Gold – A Christmas Surprise?
Commentary for Wednesday, Nov 22, 2023 (www.golddealer.com) – Today gold closed down $7.90 at $1991.40, and silver closed down $0.17 at $23.67. The big story this Thanksgiving week must be the price of gold moving above $2000.00 on Tuesday. This was not a seminal moment; It was expected but the fact that traders sold the rally and today gold finished in the red creates bullish caution. Still, hard asset optimists are enjoying a holiday surprise. Gold is dancing around $2000.00, and the 10-year Treasury rates are fetching 4.5%! Just a few months ago such a cozy relationship would have seemed impossible. Wishing you all a great Thanksgiving! We will be closed this Thursday and Friday, and likely will be accused of eating too much. Blessings! Last Friday gold closed at $1981.60 / silver at $23.81 – on the week gold was up $9.80 and silver was down $0.14. Not exactly earth shattering but encouraging.
Please note that FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.
Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on a new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.
On Monday the price of gold dipped on the open but recovered into mid-range on the day, as prices moved between $1978.00 and $1966.00. Bullish sentiment from last week seems to have lost its focus. Still, this trading dynamic could soon swing in either direction if the FOMC provides a reasonable solution to the interest rate question.
The technical picture for gold and silver seems to be turning in the neutral direction. Which provides time for this market to settle. This may encourage a unique kind of “back and forth” pricing but not necessarily a typically quiet market. Anything between $1980.00 and $2000.00 is fair game these days. A relatively tight, higher end drift which is supported technically at the lower end and will likely see profit taking rounds above $2000.00. This picture is not fixed however – if the Fed turns hawkish the lower end will be tested. Gold will likely remain capped above $2000.00 as long as the possibility of even higher interest rates remains a Fed option.
Reuters (Anjana Anil) – Gold loses footing as focus turns to Fed minutes – “Gold prices declined on Monday weighed down by an uptick in U.S. Treasury yields, with investors awaiting minutes of the Federal Reserve’s last meeting for cues on the central bank’s interest rate path. Spot gold was down 0.7% to $1,966.39 per ounce as of 1432 GMT (0932 ET), after rising as high as $1,993.29 on Friday. U.S. gold futures fell 0.8% to $1,968.40. “Technically we’ve seen gold hit resistance and is back to range bound trading with somewhat higher rates as a catalyst here,” said Bart Melek, head of commodity strategies at TD Securities. The Fed was going to maintain its narrative that monetary policy will depend on inflation and that it will keep rates elevated for as long as necessary. The minutes of the Fed meeting will be released on Tuesday. Last week’s data reignited hopes that the Fed could begin easing monetary conditions sooner than expected after a slowing jobs market and a weaker-than-expected consumer inflation report. Lower interest rates exert downward pressure on the dollar and bond yields, enhancing the appeal of non-yielding bullion. Precious metals bulls have lost momentum and need fresh, fundamental impetus. Rising U.S. Treasury yields are trumping a lower U.S. dollar and higher crude oil prices to keep gold and silver buyers skittish (Kitco Metals). The dollar slipped 0.3% to a more than 2-1/2-month low against a basket of its rivals, limiting gold’s losses today.”
On the day gold closed down $3.90 at $1977.70, and silver closed down $0.23 at $23.58.
On Tuesday the bulls were offered a Christmas surprise as the price of gold surged, moving above the vaulted $2000.00 mark. Dollar weakness has been providing underlying strength to the bulls for a week as the Dollar Index moved from 104.5 (last Thursday) through 103.4 (today). Surprisingly the Fed’s latest minutes released this afternoon contained no fresh information. (CNBC) “The summary of the meeting, held Oct. 31-Nov. 1, showed that Federal Open Market Committee members still worry that inflation could be stubborn or move higher, and that more may need to be done.” Which should raise eyebrows, because if the Fed is going to remain hawkish, why are interest rates going down and the price of gold moving higher?
Reuters (Anjana Anil) – Gold marches ahead to the beat of a weaker US dollar – “Gold prices climbed over key $2,000 an ounce ceiling on Tuesday, buoyed by expectations that the Federal Reserve has concluded interest rate hikes, pressuring the dollar, while investors awaited minutes from the U.S. central bank’s latest meeting for further policy cues. Spot gold gained 1.5% to $2,006.37 per ounce, as of 9:56 a.m. ET (1456 GMT), after earlier hitting $2,007.29, its highest level since Nov. 3. U.S. gold futures gained 1.4% to $2,008.90. “It looks like it’s short covering because of the weaker U.S. dollar and also the fact that it doesn’t look like there’s going to be any more rate interest rate hikes here coming up on the horizon, so that’s bullish for gold,” said Bob Haberkorn, senior market strategist at RJO Futures. The dollar fell to more than a 2-1/2-month low, making gold less expensive for other currency holders. Meanwhile, the benchmark U.S. 10-year Treasury yields hovered near two-month lows touched last week. The minutes from the Fed’s latest meeting are due at 1900 GMT, which could give further clarity on the central bank’s interest rate path. “After the minutes come out this afternoon, if there’s anything about a pause on rate hikes, you could see (gold) steadily above $2,000” Haberkorn added. Signs of slowing inflation in the U.S. have boosted expectations that the Fed has curbed rate hikes. Lower interest rates decrease the opportunity cost of holding gold. “Now that concerns about the conflict in the Middle East have abated noticeably, the U.S. interest rate outlook has regained the upper hand for gold,” Commerzbank said in a note. Spot silver rose 2.4% to $23.96 per ounce, platinum gained 1.7% to $933.76, and palladium was up 0.4% to $1,081.99. The global silver market faces a third consecutive year of supply deficit in 2023, the Silver Institute said last week.”
On the day gold closed up $21.60 at $1999.30, and silver closed up $0.26 at $23.84.
On Wednesday gold’s momentum cooled as pricing moved between $2002.00 and $1990.00. This lack of follow-through from yesterday’s higher prices makes sense for three reasons. First, trading during the Thanksgiving holiday is typically thin, this is a big travel week, and folks are already on their way. Second, the latest FOMC news reversed dollar direction on the short-term. And third, crude oil is down 20% from September highs. (Reuters) – “The dollar index rose on Wednesday, bouncing back from a 2-1/2 month low after economic data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week.”
Reuters (Harshit Verma) – Gold hovers near $2,000 as Fed pause bets lend support – “Gold prices hovered near the key $2,000 level on Wednesday, as expectations of an end to the U.S. Federal Reserve’s rate hike cycle kept the dollar and U.S. bond yields subdued. “The macroeconomic backdrop is turning supportive (for gold) as moderating inflation in the U.S. raises prospects for the end of the U.S. interest rate hiking cycle. The decline in US yields and the US dollar are increasing the investment appeal for gold,” wrote analysts at ANZ in a note. Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, minutes of the Oct. 31-Nov. 1 gathering showed. Markets are confident there won’t be another rate hike and are currently pricing in a nearly 60% chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool. Lower interest rates decrease the opportunity cost of holding gold. The dollar rose 0.1% against its rivals but held near a more than 2-1/2-month low touched on Tuesday. Meanwhile, benchmark U.S. 10-year Treasury yields ticked lower. A weaker dollar makes gold less expensive for other currency holders. “Price dips are probably a good buying opportunity considering at some point the Fed will cut interest rates,” UBS analyst Giovanni Staunovo said, forecasting the gold price would increase to target around $2,150 by end-2024.”
On the day gold closed down $7.90 at $1991.40, and silver closed down $0.17 at $23.67.
Platinum closed down $15.40 at $924.60, and palladium closed down $38.90 at $1054.20.
Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the October high of $2,019.70. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,935.60. First resistance is seen at this week’s high of $2,009.80 and then at $2,019.70. First support is seen at Tuesday’s low of $1,979.90 and then at this week’s low of $1,967.20. The silver bulls have the overall near-term technical advantage. Silver bulls’ next upside price objective is closing December futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the November low of $21.925. First resistance is seen at the November high of $24.22 and then at $24.50. Next support is seen at this week’s low of $23.30 and then at $23.00.”
Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special favor – talk to Harry or Eric. We are now back to our traditional business model. Thank you for your patience. Have a blessed day. Richard Schwary
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