Gold – Higher Price Expectations
Commentary for Friday, Dec 29, 2023 (www.golddealer.com) – Today gold closed down $11.50 at $2062.40, and silver closed down $0.28 at $23.85. Going into the long New Year’s weekend gold continued to settle, trading between $2072.00 and $2058.00 with a mild downward bias. The end of the year is a typically quiet time for the metals as gold finishes strong and the bulls expect higher prices in 2024. When everyone is on the same “higher price” page, my contrarian self gets stronger. In this case, however, the next pivotal move will come from the Fed in March, so enjoy the ride. We are closed this coming Jan 1st (Monday). Wishing you all a happy and healthy New Year! Last Friday gold closed at $2057.10 / silver at $24.29 – on the week gold was higher by $5.30 and silver was down by $0.44.
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.
We were closed on Monday and Tuesday of this week for the Christmas holiday.
On Wednesday the price of gold was firm, moving between $2066.00 and $2082.00, reflecting rising bullish sentiment that the Fed will continue its recent turn to the dovish side of interest rate policy. This “assumption” by the bulls remains tenuous in my mind but has gathered steam and for now “higher gold” appears to be the working model. From my standpoint Powell has obviously turned dovish in the short term but left his options open for the longer term. Any changes in Fed policy between now and March of 2024 will weigh, positively or negatively, on the price of gold. Keeping your options open still makes sense.
FxEmpire (James Hyerczyk) – Gold Prices Forecast: Economic, Geopolitical Factors Bolster XAU/USD’s Appeal – “While spot gold experienced a marginal decline early Wednesday, it remains close to a two-week high. In contrast, gold futures have risen, putting them in a position to post a strong annual gain. This performance reflects gold’s enduring appeal in uncertain times. Anticipated U.S. interest rate cuts have strongly supported gold prices. This is evident in the inverse relationship between U.S. Treasury yields and gold prices. Additionally, recent U.S. inflation data and its influence on the Federal Open Market Committee (FOMC) policy have been pivotal. The dollar index is hovering near a five-month low, marking its worst yearly performance since 2020. Concurrently, the Euro is strengthening against the dollar. This decline in the dollar index, coupled with market anticipations of Federal Reserve rate cuts, significantly impacts gold prices. Middle East tensions, particularly the Israel-Hamas conflict and Houthi attacks, have disrupted global trade, enhancing gold’s status as a safe haven. Amidst these geopolitical conflicts and economic uncertainties, gold prices have risen, underscoring its role as a stable investment. Considering the blend of economic data, currency market trends, and Middle East tensions, the short-term outlook for gold remains bullish. The anticipation of U.S. rate cuts and ongoing global uncertainties continue to position gold as an attractive asset for investors. The current price of Gold (XAU/USD) at 2067.90 is above both the 200-day and 50-day moving averages, indicating a bullish trend. It has surpassed the minor resistance level of 2067.00, which could now act as a new support level. The next key resistance is at 2149.00. Being above the main support level of 1987.00 reinforces this bullish sentiment. The market’s position above both key moving averages and its breakthrough past minor resistance suggest buyer confidence and potential for further upward movement, provided it stays above these crucial levels.”
On the day gold closed up $23.70 at $2081.90, and silver closed up $0.24 at $24.38.
On Thursday gold prices settled at these lofty levels as traders stepped back and assessed a slowing paper trade influenced by the Christmas holiday. Across our trading desk this was the first day that buyers used real cash to purchase bullion. For the previous week our customers sold their bullion for cash payments. This is not a watershed moment, but it may portend a coming shift in the public’s perception as it relates to the price of gold. Being another short week because of the New Year I would look for a narrow pricing range, still supported by the possibility of lower interest rates next year. Many traders remain on holiday through the New Year which can create a rather ho-hum kind of market. And the price of gold cannot be considered cheap. Our shiny friend this past month is higher by $40.00 and is higher by $275.00 this past year. Which opens the door to profit taking if the Fed talks hawkish between now and March.
Reuters (Anjana Anil) – Gold steadies after hitting three-week high as US yields tick up – “Gold prices steadied on Thursday, after hitting a more than three-week high earlier, as an uptick in U.S. bond yields undermined the support from expectations of rate cuts by the Federal Reserve early next year. “There’s not a lot of trading volume right now in any of the markets so that usually causes smaller moves, especially when we’re approaching a big number like an all-time high,” said Chris Gaffney, president of world markets at EverBank. The dollar index hovered near a five-month low and was heading for a yearly decline. Benchmark 10-year bond yields picked up, but were also close to their lowest levels since July. The number of Americans filing initial claims for unemployment benefits rose last week, indicating the labor market continues to cool in the year’s fourth quarter. Investors are betting on an 87% chance of the Fed cutting rates in March, according to the CME FedWatch tool. Lower interest rates decrease the opportunity cost of holding non-yielding bullion. “We look for higher gold prices over the next 12 months, with weaker economic data and lower inflation in the U.S. forcing the Fed to cut rates,” UBS analyst Giovanni Staunovo said. On the physical front, China’s net gold imports via Hong Kong rose by about 37% in November from the previous month, data showed. Spot silver fell 0.6% to $24.094 per ounce but was poised to end the year about 1% higher. Platinum gained 0.3% to a more than six-month high of $999.33 while palladium fell 1.2% to $1,139.85. Both autocatalytic metals were on track to log yearly declines.”
On the day gold closed down $8.00 at $2073.90, and silver closed down $0.25 at $24.13.
On Friday the gold bulls continue to enjoy rising positive sentiment, even as the price of gold today closed mildly in the red. If you are looking for a wild card which may provide pricing insight, consider the premium charged on America’s favorite bullion coin, the US Eagle.
During the Covid scare premiums were sky high, roughly twice as high as they are today. The reasoning being that premiums reflect the public’s fear factor. High premiums usually point to a rising fear factor, lower premiums suggest that the public is becoming less worried about safe haven demand or economic breakdown.
Today the premium changed for US gold bullion eagles is about half of its Covid all-time high. At the same time, it is not as low as it was during the pre-covid days. Which indicates the public is less anxious but still reasonably worried and wants to cover all bets in case the current FOMC plan for a soft economic landing is abandoned. Tough job but so far so good.
Reuters (Deep Vakil) – Gold to enter 2024 with sights set on record highs – “Gold investors anticipate record high prices next year, when the fundamentals of a dovish pivot in U.S. interest rates, continued geopolitical risk, and central bank buying are expected to support the market after a volatile 2023. Spot gold is on track to post a 13% annual rise in 2023, its best year since 2020, trading around $2,060 per ounce. “Following on from a surprisingly robust performance in 2023 we see further price gains in 2024, driven by a trifecta of momentum chasing hedge funds, central banks continuing to buy physical gold at a firm pace, and not least renewed demand from ETF investors,” Saxo Bank’s Ole Hansen said. On Dec. 4, gold hit a record high of $2,135.40 on bets of U.S. monetary policy easing in early 2024 after a perceived dovish tilt from Federal Reserve Chair Jerome Powell, surpassing the previous record scaled in 2020. The precious metal almost made uncharted territory in May this year as a U.S. regional banking crisis took hold. By October, it had retreated close to $1,800 an ounce until safe-haven demand triggered by the Israel-Hamas conflict spurred another rally. Investors returned to the popular SPDR Gold Shares exchange-traded fund, which posted net inflows of over $1 billion in November. A Reuters poll in October forecast prices will average $1,986.50 in 2024. They have averaged above $1,950 so far this year, above any previous yearly average price. J.P. Morgan sees “a breakout rally” for gold in mid-2024, with a targeted peak of $2,300 on expected rate cuts. UBS forecasts a record of $2,150 by end-2024 if cuts materialize. The World Gold Council, in its 2024 outlook, projected that a drop of about 40 to 50 basis points in longer maturity yields, following 75-100 points of rate cuts, could translate into a 4% gain for gold. The conflict in the Middle East, uncertainty from elections in major economies, and central bank purchases led by China will also boost safe-haven bullion’s appeal next year, analysts predicted. But “gold could be forced to unwind some of this year’s gains if an inflation resurgence forces the Fed to abandon plans for a policy pivot in 2024,” said Han Tan, chief market analyst at Exinity. Inflation cooling faster than the Fed trims rates may also slow the economy and dent retail buying. Heraeus Metals expects higher gold jewelry demand in top consumer China this year, with more support possible in 2024 from stimulus measures. By contrast, silver looks set to fall 1% in 2023, trading just under $24 an ounce. It will trend towards $26 an ounce next year, benefiting from improved industrial demand, according to TD Securities. On track to fall 6% in 2023, platinum will hold a range between $800 and $1,100 an ounce in 2024, Heraeus estimates. The impact of the energy transition was demonstrated as auto catalyst – dependent palladium fell by more than a third this year, the market’s worst performance since 2008. Palladium, which fell below $1,000 an ounce in November – for the first time in five years – before recovering, faces surpluses as electric vehicles become more popular. Bank of America expects palladium to average $750 per ounce in 2024 subject to any major supply cuts.”
On the day gold closed down $11.50 at $2062.40, and silver closed down $0.28 at $23.85.
Platinum closed down $12.40 at $995.00, and palladium closed down $29.80 at $1104.00.
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 great New Year. Richard Schwary
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