Commentary for Friday, August 30, 2024 (www.golddealer.com) – Today gold closed down $31.90 at $2493.80, and silver closed down $0.83 at $28.73. Traders took profits today, pushing the price of gold lower as the PCE (Personal Consumption Expenditures) continued to suggest that inflation is moving lower. And yet, during the same week there were experts who believed that $2700.00 gold was in the cards because the Fed would lower interest rates before Christmas. Now throw rising geopolitical tensions and safe haven demand into this mix. Which suggests higher bullion prices and investors are stuck with a confusing mix of opposing choices. The deeper reasoning has always claimed there is no substitute for hard money in this inflationary world. But using historical guidelines the reality of falling inflation in a post-pandemic world suggests gold and silver are vulnerable. Last Friday gold closed at $2508.40 / silver at $29.79. On the week gold was down $14.60, and silver was down $1.06.
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On Monday the price of gold moved modestly higher on the open trading between $2510.00 and $2526.00, before settling and finishing the day only mildly in the green. Which is a disappointment to bullish sentiment considering the recent jump in prices. The plus here is that the charts remain bullish for gold and silver. And the tension between Israel and Hezbollah underpins safe haven demand. Still veteran traders remain cautious. No one wants to short this market and at the same time any significant slowdown in momentum may present a bullish red flag. I don’t think there is much downside in gold at this point even if $2500.00 fails because the bulls will likely buy the dip. But these higher silver prices should create reasonable caution.
FXEmpire (Christopher Lewis) – Gold Continues to Reach Higher – “The gold market has been bullish for some time, and it looks like we are going to see a lot of upward pressures going forward as there are a lot of reasons for it to go higher over the longer-term. Technical Analysis – The gold markets rallied well above the $2,500 level again on Monday, as it looks like we are ready to go much higher. In general, this is a market that I think continues to see a lot of interest around the $2,500 level, which is a large round psychologically significant figure. And of course, an area where one would expect to see a lot of options trading and therefore it has a major influence on the market. Short term pullbacks should continue to open up buying opportunities with the $2,450 level being supported. All things being equal, if the market were to break higher from here, and it certainly looks like it wants to reach a fresh new high, then it opens up the possibility of a move to the $2,650 level based upon a measured move of the recent pullback. Gold, of course, has a boost due to the fact that the central banks around the world are buying it, and then of course, we have a lot of geopolitical concerns around the world that could have people looking to gold for some type of safety. Overall, this is a market that I have no interest in shorting, it’s far too strong, and I just don’t see how that changes anytime soon. Unless of course you believe that interest rates are suddenly going to spike, that the war drums in Ukraine and the Middle East are going to stop, and of course Russia, really, at this point in time, this is a one-way trade. Silver Continues to Look For Higher Prices – “The silver market has been all over the place in the early hours of Monday, as we are trying to now reach well above the $30 level, an area that obviously has a lot of psychological influence in this market. Technical Analysis – The silver market initially pulled back just a little bit during the trading session on Monday, but then turned around to break above the $30 level. We have since seen a bit of trouble above the $30 level. So, it does make a certain amount of sense that the market is going to continue to be noisy. There isn’t a whole lot out there as far as news is concerned over the next day or two. So, we’ll see whether or not this is going to be more of a risk on the market. There probably won’t be too many headlines to have it overly concerned. With that being said, I would like silver for a move up to the $31.50 level, but it’s going to take some time. Short-term pullbacks are most certainly possible with the 50-day EMA near the $28.90 level and rising. Obviously, a lot of this is influenced by the US dollar weakening, and if it continues to do so, that should, at least in theory, push silver much higher over the longer term. I have no interest in shorting this market, but you do have to be very cautious with your position sizing because of the inherent volatility of this market. The central bank in America, the Federal Reserve, is likely to cut rates in September and beyond. And I think that’s part of what we are banking on here in the silver market as the negative correlation between silver and the USD is well-known.”
On the day gold closed up $9.30 at $2517.70, and silver closed up $0.19 at $29.98.
On Tuesday the price of gold continued to be choppy, trading between $2504.00 and $2516.00 so this market remains in a kind of churning mode. Both gold and silver continue to consolidate around the upper end of their recent trading range. This kind of action has been typical of late, but I would not consider even the continued loss of momentum as a cause of worry for the bulls. Getting to $2700.00 is going to be a lot of work, it will take time and patience, but I don’t see much getting in the way of this all-time high. Even though gold closed almost unchanged today, the technical picture is in the green, the safe haven demand is moving higher, the hedge funds are showing interest as a longer term financial anchor, and interest rates will likely move lower in the near future. Exactly when the bulls will get out the champagne is difficult to pin down but by the end of this year is a real possibility. At the same time, gold is higher by $140.00 this month and a very large $600.00 year over year so profit taking is a possibility. Traders expect further price volatility, but the trend favors bullish sentiment.
Reuters (Sherin Elizbeth Varghese) – Gold consolidates as investors seek clarity on size of potential US rate cut – “Gold prices eased on Tuesday, consolidating near record highs reached last week, as investors sought clarity on the magnitude of an imminent interest rate cut from the Federal Reserve ahead of an inflation report due this week. Spot gold fell 0.3% to $2,510.02 per ounce, as of 1118 GMT. U.S. gold futures fell 0.4% to $2,545.40. “Gold has by now priced in a September start to the U.S. rate-cutting cycle, so prices may struggle in the short term to reach much higher levels, unless U.S. economic data weakness supports a 50 bps cut instead of the expected 25 bps,” Ole Hansen, head of commodity strategy at Saxo Bank, said. Hansen sees consolidation during the coming months, with a limited risk of a deeper pullback towards $2,400. The Fed’s most favored inflation gauge, U.S. PCE inflation data, is due on Friday. Traders see a 71% chance of a 25-basis-point (bp) rate cut and about a 29% probability of a bigger 50-bp reduction, according to the CME FedWatch tool. A low interest rate environment tends to boost non-yielding bullion’s appeal. Gold has hit successive record highs this year, rising about 22% so far this year and striking a peak of $2,531.60 last week on expectations of imminent U.S. rate cuts and lingering concerns about the Middle East conflict, exacerbated by a major missile exchange between Israel and Hezbollah on Sunday. “Gold could even break past $2700 by year-end if the Fed can deliver 100 basis points in rate cuts before Christmas, as per the market’s current expectations,” Han Tan, chief market analyst at Exinity Group said. “The month of December has also seen the highest average monthly gain for gold over the past 5 years. If such seasonality kicks in once more, that could help ring in the festive cheer for bullion bulls.” Among other metals, spot silver rose 0.1% to $29.93 per ounce, platinum was little changed at $962.25 and palladium gained 1.3% to $971.00.”
On the day gold closed down $1.70 at $2516.00, and silver closed down $0.03 at $29.95.
On Wednesday the price of gold was quiet, but defensive, moving between $2495.00 and $2515.00 settling on the day mildly in the red. We are seeing further settling and mild profit taking as traders wait for fresh inflation data. Still, I believe the potential for higher prices in gold is in place and will remain that way in the short to medium term. Gold’s technical picture is a big plus but to me it looks like our shiny friend is again struggling above $2500.00.
There are several reasons for this trading caution. It could be because the dollar is getting stronger or rising tension in the Middle East has slowed. But the volume numbers across our trading desk have remained steady. And the number of people buying and selling is roughly even. Most of the action of late, however, has been with well-established clients so the stall in higher prices has slowed fresh money to some degree. Fresh information relative to inflation will change this static situation, but for now the public seems content to “wait and see”.
Reuters (Anushree Ashish Mukherjee) – Gold falls on firmer dollar as US data takes spotlight – “Gold prices dropped about 1% on Wednesday, hurt by a stronger U.S. dollar as investors focused on key inflation data from the world’s largest economy for clues on the size of the Federal Reserve’s potential interest-rate cut in September. Spot gold was down 0.9% at $2,502.38 an ounce by 9:44 a.m. ET (1344 GMT), having slipped as much as 1.1% earlier in the session. U.S. gold futures were down 0.6% to $2,537.60. The dollar climbed 0.5%, making gold more expensive for other currency holders. “We’re seeing a little pressure coming from a bit firmer dollar. And at this point, we’re waiting for further information to drive this market either in one direction or the other based on that inflationary data,” said David Meger, director of metals trading at High Ridge Futures. “So what we’re seeing here is profit-taking consolidation ahead of that report.” Investors are now looking out for chip giant Nvidia’s quarterly earnings due later in the day and U.S. personal consumption expenditure (PCE) data due on Friday. If Friday’s PCE numbers come in lower than expected, it could boost expectations of a more dovish Fed, creating upside potential for gold, said Ricardo Evangelista, senior analyst at ActivTrades in a note. Markets are pricing in about a 66.5% chance of a 25-basis points U.S. rate cut in September and a 34.5% chance of a 50-bps cut, according to the CME FedWatch tool. Gold ETFs saw modest net inflows of 8 metric tons ($403 million) last week, led by North American funds, according to the World Gold Council. Elsewhere, China’s net gold imports via Hong Kong rose 17% in July, marking the first increase since March, data showed on Tuesday. China is a major consumer of gold, this uptick in gold demand could support global gold prices. Among other precious metals, spot silver retreated by 2.3% to $29.29 an ounce, platinum slipped by 1.5% to $938.95, and palladium was down 1.6% at $954.75.”
On the day gold closed down $15.00 at $2501.00, and silver closed down $0.77 at $29.18.
On Thursday the price of gold moved higher on the open today even as the Dollar Index moved higher recovering from weekly lows. That being said there are some who claim that the flip side of this coin is worth consideration. With gold at all-time highs and most everyone expecting even higher prices before Christmas the number of “contrarians” likely increases. The notion of running out of buyers also becomes amplified if the price of gold moves sideways. I’m not suggesting that this latest push to high ground is running out of gas, but it never hurts to take advantage of higher prices. Especially if you find yourself leveraged in other areas. And even if leverage is not your thing cash in the bank can allow for a better night’s sleep within a troubled world. Cash is also the most liquid asset you can own in the case of financial calamity. Not that I’m looking for a large blowup, but the possibility should be considered.
FXEmpire (Christopher Lewis) – Gold Markets Continue to Find Buyers – “The gold market continues to rise over the course of the Thursday session, and as a result, it makes sense that the gold market will continue to see a lot of momentum overall. Technical Analysis – Gold markets continue to see upward pressure, but at this point in time, we still see the same ceiling. All things being equal, the market is looking at the $2,525 level as a bit of a barrier. But if we can clear that, then I think we’ve got a situation where the market is going to continue given enough time and of course the gold market is in a bit of a perfect scenario right now as central banks around the world are cutting rates and that of course helps because the cost of storing gold suddenly isn’t as expensive in the minds of traders who normally would just as soon part cash in a bond and collect the interest payments. So that’s one thing that will drive gold higher, but short-term pullbacks, I think at this point in time, could be buying opportunities as well, with the $2,500 level underneath offering a potential support level based on psychology and the fact that it has been fairly noisy. If we break down below there, then we have the 50-day EMA and the uptrend line both coming into the picture to support gold as well. In other words, I think no matter what happens, I’ll be a buyer, although I recognize it won’t go straight up in the air. It is a bullish market. Where do we go from here? Don’t really know, but I would be willing to say that $2,600 is a very realistic target. Gold, of course, is getting benefits from not only interest rates dropping, but the geopolitical concerns, which are not getting any better. Uncertainty out there, of course, helps gold as well. So, it all ties together quite nicely for a market that should rise. And then ultimately you have to keep in mind that the Indians, Chinese and Russians at the very least are stepping in and buying gold via their central banks. So, all of it leads to higher pricing.” Silver Continues to See Choppy Behaviors – Silver continues to be very nosy overall, as the market initially rallied on Thursday, only to give up a bit of the gains early. This is a market that will continue to be difficult to deal with at times, but ultimately, I think there are a lot of buyers out there. Technical Analysis – The silver market rallied initially during the trading session on Thursday, but quite frankly, doesn’t seem like it’s got any staying power. At this point, I think we’re probably going to be a lot of sideways, back and forth trading in this market. The Friday session features the PCE index numbers, and that of course is something that a lot of people in the Federal Reserve look to for direction on inflation. This will have a direct influence on silver as it will have a direct influence on the US dollar. The idea that silver is going to continue to rally based on inflation or perhaps just based on trying to get some type of hard assets in your portfolio does make a certain amount of sense, but we also have to keep in mind that silver is an industrial metal and because of that a Pretty significant economic slowdown can work against it. It’s a bit of a push and pull effect All things being equal though. It looks like the 50-day ema is going to continue to be a bit of a floor in this market. If we can break above the $30.33 level, then I think we go looking to the $31.50 level. On the downside, I believe that the $28.50 level is a massive support level in the short term. If we were to break down below there, then we could challenge the 200-day EMA, but right now I don’t think we’re quite ready to do so. I think this looks like a market that wants to go sideways in general, as it looks for some type of catalyst.”
On Thursday gold closed up $24.70 at $2525.70, and silver closed up $0.38 at $29.56.
On Friday it looks like gold tested both overhead resistance and support moving between $2526.00 and $2506.00. It is also seeing technical selling as inflation over the last 3 months has held at 2.6%. Which some believe will give the Fed more decision room between now and the end of the year. The idea being that rates may already be at the optimum level to eventually tame rising inflation. Even insiders, however, disagree as to whether there will be a quarter point or a half point cut. This is a complex dynamic because there are some who believe that the expected quarter point cut is already factored into today’s gold price.
Inflation, however, is difficult to pin down because of the huge amount of fiat currency still floating around the world. If inflation after this current consolidation begins to move higher the price of gold could become unstable. At the same time, there is more than enough safe haven demand to underpin the current gold pricing range. So it may be that for now there is little upside and little downside in this current scenario.
Reuters (Anushree Mukherjee) – Gold ticks lower as dollar, yields firm after inflation report – “Gold softened on Friday as the dollar and Treasury yields firmed after U.S. inflation data matched expectations, but the bullion is set for weekly and monthly gains as a September interest rate cut by the U.S. Federal Reserve remains in play. Spot gold was down 0.2% at $2,515.99 per ounce, as of 9:52 a.m. ET (1352 GMT) and U.S. gold futures fell 0.4%to $2,549.60. Bullion is on track for a 3% gain this month after prices rallied to an all-time high of $2,531.60 on Aug. 20. It was up 0.2% for the week. Data earlier in the day from the Commerce Department showed the personal consumption expenditures (PCE) price index rose 0.2% last month, matching economists’ forecasts. Traders slightly raised bets of a 25-basis-point rate reduction by the Fed next month to 69%, with a 50-bps cut possibility coming down to 31% following the inflation report, according to the CME FedWatch tool. On the physical front, gold discounts in India widened this week to their highest in six weeks as a price rebound dampened purchases, while new import quotas failed to lift Chinese demand.” “Systematic trend followers are effectively max-long. We also think that Shanghai positioning is near its record highs. That is despite the fact that physical demand in China has been fairly weak and inflows from Chinese gold ETFs as well,” said Daniel Ghali, commodity strategist at TD Securities. “So overall, we think the first cohort to blink could actually create a snowball effect of subsequent selling activity.” Spot silver eased 0.6% to $29.27 per ounce and platinum was steady at $937.70. Palladium retreated 0.3% to $976.50 but gained over 5% so far this month.”
On the day gold closed down $31.90 at $2493.80, and silver closed down $0.83 at $28.73.
Platinum closed down $13.60 at $927.80, and palladium closed down $11.40 at $961.10.
Jim Wycoff (Kitco) – “Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,600.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,475.00. First resistance is seen at this week’s high of $2,564.30 and then at the contract high of $2,570.40. First support is seen at Thursday’s low of $2,536.50 and then at this week’s low of $2,527.80. September silver futures bulls have the overall near-term technical advantage as prices are still in an uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $31.00. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at $30.00 and then at this week’s high of $30.225. Next support is seen at this week’s low of $29.08 and then at last week’s low of $28.79.”
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