly US Dollar Index. Since last Wednesday an oversold dollar bounced higher, squelching the latest rise in gold on three separate occasions.

Each time the generally lower trend prevailed, and the index moved lower. The good news is that the trade bought the mild dip, the bad news was that prices then continued lower on the day.

This reminds everyone that regardless of what the Fed says, they are subject to economic factors which may be outside their control. Expect continued volatility as the FOMC struggles with fundamentals. How hawkish do they have to be in the short term to control inflation (a prime concern) and not contribute to the growing fear of recession? Uncertainty is again rising, and if it continues short-term information gets the most attention. The upcoming US Consumer Price Information (CPI) due December 13^th is a prime example and will be closely watched.

On the day gold closed down $28.50 at $1767.40 and silver closed down $0.84 at $22.20.

Grant on Gold (Zaner) – (1) Gold rose 2.5% last week, trading above $1800 for the first time since July. (2) Silver notched nearly an 8% gain last week. (3) Platinum posted a 10.3% gain last week. While some pressure has emerged more recently, the market is holding gains above $1000. (4) Palladium continues to trade in the lower end of its well-defined range.

On Tuesday gold in the domestic trade displayed continued uncertainty. But pricing does seem to have modest underlying strength. The pricing spread moved between $1780.00 through $1768.00. A relatively tight trade with a mild upward bias. This kind of pricing is likely the combination of short covering and a small bounce from yesterday’s oversold condition.

Gold remains south of the confidence building $1800.00 + mark. And traders may be reconsidering their recently adopted dovish FOMC outlook in light of problematic inflation.

This still looks like a “wait and see” moment. (Reuters) – “With the Fed due to meet next week, the direction of prices is likely to be determined on how the U.S. central bank sees the glide path for future rate rises,” said Michael Hewson, chief markets analyst at CMC Markets.”

On the day gold closed up $1.90 at $1769.30 and silver closed down $0.08 at $22.12.

Enough of the “on again – off again” scenario. We all need a great feel-good story about gold and the latest from Saxo Bank is perfect! This from Neils Christensen (Kitco) – Outrageous! “Global economic uncertainty and heightened geopolitical tensions will create a “worldwide war economy” that prioritizes domestic supplies and price caps, ensuring that inflation will remain persistently high through 2023. Taken to its extreme, this scenario will be very good for gold, with Saxo Bank offering an “outrageous” forecast of $3,000 an ounce. “2023 is the year that the market finally discovers that inflation is set to remain ablaze for the foreseeable future,” Ole Hansen, head of commodity strategy at the Danish bank, said in the report. In an interview with Kitco News, Hansen added that his price target is not an official forecast, but more of a thought experiment on what happens if extreme scenarios in the global economy unfold. “It’s not so much about being right but starting a discussion on the challenges the global economy faces and how that will impact gold,” he said. “Fundamentally, a war economy is inflationary, and we expect investors to realize in 2023 that central banks are not going to be able to keep inflation under control.” Hansen said that if inflation remains persistently high, investors will be forced to reevaluate breakeven rates. Any drop in real rate expectations should weaken the U.S. dollar.

Hansen added that gold has been lackluster through most of 2022 as investors continue to have faith that central banks will be able to bring inflation back to 2%. However, he added that 2023 is the year that faith could be shaken. Hansen said that they see a few scenarios that continue to support higher-for-longer consumer prices, including further development of domestic supply chains, with a particular focus on the energy sector. A second factor is an improvement in China’s economy, which would lead to broad-based demand for raw commodities. Not only is the Fed expecting to end its tightening cycle early in 2023, but Saxo Bank said that the threat of a global recession will force central banks to pump liquidity back into global financial markets.

These three scenarios taken to the extreme are what would drive gold prices dramatically higher, Hansen said. “Gold slices through the double top near USD 2,075 as if it wasn’t there and hurtles to at least $3,000 next year,” he said. Although inflation has fallen from its summer highs, it remains persistently high even as the Federal Reserve prepares to slow the pace of its aggressive monetary policy tightening. Markets expect the U.S. central bank to raise interest rates by 50 basis points at next week’s monetary policy meeting, and they continue to see the Fed Funds rate topping out between 5.00% and 5.25% in the first half of next year. As well as being an inflation hedge, Hansen said that gold will also remain an attractive asset for nations looking to further reduce their exposure to the U.S. dollar. In another “outrageous prediction”, the Danish bank sees the U.S. dollar losing its relevance next year as a global reserve currency with nations like China and India and organizations like OPEC+ dealing amongst themselves. “Recognizing the ongoing weaponization of the USD by the U.S. government, non-US allied countries move to leave the USD and the IMF to create an international clearing union (ICU) and a new reserve asset, the Bancor (currency code KEY), using Keynes’ original idea from the pre-Bretton Woods days to thumb its nose at the practices of the U.S. in leveraging its power over the international monetary system,” said Redmond Wong, Saxo Bank market strategist for Greater China in his report. Wong noted that currently, 20% of international trade is destined for the U.S.; at the same time, more than a third of international trade is invoiced in U.S. dollars and nearly 60% of global foreign exchange reserves are held in U.S. dollars. “A natural solution for China and its many trading partners, particularly energy and other commodities exporters, would be to find a new non-national currency reserve asset upon which to trade,” he said. This new global currency would result in non-aligned central banks cutting their U.S. dollar reserves, U.S. Treasury yields soaring and the greenback falling 25% versus a basket of currencies.”

On Wednesday gold opened choppy with a positive bias, and quickly moved higher ($1788.00) before the paper trade sold the rally and prices settled midrange. That was the bad news, the good news – the market gathered itself and once again moved to highs on the day. This trade looks like it is trying to recover from losses early in the week as the Dollar Index settles from daily highs and the 10-year bond yields dip to 3-month lows.

The gold market will also focus on next week’s November CPI (Consumer Price Index). The last Fed meeting of this year will also be next week, the 13^th and 14^th of December. The jury is out as to the outcome, the bulls are hoping for a half point hike, the bears (and the short paper trade) suspect a full point might still be in the cards if the Fed decides to fight stubborn inflation.

(Reuters) – As the Fed plans to ‘raise and hold,’ new projections may show the cost – Coupled with an only modest decline in inflation so far, new projections from the Fed’s 19 policymakers are likely to show rates continuing to rise and to remain elevated through 2023, countering current market expectations for rate cuts by the end of next year. “The Fed has been telling us that getting unemployment higher and wage growth lower is going to take a prolonged period of restrictive policy, and today’s data provides more evidence to that effect,” wrote Jefferies economist Thomas Simons. “This does not take the Fed off track for the widely expected 50 (basis point) rate hike at the upcoming…meeting, and it gives us greater confidence in our expectation that the terminal rate will top 5% next year.”

On the day gold closed up $16.20 at $1785.50 and silver closed up $0.59 at $22.71.

On Thursday gold was typically choppy, trading between $1795.00 and $1786.00 with a mild upward bias supported by a weaker dollar. The Dollar Index moved from highs (105.4) through lows (104.8). Enough to support gold prices at current levels. Today’s weaker index reflects lower Treasury yields as Wall Street expects the Fed to be less hawkish through next year.

Tomorrow traders will look at November’s Producer Price Index, but it will likely come in as expected and create little change in sentiment. There is buzz about China easing its restrictive Covid requirements. Not a new idea but apparently they are ready to move forward. The theory here is that with less or perhaps no restrictions their massive economic engine will fire up quickly and also create fresh physical buying in gold and silver bullion.

I’m not keen on this idea because China’s hand in the physical metals business has always been a kind of subterfuge. There is also the growing notion that Russia may trade oil for gold. Both innovations are driven by the idea that China and Russia will challenge dollar hegemony.

This really is fringe thinking, but you never know in these transition days. And the bullish gold and silver scenario could use a fresh shot in the arm as it struggles against higher interest rates.

On the day gold closed up $3.20 at $1788.70 and silver closed up $0.35 at $23.06.

Zaner (Chicago) – “In retrospect, traders might have been too quick to conclude that the Fed is softening its rate stance. That seemed to be on traders’ minds earlier this week with the recent pattern of strong US economic data. Furthermore, with very critical inflation news expected from China tonight and the US PPI report on Friday morning the markets are likely to get fresh direction of Fed policy. Obviously, with Bonds and Notes trading up to their highest levels since September on Wednesday, the markets continue to signal that the Fed will pare back its rate increase to 50 basis points this month after a series of 75-bp hikes earlier this year. In the end, with the subject of tempering tightening in the marketplace today’s jobless claims will take on added importance for gold. Gold and silver benefited from a weaker dollar on Wednesday, but the Dollar Index has held above Monday’s lows, and it would probably take a trade below there to support a stronger rally for gold. The Peoples Bank of China added to their gold holdings for the first time in three years in November, which is fundamental bullish factor if this is the start of a new trend. Reports are that the Chinese central bank is attempting to diversify away from the dollar, but we suspect the Chinese central bank has been adding consistently to its gold reserves secretly on-and-off for years. We base the view they are dramatically raising their holdings as US gold reserves are reportedly 8,133 metric tons which is more than 4 times Chinese central bank gold reserves holdings of 1948 metric tons. Their gold holdings increased to 63.67 million ounces from 62.64 million previously. The World Gold Council noted that the world’s central banks purchased nearly 400 million ounces during the third quarter. Unfortunately for the bulls, the technical picture is shaky, as Monday’s rally above the November high was met with lower volume and open interest and divergence with momentum indicators. Both gold and silver could have a difficult time avoiding back-and-forth action until the PPI report on Friday is known.”

On Friday gold closed above 30-day highs which is impressive. Still the notion of an aggressive FOMC in the coming months threatens rising bullish sentiment. I would call this another week for investors to decide whether the optimism glass is half full or half empty.

I’m delighted that gold is more than hanging in there. New recent highs always get attention. And this small amount of newfound optimism is growing in spite of rising interest rates.

If you look at the 3-month Dollar Index pricing still looks technically weak. These past 3 months the index has moved from 115.00 through 105.00, putting a smile on the Walled Street. With smart money betting on even lower Treasury yields I suspect the index will continue its wobbly descent, which was one of the reasons the price of gold made recent highs today.

There are other factors at play which are not as obvious. Somewhere in this unwinding mess there must be renewed interest in safe haven demand. Perhaps from China or India. Perhaps the result of new and massive Ukraine shelling by the Russians. Coupled with demands from Moscow relating to the EU.

I don’t think this stew is thick enough to seriously challenge rising interest rates in the short term. But we may be entering an interesting phase which suggests gold and silver can move higher even when competing against rising interest rates.

On the day gold closed up $9.40 at $1798.10 and silver closed up $0.48 at $23.54.

Platinum closed up $21.60 at $1049.20 and palladium closed up $38.00 at $1946.40.

Posted on December 2, 2022 by Richard

Gold – Transition or Confusion?

Commentary for Friday, December 2, 2022 (www.golddealer.com) – Today gold closed down $5.20 at $1795.90 and silver closed up $0.40 at $23.04. Gold opened steady in early trading but dropped on a strong jobs report. Which threw a wet blanket on some of this week’s positive buzz. Traders however did buy the weakness, which is a plus for the bullish gold scenario. Consider this sudden weakness as a reminder of market uncertainty. Despite the latest upbeat FOMC comments concerning interest rates. Good Grief Charlie Brown – today the Dollar Index gained and lost a full point in three hours! A rodeo finish to what I thought was going to be a typical holiday season of “quiet” trading. Last Friday gold closed at $1744.90 / silver at $21.36 – on the week gold was $51.00 higher and silver was higher by $1.68.

On Monday gold was higher in last night’s Hong Kong market yet sold off in the early London trade and continued mildly lower in the domestic New York cash market. This back-and-forth pricing mirrors the Dollar Index which dipped in the early trade but quickly recovered to something around 106.00 which has been typical support since last Thursday.

I believe traders will see this “after Thanksgiving week” as a continuation of a market looking for a new dynamic to gather either the bulls or bears. But with a wider view – meaning that most believe higher interest rates will cap bullish sentiment. This is not a new idea, but it has been gaining strength of late as some traders adopt a slightly dovish stance on the short term.

We pretty much have the same trading conditions in play – but there will be important insight offered at least twice this week. Traders are eager to hear Powell’s speech on Wednesday at the Brookings Institute where he is expected to speak on the outlook for the US economy and the labor market. And the US jobs data is due this coming Friday (Reuters).

Both events do carry some weight. But I suspect not to any great degree because this current information is known or suspected. The most important factor weighing on the metals in the short term continues to be the Fed’s policy move in December.

The modest half point rise in rates before Christmas is baked into the pricing cake. My bet is that traders are expecting gold and silver bullion to trade at or around current levels. This supposition is based on the notion that the Fed will have “more room” for interest rate options.

And the current FOMC hawkish plan will turn into something like “higher interest rates over a longer time period”. This is not the best outcome for the bullish scenario, but it is a good replacement “widget”. It allows time to see if fresh safe haven demand develops in a dangerous world adapting to a new geo-political paradigm.

The latest fun rumor would be a Christmas “surprise” in rising prices due to the holidays. But for some reason this notion always comes into focus this time of year!

On the day gold closed down $13.20 at $1740.10 and silver closed down $0.52 at $20.91.

On Tuesday gold remained choppy between $1750.00 and $1760.00 in the early domestic market with an upward bias after yesterday’s weakness. There is some underlying strength as traders continue to buy weakness. This subtle optimism is hinged on the belief that Powell’s comments tomorrow will become a Goldilocks scenario – being “not so hot – not so cold”.

Professionals believe the bulls have a slight advantage as far as the technical picture is concerned. But this is likely transitory and depends greatly on the now presupposed Fed “shift” in hawkish sentiment. Consumer confidence this morning is moving lower but in my opinion the drop is not large enough to influence the paper trade in the short term.

You may however be seeing mild fresh safe haven demand coming from the unrest in China. Still this week’s metals trade lacks conviction and remains stuck – in neutral. On the month gold is higher by $100.00 yet year over year is down by $33.00. Considering the inexorable rise in interest rates it figures that paper traders will continue to sell rallies – until they don’t.

On the day gold closed up $8.30 at $1748.40 and silver closed up $0.29 at $21.20.

This from technical expert Jim Wycoff (Kitco) – “Technically, February gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the November high of $1,806.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at today’s high of $1,773.40 and then at this week’s high of $1,778.50. First support is seen at today’s low of $1,752.90 and then at $1,740.00.

March silver futures bulls have the overall near-term technical advantage. Prices are in a choppy three-month-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the November high of $22.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at this week’s high of $21.815 and then at $22.00. Next support is seen at $21.00 and then at last week’s low of $20.79.”

On Wednesday it was another quiet day at the ranch as the gold pricing spread moved between $1750.00 and $1765.00, turning choppy and eventually holding the middle ground. Of course, everyone is waiting to hear what Chief Powell has to say later today, but these information sessions have not been promising as far as guidance is concerned. Still, Jerome is perfect for this job, combining an academic approach with the ability to avoid a political quagmire.

What the Chief said at the Brookings Institute gathering was surprising and more dovish than expected. It borded on fresh optimism and created a mild updraft in stocks. This lighter Fed approach was not reflected in today’s gold close. But can be better appreciated with an aftermarket move of more than $20.00 for our shiny friend.

If his comments were simply nuanced it would not be a game changer. But the Chief said he did not want to “overtighten” and it’s better to move slowly than be forced to back up quickly. The Dollar Index dropped a full point after his question-and-answer discussion.

His discussion was more than a hint. The Fed will move to a flexible interest rate program. Considering how bearish the metals were a month ago this is a big plus for the bulls.

“Gold prices pared gains on Wednesday due to an uptick in the U.S. bond yields ahead a much awaited speech from Federal Reserve Chair Jerome Powell, although a weaker dollar kept bullion on track for its best month since May 2021.” (Reuters)

“Euro zone inflation eased far more than expected in November, raising hopes that sky-high price growth is now past its peak and bolstering the case for a slowdown in European Central Bank rate hikes next month.” This fresh Reuters quote is interesting because it may hint at future central bank action. That said, predicting inflation has always been dicey – so stay tuned.

On the day gold closed down $2.40 at $1746.00 and silver closed up $0.35 at $21.55. The physical trade was quiet today, typical for a holiday season. But the aftermarket was buzzing with scenarios so let’s “keep our fingers crossed”. “Crossing fingers dates to a pre-Christianity belief in Western Europe in the powerful symbolism of a cross. The intersection was thought to mark a concentration of good spirits and served to anchor a wish until it could come true.”

On Thursday gold pushed higher on the New York open which was not surprising considering yesterday’s big price jump in the aftermarket. It was surprising however that gold continued to move higher in what is now likely a momentum driven market on the short.

Early gold pricing peaked at $1804.00 and settled between $1794.00 and $1800.00. These higher gold prices are driven by a dollar approaching 4-month lows after Chief Powell’s comments.

The Dollar Index followed, losing a full two points (105.00) since yesterday! Very turbulent trading, which suggests caution is warranted for the uninformed and new investor.

It is easy to get caught up in the “latest” headline, but a wider timeframe in this case is a better choice. Remember that the Fed has not stopped raising interest rates.

They are focused on the timing of these hikes. Which translates into being optimistic about future inflation. What cements this turbulence in the short term is that the economic jury simply cannot make up its mind as to whether the US is facing a “soft landing” or “recession”.

Gold prices peaked ($2000.00) in early 2020. They settled on both sides of $1800.00 through late 2021, before again challenging $2000.00 in late 2021. We are again at $1800.00, which looks great from a short-term perspective but simply sets up another attempt at $2000.00. Be patient with this market because it could easily move higher or lower in the coming months. I have always believed that gold and silver bullion is one good way to separate a portion of your investment dollars from the government-controlled fiat system. There is not much chance that the world is going to blow up in the coming years. But if it did, those with real bullion money in their hands will have created a versatile system with more options.

On the day gold closed up $55.10 at $1801.10 and silver closed up $1.09 at $22.64.

On Friday gold dipped in the early trade, reacting to November’s strong jobs report. These thoughts from Heather Long (www.washintonpost.com) – The employment market is still hot, adding 263,000 jobs and wage growth continues strong up 5.1%. The conclusion being that the US does not have enough workers and the labor force is not close to pre-covid levels.

This is the type of employment news which may reverse the growing bullish sentiment in place since Chief Powell talked with the Brookings Institute on Wednesday. Gold surged after his talk and the dollar weakened. The Chief seemed to see something in the economic tea leaves that prompted a less hawkish approach to his inflation/interest rate conundrum.

I’m having some fun at his expense. But his dilemma is serious as today points out that even the Washington deep thinkers are troubled. Deciding the “best course of action” as they raise interest rates and unwind years of Covid “free money” is a road filled with potholes.

For some reason today’s lesson must be relearned on a regular basis. Take whatever the informed “insiders” have to say with a grain of salt. The jobs report is a snapshot of last month’s numbers. It may be important, but it might also be quickly forgotten – so keep your options open and stay flexible in your planning. It is also worth noting that some professional traders believe future price dips may be shallow and extend over a longer time frame, perhaps even through next year.

On the day gold closed down $5.20 at $1795.90 and silver closed up $0.40 at $23.04.

Platinum closed down $28.30 at $1039.60 and palladium closed down $45.20 at $1879.40.

Posted on November 23, 2022 by Richard

Gold – Considering Options

Commentary for Wednesday, November 23, 2022 (www.golddealer.com) – Today gold closed up $6.60 at $1744.90 and silver closed up $0.33 at $21.36. Gold moved mildly into the green in the early trade this morning, but most expect a quietly defensive market going into the long Thanksgiving weekend. Everyone is paying close attention to the latest Fed minutes released after the market close today for hints about short-term interest rates possibilities. The Fed has raised interest rates 0.75% four times since June. The next hike opportunity will be in mid-December, and most are hoping for something less (0.50%). Today’s minutes, released after the domestic market was closed, seemed to suggest this possibility. The rather new idea of “higher but longer” is what makes the bullish gold scenario “tick”. Anything approaching the old hawkish interest approach along this more modest path would likely drive gold lower in the short term. Also remember that gold is higher by $90.00 this past month. Which encourages profit taking. If higher interest rates encourage traders to “buy” the dips and “sell” the rallies, this would continue to pressure the bulls. But for now, gold and silver have weathered the short-term storm at least which is a mild plus moving into the holiday season. Last Friday gold closed at $1751.90 / silver at $20.98 – on the week gold was off $7.00 and silver was higher by $0.38. These are tight spreads considering the large amount of palavering on both sides of the isle.

A reminder that our offices will be closed Thursday and Friday of this week for Thanksgiving. Our family thanks the Lord and wishes all a blessed holiday season.

On Monday gold was defensive and pricing spreads moved from $1748.00 though $1738.00, with a negative bias. The reasoning here remains unchanged. The Fed pivot is being ignored and traders are fixed on short-term Fed decisions. Reuters – “Gold prices slipped to their lowest in over a week on Monday as the dollar extended gains, while the market’s attention turned to the U.S. Federal Reserve’s November meeting minutes due this holiday-shortened week. “Overall, the general macro environment still is higher interest rates, which is a negative for the precious metals as central banks continue to look to increase interest rates,” said Chris Gaffney, president of world markets at TIAA Bank. The Fed’s November meeting minutes are due on Wednesday, with most traders betting on a 50-basis point hike in the December meeting, and some seeing 24.2% chance of a 75-bps hike following recent comments by Fed officials. Investors also kept track of the economic fallout from fresh COVID-19 restrictions in top bullion consumer China, where physical gold premiums fell sharply last week as buying slowed. “China in particular is an active market for precious metals and if they continue to lock down, that’s negative for the overall economic environment and less money to spend in China for investment purposes.”

The Dollar Index has moved from 106.00 through 108.00 since last Thursday! Which presents the bulls with a recurring headache. And makes the bears more aggressive. But you have seen this inverse relationship play out several times so the likely outcome should not be a surprise. The Dollar Index will likely become overbought, and the price of gold oversold.

The Fed “pivot” theory was responsible for gold recently moving from $1640.00 through $1780.00. But bullish “insiders” moved to the sidelines when momentum went out the window. Everyone will have a better idea of what the FOMC has on its mind Wednesday. But judging from today’s continued dip in gold prices it would not surprise me to see the paper market adjust to something below $1700.00 in a “wait and see mode”.

At the same time bullion premiums in the physical market remain high, which suggests interest at these discounted levels. Both for immediate and delayed delivery. The dip in crude oil prices today is a minus for bullish scenario and suggests recession fears are again building in Europe.

This week will present a thin trade. I suspect paper traders are already in the traveling mode for the Thanksgiving weekend. Which offers a “window” for paper shenanigans. Be suspicious (discount) last-minute pricing changes, if their source is outside the United States.

On the day gold closed down $14.50 at $1737.40 and silver closed down $0.13 at $20.85.

Zaner (Chicago) – “In retrospect, both gold and silver were fortunate to avoid significant declines last week in the face of predictions that US Fed funds might need to rise above 7% to quell inflation. While the Chinese central bank left rates unchanged overnight, the closure of schools in the capital city has sent a wave of fresh economic recession fear into world markets. Obviously, a significant range up breakout in the US dollar this morning has added fresh currency related selling interest in gold and silver. Fortunately for the bull camp, it appears that treasury yields might be poised to slide lower and that might serve to cushion gold and silver against strength in the Dollar. However, this week it is possible the markets will be presented with a temporary wave of euphoria from the upcoming kickoff of the holiday shopping season, and that could firm the dollar further and pressure the Treasuries thereby setting the stage for a quick decline in December gold down to $1,725. Obviously, the December gold contract has a critical pivot point to start the week at $1,750, with the 100-day moving average today proving lower support and targeting at $1,724. The COT positioning report for November 15th showed the noncommercial and nonreportable net long in gold at 147,131 contracts which is a 50,000 contract increase in the net spec and fund long on a week over week basis. Gold positioning in the Commitments of Traders for the week ending November 15th showed Managed Money traders net bought 48,945 contracts which moved them from a net short to a net long position of 40,726 contracts. Non-Commercial & Non-Reportable traders were net long 147,131 contracts after increasing their already long position by 53,119 contracts. In short, the gold market is relatively overbought in the spec sector and therefore vulnerable to negative fundamentals. Traders pressing the short side of the silver market should be aware that the Silver Institute in its latest publication predicted global demand for silver will rise 16% this year reaching 1.2 billion ounces and in turn creating the biggest deficit in “decades”. This week’s net spec and fund long position in silver was 31,230 contracts, a net increase of about 6,000 longs from November 8th! Key support in December silver is obviously $20.00 with a key pivot point in the trade early today seen at $20.55. The November 15th Commitments of Traders report showed Silver Managed Money traders net bought 3,401 contracts and are now net long 15,894 contracts. Non-Commercial & Non-Reportable traders are net long 31,230 contracts after net buying 6,953 contracts. Last week gold ETF holdings declined by 282,207 ounces while silver ETF holdings increased by 2.2 million ounces.”

On Tuesday gold ignored the mild downtrend in the Dollar Index as traders created a weak choppy trade with a negative bias. The market finished the day close to unchanged, which is a plus for gold considering the coming long weekend. The latest FOMC minutes release may only hint at the Fed’s next December move. And will be made public after the New York market closes tomorrow. Potential volatility could be reflected in the aftermarket, but for now the metals reflect a quiet holiday attitude with tight trading ranges.

On the day gold closed up $0.90 at $1738.30 and silver closed up $0.18 at $21.03.

FX Empire (Christopher Lewis) – Gold Price Forecast – Gold Markets Drift Sideways – Gold markets have been rather quiet during the trading session on Tuesday, as we are hovering around the $1750 level. Gold markets have been quite noisy during the trading session on Tuesday, as we continue to look at the $1750 level with interest. This is an area that has been important a couple of times in the past, so it does make a lot of sense that we would see noisy and quite frankly difficult behavior in this general vicinity. Ultimately, I do think this is a situation where we are going to have to make a bigger decision, and it will almost certainly be driven by Federal Reserve expectations, and of course the interest rate market. After all, the interest rate market has a huge negative correlation to the gold market. If we break down below the lows of the Monday session, then we could drop down to the 50-Day EMA, which is at the $1710 level. Underneath there, the next major support area is at $1680. The question now is whether people are going to be focusing on central-bank behavior, or if they are going to be paying attention to the potential global slowdown, which could have people running toward gold. A break above the $1800 level would be a huge barrier to overcome, and if we do, then I suspect that gold has much further to go at that point, perhaps reaching the $2000 level over the longer term. Ultimately, this is a market that I think will be very noisy over the next couple of days, especially as Thanksgiving is coming on Thursday, that will certainly have an effect on the hours that electronic trading is available. Because of this, it’s likely that we will see chop more than anything else.

Zaner (Chicago) – “At least to start today gold and silver have been “saved” by a moderate setback in the US dollar. In another minimally supportive development, gold ETF holdings yesterday increased by 153,789 ounces for the largest single day ETF inflow since June 17th. It should also be noted that silver ETF holdings increased yesterday by 1.38 million ounces! While the path of least resistance has shifted down in gold, prices are showing some strength early this morning, but that strength is likely to be temporary. In other supportive news, the IMF announced Kazakhstan, Turkey, UAE, India, and Cambodian central banks increased their gold holdings. Apparently, central banks in India and Turkey continue to add significantly to their gold holdings with recent monthly data showing both countries adding roughly 25.2 million ounces and 23.6 million ounces respectively. Relatively speaking the silver market held up to the big picture broad-based physical commodity market selling wave significantly better than gold! Clearly, the silver trade is cheered by recent Silver Institute projections that global demand for silver will rise 16% this year and surpass 1.2 billion ounces! The Silver Institute also predicted the market will have the largest deficit in decades potentially reaching 194 million ounces! The silver deficit in 2021 was 48 million ounces, with total silver ETF holdings at the end of last week at a very significant 754 million ounces. However, silver ETF holdings have continued to decline, with holdings at the end of last week 15% lower year-to-date. In the near term, expectations for strong silver demand and a large jump in the silver deficit are unlikely to be embraced by traders. Therefore, both gold and silver look to remain vulnerable to further dollar strength and might not be cushioned by declines in US treasury yields. On the other hand, there has been dovish Fed dialogue recently with many analysts beginning to predict a 50-basis point US hike in the December FOMC meeting, and yet traders are waiting for confirmation of the dovish stance from the upcoming release of Fed policy meeting notes on Wednesday. From a technical perspective, the gold market remains vulnerable to spec and fund stop loss selling with the latest COT positioning report producing the longest spec positioning since early August! Key support in February gold today is at the 100-day moving average of $1,736.25 with downside targeting for later this week seen at $1,720. Near-term support in December silver today is $20.57 but we doubt the market will fall to its 100-day moving average to $19.55 this week.”

On Wednesday gold prices in the early trade were typically choppy but mildly higher. The spread was something between $1732.00 and $1748.00 which is a plus, perhaps helping the bulls. But the entire market is muted waiting for a look at last month’s Fed minutes. Most professional trades believe that what is “known” about coming interest rate hikes in the short term is already factored into current pricing. Today’s “preview” look into what is becoming a confused group of Fed officials will not calm the waters. It is safe to consider this market tenuous. Smart money will be guarded as trading could move in either direction. But my guess is that price swings will not be large unless the Fed goes back to being more aggressive.

On the day gold closed up $6.60 at $1744.90 and silver closed up $0.33 at $21.36.

Platinum closed up $1.10 at $1014.50 and palladium closed up $18.40 at $1873.30.

Zaner (Chicago) – “Technical and fundamentals continue to diverge between gold and silver, with silver shifting bullish and gold shifting bearish. In fact, overnight February gold failed at close in support and reached the lowest level since November 10th while December silver continued to respect and build consolidation support around the $21.00 level. Obviously, silver continues to draft off the very bullish deficit forecast from the Silver Institute from earlier in the week and gold remains hostage to the fear of higher interest rates. With the New Zealand central bank raising interest rates by 75-basis points last night and the US Fed releasing its meeting minutes later today the gold market is facing the potential for fresh knock-on selling. However, the US economic report slate today is full of reports normally scheduled for Thursday and brought forward because of the holiday. The most critical readings today are initial claims (which are expected to increase slightly) and durable goods which are expected to repeat last month’s gain of 0.4%. Even more divergence between the 2 markets was evident in daily ETF flows reports yesterday with gold holdings declining by 27,195 ounces and silver ETF holdings increasing by a very significant 4.9 million ounces! The increase in silver holdings was the largest increase since September 19th. While we expect tight trading ranges until the release of the US FOMC meeting minutes later today, modest dovish dialogue in that release could save and then launch gold above the $1,775 level, but we think the most likely outcome is evidence of broad support for even higher ultimate US rate target levels. Therefore, initial downside targeting this afternoon in February gold is $1739.90. On one hand, the silver market flared sharply higher yesterday and at times reached $0.78 above its Monday low, but the trade was unable to hold the probe higher and ultimately fell back to psychological support of $21.00. Therefore, it appears that the bull camp currently lacks significant resolve, but the market should be able to respect support following very favorable forecasts of a global silver deficit ahead. Key pivot point support in December silver today is seen at $20.785, while a trade back above yesterday’s high of $21.37 could spark gains to $22.00 from short covering.”

My Brothers and Sisters, thank you for your business and friendship. If you have unusual circumstances, need cash or a special visit – talk to Harry. All our in-house staff have been vaccinated and have the booster! 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 soon get us back to normal and our traditional business model. As always, thank you for your patience. Richard Schwary

Posted on November 18, 2022 by Richard

Gold – Fed Pivot – Yea or Nay?

Commentary for Friday, November 18, 2022 (www.golddealer.com) – Today gold closed down $8.90 at $1751.90 and silver closed up $0.02 at $20.98. Gold looked defensive this morning going into the weekend. And the premiums for physical product fell sharply in China as buying slowed, according to Reuters. This figures, the Asian market has a great price feel and they are patient, long term buyers. Since early November gold has surged, moving from $1630.00 through $1780.00. But this latest bullish drive looks to have peaked, with a tight channel trade, supported at $1760.00. With traders refocusing on the negative aspects of coming interest rates hikes, the possibility of a Fed pivot may be losing some of its bullish trading mojo. Last Friday gold closed at $1766.00 / silver at $21.65 – on the week gold was down $14.10 and silver was off $0.67. We are selling any live physical product which is not nailed down and volume numbers are increasing for delayed delivery, even at these elevated levels.

On Monday gold steadied itself from last week’s gains, supported by a significantly weaker dollar as traders anticipate a shift in the still hawkish Fed interest rate sentiment. The Dollar Index these past 5 trading days has moved from over 110.00 to approaching 106.00 as the paper trade scramble to the possibility of lower interest rates. Still the Fed plays this new scenario to their advantage as Fed Governor Waller suggests inflation remains a primary concern.

Market Watch (Saefong – Adinolfi) – “Still, prices on Monday did touch an intraday low at $1,755.80. That followed “cautionary comments from Federal Reserve Governor Christopher Waller that policymakers had a “ways to go’ before ending interest-rate hikes,” said Rupert Rowling, market analyst at Kinesis Money, in daily commentary. The remarks “served as a reminder that gold’s huge gains last week were driven by sentiment that the Fed will be less aggressive with its future upcoming interest rate decisions rather than on any firm fact,” he said. Rowling pointed out that pace of last week’s gains, “in which gold climbed more than $100 an ounce, leave gold open to some profit-taking this week as investors reassess where the true value of the precious metal lies.” “While the latest inflation figure out of the U.S. was undoubtedly encouraging, rising consumer prices remain an issue that the Fed looks determined to get back under control through interest rate rises,” said Rowling. Given all of that, “gold’s current price looks dangerously high, and it would only take a slight shift in sentiment on where the Fed will go with its December rate move for the price to come quickly crashing back to $1,700 an ounce.”

I would make a less bearish case for the price of gold both in the short and longer term. There are no guarantees the Fed will slow its interest rate policy. This new “pivot” scenario emboldens the bulls but is only a plausible theory. The fact is that gold is supported by world inflation and rising fundamental tensions between the world powers. But the completely bullish gold scenario also does not work well even in today’s troubled world. Interest rates are not returning to near zero anytime soon. The low interest rate mode, in place for years was a powerful reason gold did so well as the FOMC battled the pandemic. Today, higher interest rates cap higher gold prices because they compete for investor dollars. At this point professional traders anticipate a sideways, but closely watched market. I’m in the “rather bullish” category which believes gold and silver are undervalued. Because central banks, even with their bombast over controlling inflation with higher interest rates, have no plan as to how this massive amount of borrowed money will be repaid. Unfortunately, they still operate on the “free lunch principle”.

On the day gold closed up $7.60 at $1773.60 and silver closed up $0.44 at $22.09.

On Tuesday gold was choppy in the New York cash market, trading between $1768.00 and $1786.00 and managed to finish the day almost unchanged. Trading was a mixed bag reacting to a cooler than expected October inflation snapshot. The producer price index came in lower than expected supporting the theory that the Fed may indeed moderate its coming rate hikes. A “hot” aftermarket was created over an aggressive Russian missile strike in the Ukraine which also hit neighboring UN member Poland. The markets quickly settled back to being unchanged, but this is another reminder of how unstable this region has become as world tension rises.

The Fed “pivot” theory has moved Treasury yields lower this week and the Dollar Index continues weaker but choppy, pointing toward 105.00. With the index off an amazing 5 points since last Thursday I would not be looking for an “overbought” condition. And subsequent bounce to higher ground, creating headwinds for our shiny friend.

Still gold’s technical picture is improving, and the bulls are coming out from under the bed. But are they out of the woods? The key question still to be answered is whether inflation has peaked? The price of gold is holding around 3-month highs and while the Fed may slow rate increases, inflation is still a number one priority. This uncertainty may suggest that the price of gold will continue to struggle against a slower yet steady rise in interest rates into 2023.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls and bears are on a level overall near-term technical playing field but the bulls have momentum. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $1,667.10. First resistance is seen at $1,800.00 and then at the August high of $1,824.60. First support is seen at the overnight low of $1,770.20 and then at this week’s low of $1,755.80.

The silver bulls have the firm overall near-term technical advantage. A choppy, 2.5-month-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $23.00. 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 $22.38 and then at $22.80. Next support is seen at this week’s low of $21.37 and then at $21.00.”

On the day gold closed up $0.20 at $1773.80 and silver closed down $0.59 at $21.50.

Zaner (Chicago) – “Gold firmed overnight and the dollar weakened, as the market seems to be forging through some occasionally hawkish Fed commentary without too much damage. It helps that Fed Vice Chair Lael Brainard commented that she thinks it will be appropriate soon to move to a slower pace of rate increases. This contrasted with a statement by the Fed’s Waller earlier in the session that seemed to downplay the significance of last week’s CPI report. The PPI report today will provide another look into inflation prospects, with the trade looking for a slightly lower headline number than September. In another sign that inflation may be easing, Walmart’s

CEO reportedly warned its suppliers that his company is “through” with paying higher prices. Amazon and Target are said to be taking a similar approach. The flare-up in risk anxiety in the cryptocurrency sector following the FTX bankruptcy has diverted investment flows towards precious metals as well. The PPI report today offers the next volatility event. A softer than expected number would add confirmation to last week’s soft CPI number and could inspire more gains in gold and silver. The Commitments of Traders report showed managed money traders were net buyers of 30,659 contracts of gold for the week ending November 8, reducing their net short to 8,219. Non-commercial & non-reportable traders were net buyers of 25,368, increasing their net long to 94,012. In silver, managed money traders were net buyers of 15,961, which moved them from a net short position to a net long of 12,493. Non-commercial & non-reportable traders were net buyers of 13,137, increasing their net long to 24,277. The buying trend in both markets is positive, and neither is overbought.”

On Wednesday gold had a virtual repeat of Tuesday’s pricing action. The early trade dipped in the morning (1772.00) and pushed higher in the afternoon (1784.00) but by market close it came in about unchanged. Yesterday and today, you saw a combination of short covering and mild safe haven buying with some promise of the Fed “pivot” for extra bullish measure. But you can see from the basically “back” and “forth” action. In a short time, the technical picture moved from bearish to a kind of “push” between the bulls and bears. With the momentum in the bull’s favor. But that buzz is now out the window. This market now needs something fresh and more substantial to provide a dominant trade, one way or the other.

On the day gold closed down $0.80 at $1773.00 and silver closed unchanged at $21.50.

(Zaner) Chicago) – “December gold was higher overnight, and it seems capable of taking out Tuesday’s three month high today. The market got another boost on Tuesday from the October PPI report that came in was well below expectations. This came after last week’s soft CPI number. December gold traded to its highest level since August 17 after the report was released but closed near unchanged on the day. This kind of anemic reaction has the bulls concerned that the market is getting a bit toppy. PPI came in at +8% year over year versus expectations for +8.4%. It was the smallest increase since July 2021. Core PPI was +6.7% year over year versus +7.2% expected and +7.1% in October. Having two milder than expected inflation numbers in a row has boosted talk that the Fed could be ready to pull back on its monetary tightening, but comments from Fed members have been mixed. Atlanta Fed President Bostic said on Tuesday that he sees little evidence that the aggressive monetary policy is slowing inflation and that more hikes would be needed to get inflation down to the 2% target. He said that goods price increases have slowed, but we need to see the service price increases slow as well. A report that a missile hit eastern Poland near the Ukrainian border sparked geopolitical jitters and seemed to attract buyers into the metals late in the session yesterday. Later, President Biden commented that it was unlikely that the missile was fired from Russia, which soothed market anxiety. Central bank purchases of gold could hit an all-time high of 750 tonnes in 2022 after a surge to nearly 400 tonnes in the third quarter. The average if the past 10 years is 513 tonnes. ETFs were net sellers of 153,620 ounces of gold on Tuesday, a decline of 0.2% on the day and 3.8% on the year. They were also net sellers of 658,179 ounces of silver, down 0.1% on the day and 15% on the year.”

On Thursday gold pricing was likely the result of what I suggested this past Tuesday. The Dollar Index was indeed oversold early in the week and figured to bounce higher. Creating a downdraft for the gold bulls. Today’s pricing spread was modest – $1755.00 through $1764.00 which is semi-good news. The bullish scenario may have some legs into year end.

Next week will be a short trading week because of the Thanksgiving holiday. And we will be closed on the 24^th and 25^th. I expect a continued “sleepy” trade if such a thing is possible in this unwinding mess. Russian world tension remains an underrated plus for safe haven support.

But in the shorter-term traders will focus on the FOMC. It is old news that the oddsmakers are suggesting a half point hike for the December 13^th and 14^th meeting. The next FOMC meeting will be held on March 21^st and 22^nd and is the more interesting of these two seminal gathers.

The Fed interest rate choices made at the March meeting are more definitive. And may even set the stage for 2023 as to what the Fed has in mind. Stay tuned as they say, the question of how liberal the Fed can be and still stay on the right side of this political football remains to be seen.

On the day gold closed down $12.20 at $1760.80 and silver closed down $0.54 at $20.96.

On Friday the gold and silver trade looks like it’s settling into a quiet weekend. And the anticipation of a short trading week for the coming Thanksgiving holiday. There is something to the notion that traders are beginning to worry about an aggressive Fed interest rate policy. But this may be an overaction if you consider today’s tight pricing range between $1750.00 and $1764.00. Still the price of gold technically must push through tough overhead resistance between $1750.00 and $1800.00 before the computer trade will ring the bell. And the overhead resistance between $1800.00 and $2000.00 is ferocious going back to 2020. The bullish sentiment has improved considerably as the Fed pivot is considered. And this is the big bullish plus to take away from this week’s trading. But until the world focuses on long term debt, and recognizes gold is undervalued I suspect making new real highs will remain challenging.

Reuters – “The slight pullback in gold after the recent rally has been through a technical retracement in the gold market, said David Meger, director of metals trading at High Ridge Future. The pullback could continue going into next week’s December option expiration, which could cause a further consolidation in gold, Meger added, and that the market overall seems focused on interest rate expectations from the Fed. Federal Reserve Bank of Boston leader Susan Collins said on Friday the central bank has more rate rises ahead of it as it seeks to lower inflation, adding that a 75-bps hike was still on the table. The dollar index firmed, making gold more expensive for other currency holders, while benchmark U.S. Treasury yields also edged higher. While gold has shed 15% since its March peak after the Fed began tightening monetary policy, it has gained about 7% since the beginning of November as markets started pricing in a slower pace of rate hikes. Markets currently see an 87% chance of a 50-basis point hike at the Fed’s December meeting.”

Platinum closed up $1.20 at $1002.00 and palladium closed down $71.10 at $1936.30.

Posted on November 10, 2022 by Richard

Gold – Hopeful – Less Cautious

Commentary for Thursday, November 10, 2022 (www.golddealer.com) – Today gold closed up $40.20 at $1750.30 and silver closed up $0.38 at $21.68. I am traveling this week so a short newsletter. We are closed this Friday for Veteran’s Day. Keep in mind however that the commodity markets are open, while the banks and USPS are closed. This week was a big one for metals, as gold moved above one-month highs, offering bullish hope in a rising interest rate environment. This morning the Consumer Price Index (CPI) for October missed, meaning it came in under the expected numbers. Reuters (Brijesh Patel) Gold climbs 2% as U.S. inflation data cements Fed slowdown bets – “Gold prices jumped 2% to a more than two-month high on Thursday as data showed U.S. inflation cooled off a bit in October, lifting hopes that the Federal Reserve would adopt a less aggressive approach on rate hikes. “When we start to see inflationary data showing that inflation is coming down, there is an expectation that the Fed is going to begin to slow the pace of those interest rate hikes,” said David Meger, director of metals trading at High Ridge Futures. “Hence you could argue that the dramatic pressure that has been applied to the gold market over the last several months has been released and gold now has the ability to move higher.” Following the U.S. data, the dollar dropped more than 1% to a near two-month low, making gold less expensive for other currency holders. Benchmark U.S. 10-year Treasury yields slipped to a one-month low.” Last Friday gold closed at $1672.50 / silver at $20.79 – as of Thursday gold was higher by $77.80 and silver was higher by $0.89.

On Monday gold settled after Friday’s jump to higher ground on speculation that the Fed might ease its aggressive interest rate policy. This idea comes and goes but this time around higher prices were large enough to get focused attention. And trouble in the crypto markets, while in my opinion not related to gold, always brings an unnecessary safe-haven comparison.

Grant on Gold (Zaner) – (1) Gold posted a gain of 2.2% last week after the cycle low at $1614.92 (29-Sep low) withstood another challenge. Arguably there is now a formidable triple bottom in place. (2) Silver posted an impressive 8.2% gain last week. While modest upside follow-through was seen on Monday, the $21.24 high from October 4 remains intact, but vulnerable at this point. (3) Platinum jumped 1.9% last week, its third consecutive higher weekly close. (4) Palladium remains defensive within the broad range, well below the midpoint of the COVID-era range.

On the day gold closed up $4.00 at $1676.50 and silver closed up $0.11 at $20.90.

On Tuesday gold, not surprisingly, again surged, moving convincingly towards $1720.00. In my opinion the power of computer trading momentum was on display. This encouraged gold’s rather damaged but improving technical picture. And gave credence to the perhaps dovish Fed “pivot”.

On the day gold closed up $35.60 at $1712.10 and silver closed up $0.58 at $21.48.

On Wednesday gold settled as the excitement of higher prices faces the reality of the Dollar Index once again rising above 110.00. (Reuters) – “Gold steadied near a one-month peak on Wednesday, although prices were stuck in a tight range with gains curbed by an uptick in the dollar and investor caution ahead of the release of U.S. inflation data.”

Zaner (Chicago) – “Gold and silver eased back overnight as the markets awaited the election results and started to focus more on Thursday’s CPI release. The trade is looking for a monthly increase of 0.7% in headline CPI and a 0.5% increase in core. Those are “hot” numbers, and if they come in that way, it could reignite talk of another jumbo rate hike in December, which would support the dollar. Trader polls have been favoring a less-than-jumbo hike, with 2:1 in favor of a 50 basis points versus 75. The CPI number could change that. The likelihood of significant volatility today and tomorrow leaves both metals vulnerable to additional long liquidation and a possible pullback to the bottom end of Tuesday’s ranges. The dollar extended a three-session downdraft to a seven-week low Tuesday, which lent support to the metals, but it appeared to find some safe-haven inflows overnight due to uncertain US election results and the problems with a cryptocurrency bank. Chinese PPI showed a 1.3% year over year drop overnight. This was a smaller decline than was expected, but it does suggest that global inflationary pressures could be easing, at least from a commodity perspective. Chinese CPI eased but was still positive at +2.1% YOY versus 2.8% in September. At the end of October, the World Gold Council pegged ETF gold holdings at 1.639 tonnes, their lowest month-end reading since March 2020. In contrast, central banks have been acquiring gold. The WGC estimates that central bank holdings increased by 186.0 tonnes during the second quarter of this year and by a record 399.3 tonnes during the third quarter. This compares to 90.6 tonnes during the third quarter of 2021. Prior to then, the previous record was 240.5 tonnes in the third quarter of 2018. While central bank gold holdings have only had one net quarterly decline in the past 11 years, their record increase in the third quarter was more than double the 145.2 tonnes in gold ETF outflows between March and October.”

On the day gold closed down $2.00 at $1710.10 and silver closed down $0.18 at $21.30.

On Thursday the bulls were smiling as a cooling in October inflation numbers suggests a Fed pivot is more likely. The next FOMC meeting is 34 days away and surprisingly the oddsmakers are looking for a modest half point rise in interest rates. Just a few weeks ago this obvious pivot was unthinkable, but it serves well in reminding everyone how uncertain these markets remain.

It appears the Fed will have wiggle room in its interest rate policy. It is always too early for FOMC assumptions. Their game plan can change by the hour considering their decisions must fit into a still confused world. But this is worth noting. The cooling of inflation is what Powell said would happen initially. He later blinked because the numbers were getting hotter, but his initial view was accurate. Which is encouraging from a consumer’s point of view.

The bullish scenario remains optimistic, and the technical picture improves. Charting experts have moved from extremely bearish to perhaps a “push” between the bears and bulls. Improved bullish sentiment however should be taken with a grain of salt. Today’s close ($1750.30) is a great improvement but gold gets no “cigar” until it shows strength above $1800.00. Overhead resistance remains fearsome so look for volatility and a continued battle for higher ground.

On the day gold closed up $40.20 at $1750.30 and silver closed up $0.38 at $21.68.

Platinum closed up $57.70 at $1064.30 and palladium closed up $95.00 at $1951.60.

Posted on November 4, 2022November 4, 2022 by Richard

Gold – Friday’s Surprise!

Commentary for Friday, November 4th, 2022 (www.golddealer.com) – Today gold closed up $45.20 at $1672.50 and silver closed up $1.35 at $20.79. This was another week of dramatic price swings in both silver and gold as the paper traders “ponder the reality” of the Fed’s next interest rate move. Early in the week it appeared that the Fed might modify its intentions over recession fears the metals remained on a steady footing. But after Fed Chief’s Powell comments on the facts of inflation life both metals tanked, testing $1600.00 support. Then, out of the blue gold surged into the weekend. Reuters – “Gold prices jumped more than 2% on Friday as the dollar fell after data showing an uptick in the U.S. unemployment rate in October raised optimism that the Federal Reserve would be less aggressive on rate hikes going forward.” While this jump in price is noteworthy gold’s overhead resistance between $1670.00 and $1680.00 is significant. If our shiny friend cannot build on this momentum above $1680.00 the technical picture will remain bearish, and traders will sell this rally in typical fashion. If the Fed equivocates in December with a less than expected rate hike it would be a very Merry Christmas for the bulls. Last Friday gold closed at $1639.50 / silver at $19.15 – on the week gold was higher by $33.00 and silver was higher by $1.64.

Spring Forward – Fall Back! Most will turn your clocks back one-hour late Saturday night.

Important Notice – FedEx is no longer having people sign for packages, 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 again opened choppy, trading between $1634.00 and $1642.00 while traders brace for the upcoming FOMC meeting this week. The group will begin Tuesday and release information likely Wednesday after the markets close. A 0.75 of a point interest rate hike is expected yet some analysts believe that this market has put in a solid bottom, supported by rising inflation and geopolitical problems worldwide.

Reuters – “Euro zone inflation surged past expectations yet again this month to hit a record high, pointing to further interest rate hikes from the European Central Bank as price pressures appear to be broadening. U.S. central bankers are expected to keep their inflation fight in high gear this week, even as they intensify a debate over when to downshift to smaller interest rate hikes to avoid sending the world’s biggest economy into a tailspin.”

While this does not change the bearish technical picture it does at least suggest that further downside in gold pricing may be limited. I would not say this is a majority opinion but for now let’s call it a positive “stirring” that has potential.

On the other hand, bearish sentiment is encouraged by the stronger dollar. The Dollar Index this past 5 trading days has been all over the place, which increases trading tension. It topped out at 112.00 last Tuesday, bottomed out at 109.50 that following Thursday and today is pushing back towards 112.00. This is because traders still cannot pin down exactly what the FOMC has in mind, even though their forward guidance has been extremely hawkish.

On the day gold closed down $3.70 at $1635.90 and silver closed down $0.02 at $19.13.

On Tuesday gold pushed higher in the overnight Hong Kong market on a weaker dollar but the New York domestic market sold this rally as the dollar suddenly reversed direction. The Dollar Index in early trading topped out above 111.00, dropped to daily lows 110.74 and reversed direction pushing back to daily highs. Still, gold managed to hold on to that “Goldilocks” range around $1650.00 while finishing mildly higher which is a plus for the flagging bulls.

According to FX Empire the silver market is rallying because of fresh interest from China. And even higher prices may be in the cards if Covid restrictions are relaxed.

Still both gold and silver reflect a jittery paper trade trying to anticipate sentiment not guidance. This “false flag” is also reflected in the stock market which rallied today on the notion that the Fed would moderate its interest rate policy.

Perhaps they will but on the short term I look for a bumpy ride. The confirmation of the promised 0.75 of a point interest rate hike will likely be made public after the markets close on Thursday. I don’t expect much fanfare because this outcome is expected. It is what the Fed might do at their next opportunity that has traders worried. If the Fed follows through with its hawkish promise gold, silver and stock market may become highly defensive and move lower.

This “back and forth” tide of positive and negative sentiment highlights uncertainty on the short term. Because even if the US can dodge the recession bullet on the short term the “informed” computer model predicts eventual trouble in River City.

The computer expects a recession one year or two years out – based on relative timing. We have not had a recession for a long time, and one is due assuming a typical cyclical rotation. Ironically the traditional factors like oversupply and unnecessary speculation may not even come into play.

Economists are also worried about England – a primary target for recession. Because of its EU relationship it may be the first of falling dominos. Reuters – “Everyone in Briton will need to pay more in tax in the coming years to fix a hole in public finances, a source in the finance ministry said, following a meeting between Prime Minister Rishi Sunak and finance minister Jeremy Hunt. British manufacturing last month suffered its biggest contraction since the depths of the first COVID-19 lockdown in May 2020, with optimism draining fast, a survey showed.”

On the day gold closed up $9.10 at $1645.00 and silver closed up $0.54 at $19.67.

Zaner (Chicago) – “While outside market conditions are conducive to the gold and silver rallies this morning, the gold market should draft additional lift from World Gold Council indications that central banks purchased a record amount of gold (399 tons) in the 3rd quarter 2022. However, in a strange development the World Gold Council has yet to announce the source of a substantial amount of “unreported buying”. It is important to note that despite a decline of 8% in gold ETF holdings in the 3rd quarter year-to-date gold demand overall has returned to “pre-pandemic levels”. According to the WGC world gold demand reached 1,181 tons in the 3rd quarter and posted a 28% gain versus the 2021 quarter. While mining production in the 3rd quarter increased, recycled gold fell by 6% and hedging dropped off by nearly 20%. Yesterday gold ETF holdings declined by 60,953 ounces pushing the year-to-date decline in holdings to 2.8%. In another minor negative overnight Indian gold jewelry retailers are reporting lackluster interest and in significant longer-term development Indian consumers are reportedly shifting their gold holdings into ETF instruments over physical holdings. However, increased investment in Indian ETF holdings is a positive demand factor for the world gold market if younger generations embrace the cultural shift. Fortunately for the bull camp, the net spec and fund long in gold remains near 3-year lows and the jump in central bank purchases could help establish strong fundamental value on the charts around $1,625. With the silver market yesterday rejecting a sub $19.00 trade and ranging sharply higher this morning, a run above $20.00 is possible. Critical support in December silver today is $19.41 with a pivot point seen down at $19.08.”

On Wednesday gold drifted higher in the overnight Hong Kong and London market but sold off in the domestic New York trade, settling initially around $1650.00. The early overseas rise may have been the result of a rumor that China has formed a committee to study the removal of Covid restrictions. Or perhaps a bit of optimism that Fed officials are reconsidering aggressive interest rate hikes. Gold yawned over this morning’s ADP release. Private payrolls rose 239,000 in October beating expectations (195,000). Under “normal” circumstances this “beat” might suggest the Fed has room to be less aggressive. Which would support the flagging bullish sentiment. And suggest at least some caution in the short bearish camp.

The FOMC did raise rates the expected 0.75 of a point after the market close today. This makes the fourth consecutive 0.75 point rate hike. And brings the target range to 3.75% – 4% which is the highest level seen since January of 2008 (CNBC). I don’t think Chief Powell has come off his hawkish stance, but he did open a window for consideration. The new statement hinted at that policy change, saying when determining future hikes, the Fed “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” Economists are hoping this is the much talked about “step-down” in policy that could see a rate increase of half a point at the December meeting and then a few smaller hikes in 2023.”

Still the gold market turned volatile. Moving optimistically higher ($1670.00) in the live New York market. Then tanking ($1635.00) in the aftermarket (NY Globex) before settling on the day. Traders simply did not like the reality of today’s candid comments by Chief Powell. His perceived hawkishness again created a heavy gold trade moving forward.

What happens today is important. But what the FOMC will have to say about future rate hikes through the first quarter of 2023 is now the focus. It is possible that today’s aftermarket is an overreaction, but we will have to see if traders buy this dip through next week. Powell did after all offer the possibility of some relief.

And the smart money is betting that the December rate hike will be a half point hike. This would be good news if you are looking for something to be optimistic about in the middle of this unwinding mess. In the meantime, expect further volatility as gold and the dollar move in opposite directions. And monitor deteriorating economic conditions in Europe.

On the day gold closed up $0.70 at $1645.70 and silver closed down 0.07 at $19.60.

On Thursday the Hong Kong and London markets reflected significant weakness over Chief Powell’s comments on Wednesday. The New York market hovered between $1624.00 and $1618.00. On the positive side we are seeing mild short covering and bargain hunting as prices bounced off daily lows ($1618.00) and moved as high as $1632.00 in the aftermarket.

This does not have me dancing around our parking lot, but it does suggest interest especially because the Dollar Index this morning pushed towards monthly highs (113.00). This market needs time to stabilize but we may be going into the weekend on a small upbeat. Considering the Fed “pivot” scenario is losing steam and the employment picture improves.

(Reuters) – “The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market remains strong despite slowing domestic demand amid stiff interest rate hikes from the Federal Reserve to tame inflation.”

Sill gold’s technical picture remains bearish and the trade defensive. “The reality is that people were expecting some dovish tilt (from the Fed), there was no dovish tilt. Inflation remains high globally … and the Fed is sticking to its mandate,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “I don’t see the tide turning for gold and its gathering bullish momentum again until after the Fed is done raising rates, probably not till March of 2023.”

There are some, me included who still believe the Fed will “pivot”. In other words, they do not take the FOMC at their word. But latest theory based on an optimistic economic model is “higher interest rates for a longer time”. Regardless of which side of the aisle you are on the best strategy is flexibility. Avoid being naïve. Each side of this argument is trying to sell you something.

Bloomberg – “A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s economic messaging ahead of the November midterms. The latest recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher recession probability across all timeframes, with the 12-month estimate of a downturn by October 2023 hitting 100%, up from 65% for the comparable period in the previous update. The forecast will be unwelcome news for Biden, who has repeatedly said the US will avoid a recession and that any downturn would be “very slight,” as he seeks to reassure Americans the economy is on solid footing under his administration.”

On the day gold closed down $18.40 at $1627.30 and silver closed down $0.16 at $19.44.

Zaner (Chicago) – “Clearly, the net Takeaway from the FOMC meeting has resulted in a rekindling of recession fears from the potential of over tightening. In addition to currency related selling in gold and silver this morning the markets are seeing spillover pressure from a jump in US treasury yields. In fact, yesterday the Fed chairman indicated that their upside targeting for Fed funds will likely result in a higher rate than previously forecasted by the central bank. While not a major negative, gold ETF holdings yesterday declined by large 100,783 ounces and those holdings are nearly 3% lower year-to-date. At least in the near term, the recent boost in global gold demand from the World Gold Council quarterly report is tossed aside. Even though the markets earlier in the week saw rumors suggesting China might be preparing to exit their Zero Covid policy, daily infections have caused expanding activity restrictions. Not surprisingly, news of a significant jump in Perth mint October gold sales is brushed aside because of patently bearish “overall” outside market conditions. Given the hawkish tone of the Fed yesterday and the impressive sharp range up move in the dollar this morning currency related pressure is likely to become a fixture in the days ahead. Critical and highly suspect support in December gold today is close to the market at $1,621.10, but the market is likely to knife straight through that contract low! Not surprisingly, the silver market has once again held up impressively in the face of very negative gold price spillover as the speculative trade in silver seems to view the $19.00 level as some form of value. Overnight silver ETF holdings saw a minimal inflow of 25,261 ounces but remain 14% lower year-to-date.”

On Friday gold pushed dramatically higher, surprising physical and paper traders. The reasoning for higher prices is not as clear as analysts suggest. The key here is understanding how resolute the Fed is about its policy of raising interest rates to control inflation. And the truth may be that they are not sure themselves which introduces more confusion. What we have this morning is a sentiment rerun which has been in place for months.

Traders, fully bearish this week because of a hawkish Fed are again looking for reasons to believe the FOMC will moderate. It may be time to consider better reasons for higher gold and silver prices. The dollar index cannot go up forever, a massively strong dollar is ruinous to the US economy and our trading partners. In my mind the index could easily shed 10% of its value, pushing gold back towards $2000.00 or even higher once the dollar begins to fade.

I also don’t get dealer comments which claim that investor demand is flagging. We can’t keep live bullion products on the shelf and our delayed delivery program remains popular even with higher premiums from the manufacturers! Most of this physical action is from seasoned, big players who have returned for some early bargain hunting.

Also consider an alternate case for today’s higher gold and silver prices. It could be that hawkish Fed sentiment was exaggerated. And this pushed gold and silver into an oversold condition.

And safe haven buying continues to grow in Europe and Russia. Reuters – “The downturn in the euro zone economy has deepened as high inflation and fears of an intensifying energy crisis hit demand, adding to evidence the bloc is heading for a winter recession. A closely-watched survey showed euro zone October business activity contracted at the fastest pace since late 2020.”

On the day gold closed up $45.20 at $1672.50 and silver closed up $1.35 at $20.79.

Platinum closed up $36.40 at $969.80 and palladium closed up $41.40 at $1836.90.

Zaner (Chicago) – “While part of the significant gains this morning is partially the result of a 2-day high to low slide of $58 in gold, and $1.30 in silver, the markets are also benefiting from a slight setback in the dollar, reports of a possible relaxing of Chinese incoming air travel restrictions, and reports of strong Chinese demand for Australian gold. Apparently, the largest Australian precious metal refiner indicated that China purchases of gold bars has remained strong, and Bloomberg overnight posted a story from the Perth Mint indicating institutional buying of gold has “surged”. Even the silver market saw positive demand news last night following a forecast that Indian silver consumption might jump by 80% this year and post a record. However, Indian silver purchases in the prior 2 years has been near record lows and therefore part of the recovery is from pent-up demand. Evidence of the recovery in Indian silver demand came from a jump in January through August silver imports to 6,370 tons (from 203 million tons) which dwarfs the prior year’s same period import tally of only 153 tons. Furthermore, silver holdings in London fell to only 27,101 tons at the end of September reaching the lowest levels since 2016 when the LBMA began keeping records. From a technical perspective, the sharp rejection of the downside breakout in December gold from yesterday was posted on a relatively high trading volume which could serve to discourage fresh selling today especially given the strong early upside follow-through rally. Clearly, the Fed’s open-mindedness toward the magnitude of upcoming hikes was more than offset by the Fed’s view that the ultimate peak in interest rates will be higher than previously forecasts but the fear of the Fed should moderate now that the meeting is past. While the rejection of the spike down move in gold yesterday was impressive, the spike down reversal in silver was even more impressive. In fact, the December silver contract has now violated and rejected the $19.00 level on 5 of the last 8 trading sessions and looks to see both inside and outside market buying influences today!”

Posted on October 28, 2022 by Richard

Gold – Fed Equivocation

Commentary for Friday, Oct 28, 2022 (www.golddealer.com) – Today gold closed down $21.10 at $1639.50 and silver closed down $0.33 at $19.15. Gold finished the week trending lower as the dollar gained strength and traders once again focus on near term, likely hawkish Fed policy. The early in the week speculation of a Fed interest rate “pivot” has disappeared in the heat of rising US inflation numbers. This “back and forth” trading sentiment is typical of a market which lacks conviction because the deep thinkers in Washington can’t seem to get everyone on the same page at the same time. An informed Reuters source this morning even claimed that a recession would support the price of gold. What is supporting the price of gold are the current discounted prices coupled with safe haven demand in a world threatening even more confusion. Current demand is patiently underpinned by China and India between $1600.00 and $1650.00 because they sense value at these numbers. Ignore the emotional noise until the Fed does something tangible with the existing interest rate structure. Last Friday gold closed at $1651.00 / silver at $19.04 – on the week gold was down by $11.50 and silver was up $0.11.

On Monday gold was quiet in the overnight Hong Kong and London markets. And the domestic New York trade was typically choppy, confined to both sides of $1650.00 and finished the day almost unchanged. This was expected as the strong Dollar Index remains steady ($112.00).

The lack of follow through from Friday’s jump in prices will disappoint the bulls. But it also makes sense when you consider that higher prices Friday were created over the “possibility” of a Fed pivot. This new insight was created last week by two Fed governors. But most believe the majority of the FOMC faithful are still very hawkish. They favor higher interest rates until there is something measurable that would suggest inflation is beginning to cool.

At this point patience will be required to see what the FOMC does between now and next year. And analysts are all over the place. Reuters – “Markets have priced in a 75-basis-point interest rate hike by the Fed in November but are now scaling back bets for a similar hike in December after reports that Fed officials will likely debate the size of future increases. A survey showed U.S. business activity contracted for a fourth straight month in October, the latest evidence of an economy softening in the face of high inflation and rising interest rates. “Gold could potentially rally to $2,250 per ounce in case of a sizable U.S. recession and fall to $1,500 per ounce in an ultra-hawkish Fed scenario,” Goldman Sachs.”

I have become suspicious of the much used “pricing in” concept, where there was a time when I used this notion regularly. It remains to be seen if the markets have “priced in anything” during this confusion. Ditto about “scaling back” interest rates. Not surprisingly I’m in accord with the latest Goldman Sachs evaluation – this circus could easily push gold to $2250.00 if traders turned dovish on interest rates. Or gold could fall to $1500.00 with a hard US landing. Not because extreme interest in gold and silver bullion is over but because during a recession both assets are easily sold to raise cash. Finally, keep in mind that the more isolated Russia becomes the more precarious this stand-off between Russia and the US. Notwithstanding any unilateral support from other parts of the world. President Biden owns the fallout from this mess as we move backwards towards a different kind of cold war. But let’s at least keep talking to each other in a political sense as the world becomes a more dangerous place.

On the day gold closed down $2.30 at $1648.70 and silver closed up $0.13 at $19.17.

Zaner (Chicago) – “Initial weakness in the dollar overnight translated into a temporary rally in gold to start the trading week. Given the one-way street to unending jumbo US rate hikes, it is not surprising that gold reversed direction aggressively at the end of last week in the wake of suggestions that November’s 75-basis point US rate hike might open the Fed to a slight moderation of the pace of increases in the December meeting. On the other hand, the Fed last week made it very clear that softening in the economy will not deter their battle against inflation, but that gold bearish theme was countervailed by words of caution from a Fed member indicating the Fed could not “overdo it”. In yet another inflation tempering US official commentary, the US Treasury Secretary indicated that inflation was not “embedded” in the US economic structure. Unfortunately for the bull camp in treasuries, equities and physical commodities last week saw historical inflation readings from the UK and Europe. While we have mentioned it several times already German producer prices registered a year-over-year jump of 45.8% last week in a reading that unnerved investment in European instruments and that in turn provides the US dollar with ongoing strength. Over the weekend reports from India suggested that pre-festival gold buying has been unremarkable despite gold prices last week reaching the lowest level since the beginning of the pandemic! With the Indian rupee at record lows, Indian imports of gold might moderate sharply if it were not for the low flat price. Even though the December gold contract into the close Friday was near the level where the last COT positioning report was measured, into the low last week the market was $36 lower which likely put the net spec and fund long down to the lowest levels since the middle of 2019. The Commitments of Traders report for the week ending October 18th showed Gold Managed Money traders net sold 21,923 contracts which moved them from a net long to a net short position of 20,633 contracts. Non-Commercial & Non-Reportable traders reduced their net long position by 18,006 contracts to a net long 83,353 contracts. Last week gold ETF holdings declined by 779,853 ounces and are now 2.4% lower year-to-date. Given the silver market’s capacity to stand up to weakness in gold and significant strength in the dollar last week and in turn respect the $18.00 level over 6 trading sessions, the range up move on Friday could signal silver’s newfound bullish capacity especially if extreme hawkish Fed views are tempered further. It should be noted that the net spec and fund long in silver remains extremely low compared to the last 3 years but is not as liquidated as the gold spec positioning. Silver positioning in the Commitments of Traders for the week ending October 18th showed Managed Money traders went from a net long to a net short position of 7,599 contracts after net selling 8,722 contracts. Non-Commercial & Non-Reportable traders were net long 8,679 contracts after decreasing their long position by 7,432 contracts. Last week silver ETF holdings increased by 517,650 ounces but are 13% lower year-to-date. In the end, we are not impressed with bullish fundamental prospects in gold and silver.”

On Tuesday gold was supported as the dollar weakened. The Dollar Index moved lower by a full point in the morning as consumer confidence flagged over worries about inflation and recession which may lead to a less aggressive Fed. This in turn introduced a mild short covering rally.

If consumers see a cloudy inflation future, this fear is not reflected in the Dow Jones Industrial Average. The DOW this past month looks technically sound, moving from 29,000 towards 32,000. Expected higher interest rates did not stop this forward march which suggests stock investors believe this FOMC landing will be soft enough. It is surprising that there can be such a wide expectation divergence using the same Fed guidance.

Neils Christensen (Kitco) – Gold prices holding at session highs as U.S. consumer confidence drops to 102.5 – The gold market is holding at session highs as rising inflation continues to take its toll on U.S. consumer confidence. The Conference Board said on Tuesday its consumer confidence index fell to a reading of 102.5 this month, down from September’s reading at 107.8. The data significantly missed expectations as economists were looking for a reading of around 105.9. “Notably, concerns about inflation – which had been receding since July – picked up again, with both gas and food prices serving as main drivers. Vacation intentions cooled; however, intentions to purchase homes, automobiles, and big-ticket appliances all rose. Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. Looking at the components of the report, The Present Situation Index dropped sharply to 138.9, down from September’s reading at 150.2. At the same time the Expectations Index dropped to 78.1, down from last month’s level at 79.5. “The Present Situation Index fell sharply, suggesting economic growth slowed to start Q4. Consumers’ expectations regarding the short-term outlook remained dismal,” Franco said. “The Expectations Index is still lingering below a reading of 80—a level associated with recession—suggesting recession risks appear to be rising.”

I would be less concerned about our financial system during this “unwinding” if everyone took the process more seriously. Yesterday’s comments by US Treasury Secretary Janet Yellen should have been recognized as a red flag and not ignored. Leverage in the private sector, especially as it relates to unregulated banking derivatives could easily be the epicenter of the next financial disaster. “We are also attentive to the possibility that higher market volatility could expose vulnerabilities in nonbank financial intermediation,” the Treasury chief said. “Regulators have been working together to better monitor leverage in private funds and develop policies to reduce the first-mover advantage that could lead to investor runs in money market funds and open-end bond funds.” As for Treasuries, Yellen’s comments marked the second time this month that she acknowledged concerns over the functioning of the $23.7 trillion market.

On the day gold closed up $4.10 at $1652.80 and silver closed up $0.17 at $19.34.

On Wednesday gold initially rose to two-week highs ($1675.00) but traders sold the rally in usual fashion and on the day our shiny friend only posted modest gains. The day was driven by a weaker dollar.US bond yields slipped on expectations that the Federal Reserve would temper aggressive rate-hikes after December (Reuters). The Dollar Index has lost more than 4 full points since Friday’s recent high and is now trading below 110.00. This significant weakness makes gold more attractive to foreign buyers. If Treasury yields continue to slip over softer economic data it bolsters hopes that inflation will moderate, and the Fed will be less aggressive.

A few things to consider. First the dollar is likely oversold so expect some sort of upward correction which could discourage new gold bulls. Many still believe that the Fed will not deviate from its 0.75 percent rate hike by year end. It may reconsider further immediate rate hikes next year or perhaps slow down the process. And look for confirmation that inflation is not as aggressive as most believed just a month ago.

The idea that the Fed would “pivot” was ignored just a few months ago. But this morning this very dovish notion has reinvented itself. The Bank of Canada surprised the market and other central banks by raising interest rates less than expected.

Paper speculators in the gold futures market have typically sold this kind of rally. Not a big deal if bullish sentiment improves but this rising positive sentiment could easily collapse if the dollar rebounds significantly. ETF outflows in the metals are discouraging but are offset by record gold demand during Diwali – the Hindu festival of light that celebrates good luck and prosperity.

On the day gold closed up $11.20 at $1664.00 and silver closed up $0.14 at $19.48.

On Thursday gold was choppy to mildly weaker in the New York cash market as the Dollar Index bounced off yesterday’s oversold lows. The European Central Bank raised interest rates the expected 0.75 of a point. ECB President Christine Lagarde remains an inflation hawk and informed analysts suggest even higher rates will be necessary to stop rising inflation within the EU. This discourages a rate pivot. Even though the European economic slowdown continues.

The US 3^rd quarter economic rebound could embolden the FOMC relative to future rate hikes which would be a minus for the still fledging rise in the price of gold and silver. But the obvious slowdown in consumer spending suggests the public remains cautious.

Reuters – “However, “the (Fed’s) November meeting is already expected to deliver 75 basis-point, and December likely to do likewise,” StoneX analyst Rhona O’Connell said, adding, “this talk of an early pivot is premature.” A majority of economists in the Oct. 17-24 Reuters poll forecast another 50-basis point hike in December. U.S. rate hikes increase the opportunity cost of holding zero-yielding bullion.”

The results of the Reuters poll are bullish for the metals if the academics are right and would likely override the higher interest rate consideration. Rhona O’Connell’s “premature” comment about a pivot remains central to the argument raging between the bulls and bears.

The academic poll carries big dovish weight, but inflation is out of the bottle and the Fed is faced with the problematic decision of fighting now or fighting later. I suppose that Powell is still looking for signs that inflation is slowing down and therefore the FOMC could get away with a half point hike. But some economists claim that inflation is not slowing down and will increase through next year. Others point out that if you look at the wider 10-year picture frame inflation will be around 2.5% which is Fed friendly. But these stakes are very high. If the Fed fumbles the ball Wall Street and the nation will pay the price. And the public will hold the Democrats responsible in coming elections. President Joe is already worried and bringing back former President Obama to head off losing the narrow edge the Dems hold in the House.

On the day gold closed down $3.30 at $1660.70 and silver closed unchanged at $19.48.

On Friday gold traded lower in the overnight Hong Kong and London markets and continued weak in the domestic New York trade. This is the result of the likely event I mentioned earlier in the week, namely the dollar weakness turned into an oversold market. The Dollar Index bounced off Thursday’s weekly lows (109.00) moving back towards a kind of weekly middle ground around 111.00. This makes sense because traders are not sure what the Fed has in mind for the short to medium time frame. Reuters claims that traders have now refocused on the impending rate hike next week. Bets for rising rates overall have put gold on course for a seventh straight monthly fall. “However, with the passing of time, recession fear is getting stronger and that could probably give a much-needed support to gold prices, and limit the downside,” Bharti added. Helping drive some of gold’s gains this week, the Fed was seen slowing its aggressive rate-hike pace in December, amid some signs of a U.S. economic slowdown. But Jigar Trivedi, a senior analyst at Mumbai-based Reliance Securities, said the outlook for gold still appears bearish with investment demand still weak and retail demand also not aggressive. “Gold should trade in a range of $1,640-$1,660 till there is an outcome from the Fed,” Trivedi added.

On the day gold closed down $21.10 at $1639.60 and silver closed down $0.33 at $19.15.

Platinum closed down $29.00 at $958.40 and palladium closed down $33.80 at $1894.60.

Zaner (Chicago) – “With a broad-based risk off environment flowing from equities and commodities, a pulse up in the dollar and significant outflows from gold and silver ETF holdings yesterday (-120,453 ounces in gold, -2.1 million ounces in silver) the bias in gold and silver is clearly pointing down. With the gold market yesterday failing to post a higher high for the move in the wake of a fresh downside breakout in the dollar and a downside breakout in treasury yields, the market may have made a temporary top. On the other hand, gold and silver price action could find fresh direction this morning following the Fed’s favorite inflation gauge of personal consumption expenditures which are projected to gain 0.5% (an increase of 0.2% from the prior month). However, would be buyers of gold and silver were likely discouraged yesterday by a jumbo ECB rate hike and were subsequently discouraged following a noted recovery bounce in the dollar. We also see Chinese gold demand prospects deteriorating with this week’s additional lockdown orders. In fact, soft 2022 Chinese gold demand has already been confirmed with a report yesterday that Chinese January through September gold consumption fell by 4.36% over comparative 2021 levels. From a short-term technical perspective, the high this week in December gold was posted on a minimal increase in trading volume, indicating prices above $1,667 are viewed by some as expensive. Given the negative outside market influences this morning and the presence of a key US inflation report, support in December gold falls to $1641.20 and traders should see the PCE report reactions set the tone of the session. In other words, the theme of a December moderation of Fed hawkishness could be tested this morning.”

Posted on October 21, 2022October 21, 2022 by Richard

Gold – An Upbeat Weekly Close

Commentary for Friday, Oct 21, 2022 (www.golddealer.com) – Today gold closed up $20.20 at $1651.00 and silver closed up $0.37 at $19.04. The paper trade created a bit of buzz this morning as both gold and silver jumped higher and the Dollar Index lost 2 full points! This surprising outcome over the possibility that the Fed may soften its current inflation fighting agenda. I would not get carried away because it’s sensible to look for paper traders to sell this rally. But the metals trade at least for today seems lighter. And so does the Wall Street trade as stocks rally and negative sentiment suggests an improvement. Not to rain on this parade but it is too soon in this debate to call this the anticipated Fed “pivot”. But at least there is a fresh scenario on the table that can be tested next month. If the expected 0.75 of a point interest rate from the FOMC holds up this small rally will melt like snow on a hot day. But if the Fed decides a half point hike is a better choice bullish sentiment in the metals will be bolstered. Beware however of this Trojan horse. In January you could realize that higher interest rates are still part of the Fed’s fighting game plan. They are just going to spread them out over a longer period. Last Friday gold closed at $1641.70 / silver at $18.02 – on the week gold was higher by $9.30 and silver was higher by $1.02.

On Monday gold was strong overnight in Hong Kong and London. And continued higher in the domestic New York trade as the cash market moved above $1668.00 before settling on both sides of $1660.00 for the day. The strength was created as the Dollar Index lost more than 1% of its value in the early morning trade. Reuters also suggests a rise in safe-haven demand for gold as geopolitical risks continue to mount. TD Securities – “In the near term, however, the recovery in risk assets bolstered by signs of stabilizing gilts is raising pressure on precious metal shorts, but gold prices need to break above $1,750/oz to extend the short squeeze.”

The rumor-mill this week is typical. Some analysists suggest the Fed and the market are low-balling the potential of higher interest rates (FX Empire). That is possible and if these folks are correct the paper trade will soon be dealing 5% + interest rates. Which will increase the pressure on gold and silver prices as investors buy Treasuries following strong guaranteed returns.

It is tough to argue with this scenario – gold is struggling against higher interest rates. But the value of gold in an inflationary world should not be ignored for two reasons. The first is simply that today’s bounce to higher ground does support the notion that gold is carving out a reliable bottom even in the face of negative news. The second reason is that gold has survived in a higher interest environment. Through a combination of safe-haven interest created by the disconnect between EU problems and the escalation of war in the Ukraine.

Still, this latest jump in the price of gold saw about half of today’s gain lost in the aftermarket suggesting traders selling the “rallies” and buying “dips”. We are still in the middle of this latest interest rate storm. But to overlook the value of physical gold and silver bullion at these discounted prices could be perilous if the inflation genie is already out of the bottle.

On the day gold closed up $15.30 at $1657.00 and silver closed up $0.65 at $18.67.

Grant on Gold (Zaner) – “(1) Gold ended last week with a 3% loss after data confirmed that the Fed has yet to get a handle on inflation. (2) Silver plunged 9.2% last week, erasing most of the gains recorded in the previous two weeks. (3) Platinum closed down 1.9% last week, but price action was confined to the previous week’s range. (4) Palladium is displaying a softer tone within its range as recession worries, inflationary prices, and higher interest rates conspire to sap auto demand.”

On Tuesday gold drifted lower in the New York cash market, unable to build on yesterday’s modest rise in prices. Even as the Dollar Index came off weekly highs which suggests that negative sentiment and the bearish technical picture remains the primary trading focus. Gold pushed to highs on the day ($1657.00), in what looks like mild short covering but drifted lower finding daily support at $1646.00. By the end of the day gold managed to claw its way back to familiar support ($1650.00) but this remains a heavy trade and the bear continues to roar.

I have said for some time that the price of gold would likely trade between $1600.00 and $1650.00 as this market adjusts to higher interest rates. And the downside in gold at these new lower levels would be limited using the following reasoning. Today the yield on 10-year Treasuries is 4% +, more than enough to slow down the US economy and unwind a cheap money policy in place during the pandemic. The academic community are split over this issue, but many thinkers believe the Fed will come to a similar conclusion, which is already foreshadowed in England as our friends across the sea choose a less obtrusive route to control spending.

New York Times – LONDON — In a stark retreat, Prime Minister Liz Truss of Britain on Friday fired her finance minister and partly reversed a tax plan that had rattled global financial markets, unsettled investors and set off a spiraling crisis that still threatens her political survival. In a brief news conference from Downing Street, she vowed to raise the country’s corporate tax rate after promising last month not to do so. The increased taxes will help pay for other tax cuts she had initiated and are meant to calm investors, who worried that the cuts were unfunded. “It is clear that parts of our mini budget went further and faster than markets were expecting,” Ms. Truss said, adding, “We need to act now to reassure the markets.”

On the day gold closed down $8.00 at $1649.00 and silver closed down $0.10 at $18.57.

On Wednesday gold pushed to 3-week lows as the Dollar Index (113.00) gained a full point since Tuesday’s low (112.00). This latest dip looks more like a bear raid than anything else, but it is tough to figure because these discounted prices should have brought in safe haven buying from both China and India. Today’s pricing route began at $1650.00 and settled on the day around $1630.00. Not the end of the world but enough of a wrinkle to suggest more confusion.

Still, the negative sentiment waterfall is not new and for now remains unrelenting. Traders are convinced the Fed will forge ahead with still higher interest rates. The fact that the FOMC has done little to encourage the notion that a “middle ground approach” is a consideration has become a nagging loose end. It reminds me of an old story my Mom used on occasion – a warning about bulls in the China closet. “It is widely believed that the phrase came about from real-life situations when cattle were brought to the market in London in the 17th century. The beasts would stray into nearby China shops and played havoc with the items. The earliest recorded use is in Frederick Marryat’s novel, ‘Jacob Faithful’ (1834).

It is difficult to imagine negative sentiment getting worse, which helps the contrarian theory – “prices are bottoming as all the sellers have sold”. But what the bulls need is news that the Fed will not overreact in its fight against inflation. The “overreaction” theory has underscored bearish sentiment since economists suggested months ago that the Fed was “behind the inflation curve”.

The technical picture from expert Jim Wycoff (Kitco) “Technically, the gold futures bears have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,622.20. First resistance is seen at today’s high of $1,659.50 and then at this week’s high of $1,674.30. First support is seen at $1,630.00 and then at $1,622.20.”

“The silver bears have the solid overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at the September low of $17.40. First resistance is seen at today’s high of $18.755 and then at $19.00. Next support is seen at this week’s low of $18.155 and then at $18.00. Wyckoff’s Market Rating: 2.0.”

On the day gold closed down $21.50 at $1627.59 and silver closed down $0.23 at $18.34.

Zaner (Chicago) – “While the dollar index is trading higher early this morning that action does not appear to be the primary force behind the sharp slide in gold prices. In fact, red hot inflation readings from the UK (a 40 year high) and talk of aggressive rate hikes from several central bankers has flooded the headlines and that has knocked gold sharply lower. Reports are the ECB plans to implement another jumbo hike next week, the Minneapolis Fed Pres. indicated the benchmark policy rate in the US will have to rise above 4.75% and the BOE has indicated they will begin selling bonds on November 1st. Therefore, surging interest rates are likely to dominate gold and silver with the dollar adding into the selling environment. In conclusion, a continuation of dollar strength in the face of spiking interest rates could quickly throw December gold to and perhaps below the October low down at $1,622.20. Yesterday, the gold market saw a forecast for a 13% cut in gold output from one miner which would result in the lowest production since 2015. On the other hand, Turquoise Hill raised its fiscal year gold output, but the increase was not as large as the decline in output from the other miner reporting production figures yesterday. While the markets were not expecting the Russians to buy gold for their reserves, the Russian Finance Minister indicated now would not be a good time for Russia to buy for gold reserve holdings. Even though the markets are expecting Indian festival-inspired gold buying over the coming 2 weeks, it could take a return to the September lows, along with a jump in the value of the Indian currency for Indian buying to have a material upside impact on gold prices. Recently Indian gold jewelers expected festival sales this year to hold steady with last year’s post Covid related rebound. In conclusion, we are bearish toward gold, but acknowledge an already heavily liquidated net spec and fund long position which could bring about an exhaustion low later this week. In a positive development, gold ETF holdings increased minimally yesterday while silver ETF holdings posted another large inflow of 1.1 million ounces.”

On Thursday gold presented a typically wobbly market, choppy on the open but generally higher as the dollar weakened. The Dollar Index opened around 113.00 and trended lower, moving towards 112.00 which prompted higher gold prices. This gave the bulls a little breathing room from yesterday’s weakness. The New York cash market moved from $1625.00 through $1645.00 before the paper traders sold the rally and the markets closed mildly higher. The rumor which prompted dollar weakness was that Japan might sell dollars to support the yen. Not an uncommon move between countries looking to offset trade imbalances created by the dollar.

But this is another example of “unforeseen” fallout which many believe will become common worldwide as central banks adjust to post pandemic conditions. And damage from war in the Ukraine becomes permanent. Examples on our side of the world include fallout as the Fed backs away from the pandemic free lunch financial model. Within the EU, the mess that the Bank of England has created comes to mind. Here, the government must seriously intervene to protect the pound. They will worry about inflation later. And Russia can now openly threaten Europe over energy delivery as Moscow feels threatened over further unilateral sanctions.

It would also appear that yesterday’s swoon in gold prices was helped by Minneapolis Federal Reserve Bank President Neel Kashkari’s inflation comments: “But if we don’t see progress in underlying inflation or core inflation, I don’t see why I would advocate stopping at 4.5%, or 4.75% or something like that. We need to see actual progress in core inflation and services inflation, and we are not seeing it yet.” Most Fed policymakers expect to need to raise the policy rate, now at 3%-3.25%, to 4.5%-5% by early next year, based on projections published last month and comments made publicly since then Kashkari’s remarks signal a readiness to go even further. “That number that I offered is predicated on a flattening out of that underlying inflation,” Kashkari said. “If that doesn’t happen, then I don’t see how we can stop.” (Reuters)

On the day gold closed up $3.30 at $1630.80 and silver closed up $0.33 at $18.67.

Zaner (Chicago) – “While the December gold contract managed to reject the initial lower low for the move overnight and the Dollar is lending some initial support, the path of least resistance remains down with an upside breakout in US treasury yields to the highest levels since the financial crisis in 2008 dominating market sentiment. In fact, investors yesterday continued to pull money from gold and silver ETFs leaving traders and investors negative toward the sector. Apparently, sentiment in gold is so negative that reports of a 43% jump in September gold shipments from the key European gold refining hub Switzerland failed to provide support. Swiss gold exports to India in September rose 79%, shipments to China increased by 16%, and sales to Turkey rose by 36%! With a major Indian festival gold demand window just ahead and gold prices near two-year lows, we suspect Indian bargain hunting buying will present in the headlines in the coming sessions. However, given bearish big picture outside market conditions a temporary buying wave is not likely divert the market from the downside. With the gold market seeing its net spec and fund long jump 45,000 contracts in last week’s report, the sharp failure at the $1,650 level this week might have been stop loss selling from bottom picking late last week off the temporary consolidation at $1,650. On the other hand, into the low today, the December gold contract was trading $50 below the level where the last positioning report was measured and that could mean the net spec long has been brought down to the lowest levels since May 2019. Unfortunately for the bull camp, technical signals for a major low are likely to be overwhelmed by ongoing bearish fundamental forces. In the near term, we see December gold headed below the late September low down at $1,622.20. Relatively speaking the silver market has held up impressively in the face of this week’s washout in gold with the December silver contract holding well above last week’s lows again this morning. While the $18.00 level might be seen as some form of value, fundamentals for a solid bottom are not apparent!”

On Friday gold was flat in overnight Hong Kong and London trading but rallied early in the New York domestic market, bouncing off overhead resistance at $1645.00. This rather erratic gold pricing was helped by dramatic changes in the value in the dollar. The Dollar Index touched 114.00 in the early trade but quickly lost steam – settling around 112.5 for the day.

It is difficult to say what created higher gold prices going into the weekend. But even short-term bullish optimism is welcomed these days. And higher gold is probably related to two factors. First, this market is oversold, anything that sounds promising will get attention. Second, and more importantly Reuters said this morning that the Federal Reserve will debate the coming December interest rate hike. “Some Fed officials have begun sounding out their desire to slow down the pace of increases soon, according to the Wall Street Journal, and how to signal plans to approve a smaller increase in December. “The hopes that the Fed may temper or take the foot off the gas pedal slightly is helping the market,” said Andre Bakhos, managing member at Ingenium Analytics LLC in Plainsboro, New Jersey. Stock markets have been hammered by worries of aggressive rate-hiking cycle tipping the U.S. economy into a recession, with the benchmark 10-year U.S. Treasury yield hitting fresh 15-year highs earlier in the session.”

Some traders claim this is the first step towards a modified Goldman Sachs scenario which early on suggested gold would see $2,250.00 by 2025. Too optimistic for my tastes but you must give them credit for at least thinking out the box in this new rising interest rate world.

On the day gold closed up $20.20 at $1651.00 and silver closed up $0.37 at $19.04.

Platinum closed up $24.50 at $954.60 and palladium closed down $74.10 at $1995.70.