Gold – Above $2000.00 – For Now
Commentary for Friday, Feb 9, 2024 (www.golddealer.com) – Today gold closed down $8.90 at $2023.30, and silver closed down $0.04 at $22.53. On the open its price was steady at $2032.00 before moving to lows of $2020.00 and finishing the day modestly off lows. Not a big deal, this pattern is familiar these days as gold struggles against higher interest rates. And its technical picture is only slightly encouraging. On the plus side the gold market in China is closed for their upcoming New Year celebration. Still with bearish commentary on the rise gold has managed to hold up above $2000.00. In the short term, however, traders are looking for fresh bullish information before placing their bets. Last Friday gold closed at $2036.10 / silver at $22.70 – on the week gold was down $12.80 and silver was off $0.17.
Please note that FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.
Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on a new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.
On Monday the price of gold was firm on the open ($2028.00) but quickly dipped to session lows ($2014.00) as the ISM service Sector beat expectations. Which suggests that respondents believe that business is steady, and they are optimistic about the economy. The dip in the price of gold is the result of a stronger dollar as the Dollar Index moved a half point higher in the early trade. Higher interest rates pushed gold prices mildly lower on the day as traders again ponder a test of the important $2000.00 support. Heavy rain and travel warnings continue in Los Angeles so plan accordingly if you are planning an in person visit to the store and stay safe.
FXEmpire (James Hyerczyk) – Interest Rates Expected to Hold Steady as Fed’s Balancing Act Continues – Federal Reserve’s January Meeting: A Balancing Act in Monetary Policy – As the Federal Open Market Committee (FOMC) readies for its first rate-setting meeting of 2024 on January 30-31, expectations are high that key interest rates will remain steady. The FOMC, having paused rate hikes in July, is likely to keep the federal funds rate target range at 22-year highs. This decision is backed by the need to manage inflation effectively while steering the U.S. economy towards a stable path, avoiding a recession. Inflation Trends and Economic Growth – Despite a slowing in inflation, it remains above the Fed’s long-term target of 2%, warranting a cautious stance from the Federal Reserve. The economy has shown resilience, with consumer spending and growth in late 2023 exceeding expectations. This has lessened the immediate necessity for rate cuts. The focus is now on how Fed Chair Jerome Powell and other policymakers, such as Loretta Mester, Thomas Barkin, Raphael Bostic, and Mary Daly, interpret these economic signals in the upcoming meeting. Market Reactions and Fed’s Strategic Approach – The Fed’s communication since its last 2023 meeting has tempered market expectations, with forecasts now pointing to a potential first rate cut in May. However, with the bond market predicting a high chance of rates remaining unchanged by the end of January, the Fed faces the challenge of deciding when to pivot to rate cuts without triggering inflation. This strategic balance is reflected in the S&P 500 Index’s notable return over the past 12 months, showcasing investor optimism. Rate Cut Prospects and Fed’s Cautious Policy – Though there is a probability of a rate cut by the March meeting, experts and economists anticipate any such action to be cautious and gradual. The Fed’s decision-making will be data-driven, focusing on a range of economic indicators, including inflation trends and labor market conditions. The general sentiment is that the Fed will not rush into policy changes, maintaining higher interest rates for an extended period. Consumer Implications and Economic Outlook – The current economic climate suggests that consumers should manage high-cost debts wisely and be cautious about fixed-rate loans or CDs. The Federal Reserve’s policies in 2024 will be crucial in shaping the broader economic landscape, with a focus on achieving a ‘higher for longer’ stance on rates. The upcoming FOMC meeting will be pivotal in determining the future direction of the U.S. economy, with a careful balance between supporting growth and controlling inflation.
On the day gold closed down $10.40 at $2025.70, and silver closed down $0.36 at $22.34.
On Tuesday the price of gold trading between $2022.00 in the early trade and moving to session highs of $2038.00 before settling with an upward bias on the day. This is good news for the bulls, or perhaps that is a bit too optimistic. Let’s call today’s price action encouraging because it suggests traders are willing to buy the dips within the higher interest rate structure.
I believe this pattern is becoming more reliable and will remain in place unless there is a seismic shift in current interest rate thinking. If, for any reason the Fed turns decidedly hawkish gold will move lower, but for the present this more optimistic pattern is repeating itself – a bullish plus.
Reuters (Anushree Ashish Mukherjee) – Gold rebounds as dollar rally cools, Fed speakers on tap – “Gold regained some ground on Tuesday on a slight pullback in the U.S. dollar and Treasury yields, while traders positioned for remarks from several Federal Reserve officials this week to gauge the likely pace of interest rate cuts this year. Propping up zero-yield bullion, dollar was down 0.1% and benchmark U.S. 10-year Treasury yields also eased slightly. Fed speakers are expected to reiterate that while March might be too early for a rate cut, they just need more of the same on the inflation front in order to start their cutting cycle, said Daniel Ghali, commodity strategist at TD Securities. “We’re expecting gold prices to firm on the horizon with next week’s CPI data release potentially being the catalyst. We expect a soft print on inflation and gold to respond quite positively,” he added. At least eight Fed speakers are due to speak this week. After robust jobs report last week, traders have pared back, opens new tab bets of a March U.S. rate cut. “Gold bulls have been slammed by stronger-than-expected U.S. economic data, and have been forced to revisit lower levels as markets continue to lower their bets for a Fed rate cut in March,” said Han Tan, chief market analyst at Exinity Group. “Bullion should rise as that first Fed rate cut looms closer. However, if the Fed is forced to delay the start of its policy pivot, that should prompt the precious metal to unwind more of its recent gains in the interim.” Spot silver fell 0.2% to $22.32 per ounce, while platinum rose 0.3% to $899.12 and palladium was up 0.1% to $949.64.”
On the day gold closed up $8.80 at $2034.50, and silver closed up $0.05 at $22.39.
On Wednesday gold moved between $2030.00 and $2042.00. The market dipped in the early trade but reversed direction and moved to session highs before closing almost unchanged. With a strong Dollar Index, trading above 104.00 since Monday, this swing in the pricing model is a bit surprising and suggests that traders are testing both support and overhead resistance.
Jim Wycoff (Kitco) –“Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,052.60 and then at this week’s high of $2,059.10. First support is seen at Tuesday’s low of $2,038.80 and then at this week’s low of $2,030.80.”
On the day gold closed up $0.70 at $2035.20, and silver closed down $0.11 at $22.28.
On Thursday gold moved between $2020.00 and $2036.00, typically choppy with little direction as weekly jobless claims came in around expectations. On the day it finished just slightly in the red, but this market needs fresh news to spark a real move in either direction. Volume numbers across our trading desk remain lethargic which figures as gold is about unchanged on the month and the public does not seem in a mood to buy or sell. Most everyone is willing to wait on the Fed before making decisions about balancing precious metal positions for the new year. Occasional selling of both physical platinum and palladium continues but the numbers are small. And what we do buy is quickly sold to investors who believe this market offers upside opportunity to those with a long term perspective. In my opinion fresh buyers will have to have to develop the patience of Job, as this has already turned into a long haul. The good part however is that I can’t imagine much downside from the current numbers.
Reuters (Sherin Elizabeth Varghese) – Gold subdued as traders seek more Fed cues; palladium extends slide – “Gold prices eased on Thursday as dollar ticked higher, with investors awaiting more cues on the timing of the U.S. Federal Reserve’s first interest rate cut this year, while palladium prices dropped to a fresh five-year low as demand concerns persist. “At this point in time, there’s nothing really in the price action that suggests we’re going to see a breakout in either direction. The data we’ve seen recently shows that policymakers are still unsure as to whether it’s quite time yet for interest rate cuts,” said Craig Erlam, senior markets analyst at OANDA. Fed officials want to hold off on cutting interest rates until they have more confidence that inflation is headed down to 2% and gave a range of reasons for feeling little urgency to start easing policy soon or to move quickly once they do. High interest rates increase the opportunity cost of holding bullion. Investors will be watching out for U.S. weekly jobless claims data due at 1330 GMT after last week’s monthly non-farm payrolls report came in stronger-than-expected, showing signs of persistent strength in the labor market. Spot palladium , meanwhile, fell 1.9% to $877.40 per ounce, after hitting $874.24, its lowest since August 2018, earlier in the session. “The demand picture doesn’t look fantastic at the moment, be it as a result of automotive industry changes (EVs), or the industrial sector woes of countries like Germany and China. Momentum and sentiment are firmly against the palladium price,” said Tim Waterer, chief market analyst at KCM Trade. Both platinum and palladium are used by automakers in catalytic converters to clean car exhaust fumes. Elsewhere, silver rose 0.6% to $22.32 per ounce and platinum lost 0.3% to $876.94.”
Anna Golubova (Kitco) – Fed could still pivot in March, but it won’t be through rate cuts: Nomi Prins warns of massive banking crisis – “After a hawkish Federal Reserve and a strong U.S. jobs report, markets are now pricing in the first rate cut in May. However, Dr. Nomi Prins, geo-macro economist and best-selling author, still sees the Fed as likely to pivot in March but without the use of rate cuts. Prins was speaking in an interview with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. After the Fed kept rates between 5.25% – 5.5% and Powell stated that a March rate cut was not likely, markets re-adjusted their expectations from a cut in March to a 60% chance in May, according to the CME FedWatch Tool. But Prins said investors need to pay closer attention to what’s happening with quantitative tightening (QT), forecasting a pivot to quantitative easing (QE) sooner than many anticipate. “In the Q&A on Wednesday, [Powell] answered some questions that indicated there could be other ways of the Fed loosening monetary policy before the second half of the year,” Prins said. “The quantitative tightening that is in play has been reduced. So QT is becoming much more QT light.” The Fed pursues QT by removing money from the economy – it allows some of its debt securities holdings to mature without reinvesting the principal. Since June 2022, the Fed has reduced its holdings by over $1.3 trillion to $7.7 trillion. During the press conference, Powell stated that rate cuts and quantitative easing could be separated and the Fed’s balance sheet was going to be a specific topic of conversation for the March FOMC meeting. At the press conference, Powell said: “We’re getting to that time where questions are beginning to come into greater focus about the pace of run-off and all that. So at this meeting, we did have some discussion of the balance sheet, and we’re planning to begin in-depth discussions of balance sheet issues at our next meeting in March.” Prins added that this means that the Fed could introduce various forms of QE as soon as the next meeting. “He was indicating, without trying to, that there could be some movement towards various forms of QE before we see actual rate cuts,” she said. Prins also explained how the Fed’s emergency lending program, the Bank Term Funding Program (BTFP), created after three major bank failures in March of last year, fits in and why it could be extended past its expiration date of March 11. Prins expects gold to be one of the first assets to react in response to potential future QE. For the reasons why and to get Prins’ bullish gold price forecast for this year. The main reason for the Fed to introduce QE would be more incoming bank failures, according to Prins. “I do see the potential for a massive crisis in the banking sector. We are not out of the woods there. If that happens, it will be remedied by QE, and that will help this particular sector by creating liquidity,” Prins said. For more on why Prins is still optimistic when it comes to stocks despite the risk of more bank failures, watch the video above. Prins also commented on Former President Trump’s remarks regarding the promise to ban the creation of a central bank digital currency (CBDC) if he is elected. Trump is currently the front-runner in the Republican leadership race. Speaking at a campaign stop in New Hampshire in January, Trump said: “As your president, I will never allow the creation of a central bank digital currency. Such a currency would give a federal government — our federal government — absolute control over your money. They could take your money and you wouldn’t even know it’s gone.” Prins shared her fears about CBDCs and how they can be introduced in the U.S.
On the day gold closed down $3.00 at $2032.10, and silver closed up $0.29 at $22.57.
On Friday the weakness in gold was the perfect finish to a ho-hum trade which failed to hold anyone’s attention. Gold was down a sawbuck and silver off a dime this week, and the process basically put everyone to sleep. Still gold is holding above $2000.00, and silver is trading mid-range between recent highs and lows. Not exciting but believe it or not these pricing trends are strong enough to keep the bears in check and bulls on a short leash.
Reuters (Anushree Ashish Mukherjee) – Gold en route to weekly dip as rising bond yields dent appeal – “Gold slipped on Friday and was heading for a weekly fall, pressured by elevated Treasury yields, while investors awaited next week’s U.S. inflation data for more clues on the timing of the Federal Reserve’s interest rate cuts. Benchmark 10-year U.S. Treasury yields rose to a two-week high and two-year yields hit an almost two-month high, making non-yielding bullion less attractive for investors. Several Fed officials, including Chairman Jerome Powell, have said this week they want to see more evidence inflation will continue to decline before cutting rates. U.S. monthly consumer prices rose less than initially estimated in December, revised government data showed on Friday. Market participants now await U.S. consumer price index (CPI) for January, due on Tuesday. Traders now see about a 62% chance of an interest rate cut in May, according to the CME Fedwatch tool, opens new tab. Lower interest rates decrease the opportunity cost of holding non-yielding bullion. Elsewhere, palladium fell 2.9% to $861.06 per ounce and platinum was down 1.3% to $873.97. Prices of both metals were heading for a second weekly dip.”
On the day gold closed down $8.90 at $2023.30, and silver closed down $0.04 at $22.53.
Platinum closed down $15.20 at $871.40, and palladium closed down $22.70 at $865.90.
Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in April futures above solid resistance at $2,100.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. First resistance is seen at the overnight high of $2,050.10 and then at this week’s high of $2,059.10. First support is seen at Thursday’s low of $2,034.60 and then at this week’s low of $2,030.80. The silver bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing March futures prices above solid technical resistance at $23.72. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. First resistance is seen at this week’s high of $22.84 and then at $23.00. Next support is seen at this week’s low of $22.195 and then at $22.00.”
Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special favor – talk to Harry or Eric or Ken Slater. We are now back to our traditional business model. Thank you for your patience. Blessings. Richard Schwary
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