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Gold – Fresh News Required

Gold – Fresh News Required

Commentary for Thursday, April 6, 2023 ( – Today gold closed down $9.00 at $2011.90, and silver closed up $0.07 at $25.03. The gold trade today reflected trader indecision, which was typical this week, even though gold touched yearly highs on Wednesday. Today gold touched $2020.00 but traders sold the rally and bought the dip at $2000.00. Still this market looks like a tired bull, although some analysts believe this kind of pricing is typical of reasonable consolidation. The jobs report will be out tomorrow, and this would ordinarily create cross currents in commodity markets, but they are closed for Good Friday. So, reaction will not be seen in the US trade until the Monday after Easter. Trading is further slowed down by Passover which began at sundown on Wednesday and ends on Thursday in the United States. My bet – this long weekend will be quiet, but there is considerable underlying tension so analysts will be looking for any shift in trading sentiment. Both the commodity markets and are closed for Good Friday. Last Friday gold closed at $1969.00 / silver at $24.08 – on the week gold was up $42.90 and silver was higher by $0.95.

Please note and thanks – FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.  

Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.

On Monday gold opened choppy but quickly moved to session highs as the latest information from the Institute for Supply Management (ISM) suggests a further slowdown in the economy. If you are predisposed to the “recession” scenario this latest information will help increase that disposition. The fear of recession is of course the driving force behind the FOMC strategy.

The views of professional economists differ widely, but the most likely scenario is that modest interest rate increases will continue. If this is the case, these smaller hikes will continue to challenge the bullish scenario. If the Fed does “pivot”, for whatever reason gold would likely challenge all-time highs. While this argument is intuitive, it may be helped along this bumpy road in a world that requires continued safe haven demand, created by uncertainty and war.

From a short-term view traders sold this latest pricing surge at $1990.00, setting up another possible “see/saw” trade. Which may encourage short-term profit taking considering the price of gold is higher by $125.00 this past month.

On the other hand, the recent spike in crude oil prices helps the bullish gold scenario. These past three weeks the rise in crude oil has been significant, moving from $67.00 to $80.00. And there is new evidence suggesting that even the mighty hedge funds are rethinking gold ownership.

And it may be significant that these crosscurrents are happening in the usually thin, quiet, and short Easter trading week. The commodity markets are closed on Good Friday.

Reuters (Seher Dareen) – Gold rebounds as dollar trims OPEC+ cut-led gains – “Gold prices bounced back on Monday as the dollar trimmed its initial gains that were driven by bets that OPEC’s surprise output cuts could jack up global energy prices and force central banks to hike interest rates. That seemed to be a “knee jerk reaction” to the dollar’s initial rise, also triggering some bargain hunting around the $1960-$1965 levels, said StoneX analyst Rhona O’Connell. “You’d have thought in the longer term, it might be supportive because OPEC has introduced some uncertainties or fresh uncertainties into the marketplace,” she added. The dollar trimmed its initial gains, making gold cheaper for traders holding other currencies, as investors focus on diverging central bank policy, with the impact of oil production cuts complicating the inflation outlook. While gold is traditionally considered a hedge against inflation, higher interest rates to rein in rising price pressures dim appeal for the asset since it pays no interest. CME’s Fedwatch tool showed markets see a 59.3% chance of the Federal Reserve hiking rates by a quarter point in May, while markets see a 66% chance of a further 25 bp hike by the Bank of England in May. “Gold is now vulnerable to a move down to $1,900, given the potential for a higher terminal Fed rate that markets are currently pricing in,” said Matt Simpson, senior market analyst at City Index. Bullion rose by nearly 8% last quarter after the global banking turmoil drove bets that the Fed would slow its rate hikes.”

On the day gold closed up $14.90 at $1983.90, and silver closed down $0.14 at $23.94.

Zaner (Chicago) – “We are little concerned of a loss of upside momentum in gold especially relative to silver. Furthermore, we are concerned that the sharp jump in energy prices will prompt hawkish central bank dialogue which in turn could weigh on gold and silver prices. In fact, last week’s very modest hard-fought gains in gold were forged on a distinct softening of trading volume and that action was accompanied by falling open interest! Therefore, we suspect flight to quality longs are becoming impatient and/or recognize a pause in global economic uncertainty. In other words, gold interest is waning while silver as a physical commodity likely to benefit from better economic activity is in vogue. Last week gold ETF holdings increased by 284,798 ounces but remained 0.6% lower year-to-date. However, it should be noted that gold ETF holdings from the early March low of 66.6 million ounces reached a high last month of 68.3 million ounces. While gold ETF holdings have retrenched from that March high, seeing total gold ETF holdings rise above 69 million ounces could signal an upside breakout in investment interest, particularly if “risk on” sustains. Gold is also vulnerable from a technical perspective with the latest COT positioning report showing a net spec and fund long of 219,000 contracts which is the highest since May 2022. Gold positioning in the Commitments of Traders for the week ending March 28th showed Managed Money traders added 23,359 contracts to their already long position and are now net long 130,314. Non-Commercial & Non-Reportable traders have a net long of 219,293 contracts after net buying 20,430 contracts. In retrospect, the silver market’s low to high rally last week of $1.27 suggests a temporary leadership role and a slightly overbought status. Evidence of the leadership position by silver is its ability to gain on gold for 9 straight sessions! In conclusion, silver looks to benefit if global equities and treasuries continue to rally while gold appears vulnerable to a setback to $1962.70 and possibly to $1,950. In contrast, the silver net spec and fund long position as of early last week was half the size of the net spec and fund long in January! The March 28th Commitments of Traders report showed Silver Managed Money traders had a net long 10,832 contracts after increasing their already long position by 9,946 contracts. Non-Commercial & Non-Reportable traders added 9,131 contracts to their already long position and are net long 23,684 contracts. In the silver investment quadrant total silver ETF holdings at 841 million ounces are only 19 million ounces below a critical upside breakout. While current silver ETF holdings are well below all-time highs of 994 million ounces it should be noted that holdings last Friday saw an influx of 5,036,577 ounces with inflows last week gaining 7.31 million ounces! Uptrend channel support in May silver is $23.61 with a close above $24.00 needed today to avoid a wave of profit taking.”

On Tuesday both gold and silver made 12-month highs as US economic data and the media in general whipped up the “continued jobs weakness” theory.

Today’s Labor Department data reported that February job openings fell to two-year lows – in other words demand for workers is easing. This for now supports the notion that recessionary forces are growing, and the Fed will reconsider its current hawkish interest rate program.

Whether they will or not remains to be seen. But I believe this news was “today’s trigger” in a raging market already primed for higher prices from a technical viewpoint.

To say the metals are hot would be an understatement. But unless you believe the world is coming to an end, the run from $1800.00 to $2000.00 has likely created more sellers than buyers.

Jim Wycoff (Kitco) – “Technically, April gold futures prices hit a 12-month high today. Bulls have the strong overall near-term technical advantage. Prices are in an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the all-time high of $2,078.80, scored in March of 2022. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,945.00. First resistance is seen at $2,035.00 and then at $2,070.00. First support is seen at $2,000.00 and then at today’s low of $1,979.00. May silver futures prices hit a 12-month high today. The silver bulls have the strong overall near-term technical advantage. Prices are in a steep uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $27.50. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at today’s high of $25.12 and then at $25.50. Next support is seen at $24.50 and then at $24.00.”

Reuters (Deep Kaushik Vakil) – Gold races past $2,000/oz after weaker U.S. data – “Gold extended gains on Tuesday and crossed the key $2,000 level as the dollar and yields fell, while weaker U.S. economic data emboldened bets for slower rate hikes despite mounting concerns over oil-led inflation. “We’re in this very positive backdrop for gold in which we have the slowing of economic data along with inflationary pressures remaining elevated,” said David Meger, director of metals trading at High Ridge Futures. Burnishing gold’s appeal, especially amongst traders holding other currencies, the dollar added to its losses after data showed U.S. job openings in February dropped to a near two-year low while factory orders also dipped.  A surge in oil prices this week after a surprise output cut by OPEC+ has helped zero-yield gold, traditionally considered the preferred inflation hedge, shake off the usual pressure from the likelihood of interest rate hikes that could be implemented to rein in rising price pressures. “From a technical perspective, the gold price is likely to remain strong and stabilize at its current level or even higher. The $2,050 mark could act as an important resistance level, and if breached, prices could quickly soar towards its all-time high,” said Alexander Zumpfe, a precious metals dealer at Heraeus.” Markets now see about a 40% chance of the Federal Reserve hiking rates by a quarter basis point in May, with a roughly 60% chance of a pause. But Han Tan, chief market analyst at Exinity, said more rate hikes could cause gold to unwind some of its recent gains.”

On the day gold closed up $38.30 at $2022.20, and silver closed up $1.08 at $25.02.

On Wednesday both gold and silver held these higher pricing levels nicely, a plus for the bullish scenario which builds confidence in the still developing theory that the Fed may pause interest rate hikes in May. The much-watched CME FedWatch Tool counts the days before the next meeting (May 3rd) and statistically sees a 60% chance that US rate hikes will pause in May.

I’m not sold on the idea that the Fed will abandon its program of interest rate hikes. But I suppose it is possible they will “pause” next month. As churning in the banking industry, uncertainty on Wall Street and growing world confusion push the anxiety button. And a simple “pause” will continue to stoke the increasingly bullish technical picture.

At the same time, “anything” that detracts from this optimistic picture will accelerate and encourage the selling of both gold and silver bullion. Today’s New York market will become more typical as gold moved to $2032.00 in the early trade and just as quickly dropped to $2010.00 before settling in the $2020.00 range. Expecting volatile trade, in either direction, will continue to be a reasonable precaution. Make sure your seat belts are fastened.

On the day gold closed down $1.30 at $2020.90, and silver closed down $0.06 at $24.96.

On Thursday the gold market was choppy, and in my opinion subject to further profit taking unless the Fed turns a bit more dovish towards interest rates. Chief Powell has already talked about this possibility, but the proof is in the pudding. An old saying which notes that value is judged on direct experience. Or the proof of the pudding is in the eating.

We continue to be a net seller to the public this entire week. Any quality bullion product which came in over the counter was sold in a matter of days. There is plenty of buzz still left in this trade but using a “step-down” approach if you are a new buyer is a consideration because of the expected volatility. Under these circumstances a buyer with $100,000.00 (common these days) would split this action into 4 units of $25,000.00 each. And spread them out – using a time frame which includes several FOMC meetings.

Reuters (Deep Kaushik Vakil) – Safe-haven gold set for weekly rise on economic woes – “Gold slipped on Thursday as the U.S. dollar and yields firmed, but prices were still on track for a weekly rise as weak U.S. economic data spurred worries of a slowdown. Pressuring prices, the dollar index came off two-month lows, while benchmark Treasury yields also ticked up for the day. Safe-haven bullion has risen about 2% so far this week, surpassing the key $2,000 level, as oil prices surged after the shock OPEC+ output cuts, while data showed a slower U.S. services sector and fewer job openings. The U.S. Federal Reserve is in a bind, as higher interest rates could trigger a recession but a pause in the monetary tightening risks embedding inflation, with either scenario positive for gold, said Paul Wong, market strategist at Sprott. “It is a long weekend for most major markets, so I would expect low volume, not meaningful price action today.” Gold is seen as an inflation hedge, while lower interest rates decrease the opportunity cost of holding zero-yield bullion. More data reinforcing the need for rate cuts “could keep gold above $2,000 and perhaps propel it into uncharted territory,” said Craig Erlam, senior market analyst at OANDA. Traders are awaiting the U.S. jobs report on Friday for cues, but their reaction will only become apparent next week due to the Good Friday market holiday. “With a U.S. recession still on the cards, growing systemic risk adds to gold’s case,” the World Gold Council said, adding that gold exchange-traded funds (ETFs) saw their highest monthly inflows in March since 2019.”

On the day gold closed down $9.00 at $2011.90, and silver closed up $0.07 at $25.03.

Platinum closed up $9.40 at $1006.90, and palladium closed up $37.10 at $1459.10.

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

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