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Gold – Holds $1900.00 + For Now

Gold – Holds $1900.00 + For Now

Commentary for Friday, June 2, 2023 ( – Today gold closed down $25.60 at $1952.40, and silver closed down $0.24 at $23.64. The price of gold moved lower on the opening this morning, and in typical fashion drifted to lows on the day. Its price “swing” was $30.00, definitely not too hot, and a bit on the cold side. The strong jobs report for May kept our shiny friend left footed because it suggests an aggressive interest rate policy is still in the cards. Across our trading desk the physical market remains focused during this consolidation. The public buys the dips, and while there has been some selling, popular bullion products are rarely in inventory more than a few days. Premiums for bullion are down a small amount from several months ago, so considering the present “drama” they have remained surprisingly steady. Last Friday gold closed at $1944.10 / silver at $23.24 – on the week gold was up $8.30 and silver was higher by $0.40. Another week of more “noise” and little price movement.        

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 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.

Monday was Memorial Day, and the US commodity markets were closed.

On Tuesday the price of gold moved to highs on the day ($1962.00) before traders sold this modest strength and the price of gold dropped to lows on the day ($1952.00) before once again bouncing higher in what looks like a short covering rally.

This kind of trading pattern was typical of last week’s indecisive pricing, but it is worth noting that last night’s Hong Kong cash price approached $1932.00 (a nine-week low) before recovering to $1962.00 and settling at the higher end of the range.

Still, I am not optimistic, because the Fed will continue to fight inflation with higher interest rates. Which means that the bulls will struggle with holding $1900.00. And without fresh bullish news they may have to settle for something between $1800.00 and $1900.00. Not the end of the world but consolidation continues as long as higher interest rates create stormy weather.

Neils Christensen (Kitco) – Gold prices holding above $1,950 an ounce as U.S. consumer confidence falls less than expected to 102.3 – “The gold market is holding on to modest gains around $1,950 an ounce as sentiment among U.S. consumers remains resilient. American consumer confidence index fell to 102.3 in May, down from April’s upwardly revised reading of 103.70, the U.S. Conference Board reported Tuesday. The data came in better than expected; according to consensus estimates, economists were looking for sentiment to drop to 99.1. Although report noted that while U.S. consumers are maintaining an upbeat attitude, their expectations remain fairly pessimistic. Looking at the components of the report, the Present Situation Index fell to 148.6 from last month’s reading at 151.80. At the same time the Expectations Index dropped to 71.5, down from the previous level of 71.7. “The Expectations Index has now remained below 80—the level associated with a recession within the next year—every month since February 2022, with the exception of a brief uptick in December 2022,” the report said. Ataman Ozyildirim, senior director, Economics at The Conference Board, said that the outlook for the labor market is starting to deteriorate.

“Their assessment of current employment conditions saw the most significant deterioration, with the proportion of consumers reporting jobs are ‘plentiful’ falling 4 ppts from 47.5 percent in April to 43.5 percent in May. Consumers also became more downbeat about future business conditions, weighing on the expectations index. However, expectations for jobs and incomes over the next six months held relatively steady,” he said. Although inflation expectations remain elevated, Ozyildirim said that they are starting to stabilize. “Consumers in May expected inflation to average 6.1 percent over the next 12 months – essentially unchanged from 6.2 percent in April, though down substantially from the peak of 7.9 percent reached last year. Nonetheless, consumers continued to view inflation as a major influence on their view of the US economy.”

On the day gold closed up $13.90 at $1958.00, and silver closed down $0.11 at $23.13.

On Wednesday gold moved to highs on the day ($1975.00) even as the Dollar Index surged higher (104.6) and new jobs data beat expectations. Now consider that Treasury yields are moving lower, and you have another confusing bump in the economic road. Lower Treasury yields usually signal market caution even in the global economy. Still, these are the latest cues in short term data points which I usually ignore because they come and go like the wind. Some professionals believe that gold finished higher on the day because of increased safe haven buying created over anxiety in the vote to extend the US debt limit. There is something to this also, but a better approach is to keep your eye on the bigger picture.

The US and most of the world are fighting higher inflation and endemic inflation. A double whammy created by the modern printing press. These threats have chipped away at the buying power of the dollar for decades. This continual grind will support and eventually push the price of gold/silver bullion higher in my view. But in the meantime, traders are watching carefully to see if our shiny friend can carve out a new bottom at these substantially lower prices.

Reuters (Ashitha Skivaprasad) – Gold firms; set for monthly loss on dollar strength, Fed’s rate hike bets – “Gold firmed on Wednesday supported by lower Treasury yields but the dollar’s strength, with more interest rate hikes in the offing and optimism about a U.S. debt deal kept bullion on course for its first monthly dip in three. Spot gold was up 0.5% at $1,968.19 per ounce by 1033 ET (1433 GMT) on weaker-than-expected Chicago purchasing managers’ index (PMI) data, before paring some gains on stronger U.S. jobs data. It has lost nearly 1.1% this month and $120 from near-record highs scaled earlier in May. “We’ve had kind of a push-pull effect,” amid support from lower yields and pressure from the dollar, said David Meger, director of metals trading, High Ridge Futures. “With the job’s data relatively strong, concern about the possibility of further rate hikes would obviously have a tendency to pressure gold… and yet on the other side, we have the PMI data pulling in the opposite direction.” The dollar index headed for a monthly gain, making bullion less attractive to overseas buyers. Investors priced in a 71% chance of a 25-basis point hike in the Federal Reserve’s June meeting versus 60% before the data. High interest rates dim appeal for zero-yield gold. But key support around $1,950 could fuel momentum trade to push gold back to $2,000, said Edward Moya, senior market analyst at OANDA. Traders also focused on developments around the U.S. debt ceiling, with the U.S. House of Representatives due to vote on a bill to lift the limit. Silver rose 0.4% to $23.30 per ounce, platinum fell 1.3% to $1,000.84, while palladium slipped 2.3% at $1,368.65. All three were set for a monthly drop. Russia’s Nornickel saw the global palladium market swinging to a surplus in 2024 from a deficit in 2023 as recycling outpaces a demand recovery.”

On the day gold closed up $5.90 at $1963.90, and silver closed up $0.34 at $23.47.

Zaner (Chicago) – “With a fresh new high for the move in the dollar to the highest level since March 15th yesterday, the gold market is short term overbought and is facing ongoing currency related pressure. Surprisingly, silver has avoided the pressure seen in the early gold trade thereby signaling its continued focus toward physical commodity fundamentals instead of financial/currency related factors. However, gold and silver should see minimal support from a continued slide in US interest rates today. Unfortunately for the bull camp gold ETF holdings saw an outflow yesterday of 11,088 ounces which lowers the net purchases this year to 461,016 ounces. In a minimally supportive development for silver, ETF holdings yesterday increased by 127,446 ounces, which is important for the bull camp after seeing several massive outflows last week. Fortunately for the bull camps in gold and silver Chinese nonmanufacturing PMI readings for May came in much higher than expected and that offsets softer than expected Chinese manufacturing PMI data. While it seems like the US is nearing a debt ceiling deal some economists are suggesting spending cuts in the bill will increase the chances of a US recession. Yet another negative weighing on gold and silver prices is a slight escalation in the prospects of a US rate hike after upbeat US scheduled data recently and particularly if a budget deal manages to reduce uncertainty throughout the markets. With a test and a sharp rejection of yesterday’s dip to $1,950 in gold, that level has been given added credibility as key support. As indicated already, we see silver vulnerable to risk-off trade but the magnitude of the net spec and fund long in silver from last week’s COT report looks less vulnerable to long liquidation than the spec long in gold. As indicated already the silver market should see some pressure from the disappointing Chinese manufacturing PMI readings for May as that could reduce the countries upcoming silver imports. In the end, July silver has key support at $23.00 but without prices leaping in a big picture broad-based risk on euphoria from a debt deal, the bull camp lacks a story that justifies buying at support.”

On Thursday gold’s pricing pattern was typical, reflecting a mild dip on the opening ($1958.00) and the subsequent push to highs on the day ($1980.00) and finally settling with a positive bias. The plus here for gold is that these early dips are bought by the paper trade, the minus being that when overhead resistance is tested, the result does not create the typical buzz. Which might suggest that even the bulls lack conviction.

Still, today’s pop to the upside is worth noting in a market looking for fresh news. The Wall Street Journal this morning noted that the Fed may not raise interest rates at the June FOMC meeting. But have the option of resuming their program later in the year. This idea of a “pause” comes and goes these days, but the handwriting may already be on the wall if you consider that today Treasury yields dropped below their 200-day moving average.

I doubt the Fed will “pause” but if they do it would be very bullish for gold sentiment. The bulls will also be smiling at an improved technical picture because of gains above $1900.00.

Reuters (Deep Kaushik Vakil) – “Gold edges higher on dollar pullback as US rate hike bets ebb – “Gold prices rose after mixed U.S. jobs data on Thursday, as the dollar tumbled on expectations of the Federal Reserve skipping an interest rate hike at its next policy meeting. U.S. private payrolls increased by 278,000 in May, beating expectations for a rise of 170,000, but separate data showed the number of new U.S. jobless claims rose modestly last week. “The initial reaction was the market selling off … and then you have another number 15 minutes later showing that jobless claims came out in line,” said Daniel Pavilonis, senior market strategist at RJO Futures. The dollar drifted lower from a two-month high, making bullion cheaper for holders of other currencies, as investors trimmed bets that the Fed will raise interest rates this month. Markets now see a 70% chance the Fed will keep rates unchanged next month, up sharply from a 30% probability earlier, after Fed officials including the vice chair-designate pointed towards a rate hike “skip” in June. “There’s some kind of safe-haven demand supporting gold because of uncertainty regarding the debt ceiling bill,” said Commerzbank analyst Carsten Fritsch. The U.S. Senate was set to take up the bill with just four days left to pass the measure and send it to Democratic President Joe Biden to sign, averting a catastrophic default. Gold, which does not yield any interest of its own, tends to lose its appeal when interest rates rise.”

On the day gold closed up $14.10 at $1978.00, and silver closed up $0.41 at $23.88.

On Friday the price of gold was not nearly as defensive as you might think considering the DOW was significantly higher this past week. Such strength might suggest that the Fed interest rate policy will be getting a haircut sooner than later. Still, it is better to remain cautious – speculation about interest rates is now a national pastime. The bulls and bears are more evenly matched than the bullish technical picture might suggest.

Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the overall near-term technical advantage. A downtrend on the daily bar chart has stalled out. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at $2,050.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,949.60. First resistance is seen at this week’s high of $2,000.70 and then at $2,007.00. First support is seen at Thursday’s low of $1,970.10 and then at $1,960.00. The silver bulls and bears are back on a level overall near-term technical playing field. A downtrend on the daily bar chart has been negated. Silver bulls’ next upside price objective is closing July 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 May low of $22.785. First resistance is seen at today’s high of $24.12 and then at $24.40. Next support is seen at Thursday’s low of $23.335 and then at $23.00.”

On the day gold closed down $25.60 at $1952.40, and silver closed down $0.24 at $23.64.

Platinum closed down $6.60 at $1011.60, and palladium closed up $10.90 at $1386.80.

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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