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Gold Price News: Gold Glitters Once Again
Gold has continued to build on last week’s recovery, gaining a further c. 1.5% this week at the time of writing. Now trading back around $2467/toz, gold is now back within striking distance of the all-time high of c. $2483/toz on 17 July. Preliminary data for physical gold ETF/ETC flows suggests that we have seen small net inflows thus far this week, which is notable given elevated gold prices and a recovery in major asset classes such as equities and fixed income.
Thus far this week, US rate markets have given back some of the yield increase seen the previous week, with 2-Year and 10-year US Treasuries c.15 bps lower and c.10 bps lower respectively. According to CME FedWatch, markets have also slightly increased their expectations of rate reductions at the next FOMC meeting on 18 September, with futures currently pricing in a c. 55% probability of a 0.50% cut and a c. 45% probability of a 0.25% cut in the key US Fed Funds rate.
Looking further ahead, futures markets suggest a total of three quarter-point rate cuts by the Fed’s meeting on 7 November and 4-5 quarter-point cuts by the Fed’s last meeting of the year on 18 December. In combination with a somewhat weaker dollar as measured by the Dollar Index (DXY) and elevated geopolitical risk in Russia/Ukraine and the Middle East, fundamental support for gold has strengthened. Read More
Silver Price News: Silver Weathers Growth Headwinds
Silver has made some progress in recouping losses incurred last week during the global market’s growth panic, having put on c. 1.5% since Friday’s close at the time of writing. Preliminary data for physically backed silver ETFs/ETCs flows this week suggest very little net activity, which might be considered an achievement considering the fundamental and technical headwinds that we detail below.
The easier US rate environment and slightly weaker US dollar seen this week is somewhat supportive of silver pricing. Indeed, the relative move of 2-Year and 10-Year US Treasury yields suggests a smaller yield inversion and a lower probability of a US recession. However, incoming data over recent days have done little to allay fears that the global economy is slowing rapidly, with negative implications for industrial silver demand. Monday saw OPEC cut its oil demand forecasts on softer Chinese growth, while Tuesday revealed weak Chinese loan growth and very disappointing Eurozone ZEW Economic Sentiment.
Despite Atlanta Fed President Bostic seeing risks to the US economy as being reasonably balanced, markets still feel that the Fed is ‘behind the curve’ and must cut rates more aggressively to support growth. Indeed, it could be argued that central banks globally are risking significant policy errors. Read More
US dollar reserves drop 14% since 2002 as BRICS and gold challenge hegemony
The decline of the U.S. dollar (USD) as the world’s reserve currency has been a popular topic of conversation for years – especially in the wake of the global financial crisis (GFC) of 2007-2008 – and while talks of its impending demise may be overblown, data provided by the Atlantic Council shows that the world is indeed utilizing the USD significantly less than at the turn of the century.
According to the Atlantic Council’s Dollar Dominance Monitor, the share of the USD in global reserves stood at 58% in 2024, a 14% decline from 2002 when it accounted for 72% of global reserves.
“The US dollar has served as the world’s leading reserve currency since World War II,” the report said. “Today, the dollar represents 58 percent of the value of foreign reserve holdings worldwide. The euro, the second-most-used currency, comprises only 20 percent of foreign reserve holdings.”
“But in recent years, and especially since Russia’s invasion of Ukraine and the Group of Seven (G7)’s subsequent escalation in the use of financial sanctions, some countries have been signaling their intention to diversify away from dollars,” researchers at the Atlantic Council said. Read More
'The better value might be in silver right now' - Jeff Clark on precious metals moving higher
Silver usually out-performs gold, but silver starts slower, said Jeff Clark, founder of the TheGoldAdvisor.com. Last week, Kitco Mining spoke to Clark.
Clark noted that the gold miners, represented by GDX, haven't outperformed gold. As of August 8, both gold prices and the GDX were showing similar returns. Clark expected the gold miners to start to turn around when the miners start showing higher free cash flow in Q2.
Mergers and acquisitions are expected to pick up as producers gain more cash, driven by the need for majors to acquire ounces.
Silver prices will likely start moving after gold, and silver should outperform the yellow metal, noted Clark. However, gold is seen as a better performer during negative economic events.
"Silver outperforms gold," said Clark. "It tends to start slower. Gold tends to be a little stronger, so the better value might be in silver right now." Watch the podcast
United States Mint sourced non-American gold for decades, misled customers and auditors – Treasury investigation
For decades, the United States Mint did not obtain, nor even request, any documentation confirming the origins of the gold they sourced from suppliers and refiners, all while promoting their most popular coins as minted from 100% newly-mined American gold, according to a recent report from the U.S. Treasury’s investigatory and auditing office.
The Treasury Department’s Office of the Inspector General (OIG) published the audit report OIG-24-027 on May 29, 2024. The report, entitled ‘Bill and Coin Manufacturing: The Mint Needs to Enhance Controls over Gold Acquisitions,’ was the result of nearly a year of investigation, and it uncovered serious lapses, failures, and misrepresentations in the 222-year-old institution’s gold procurement processes. Read More
Gold trades near session highs as U.S. headline CPI drops below 3% in July
Gold prices are trading near session highs after U.S. headline consumer prices cooled more than expected in July, boosting hopes for a significant September rate cut from the Federal Reserve.
The Consumer Price Index (CPI) rose 0.2% last month after June’s -0.1% decline, the U.S. Bureau of Labor Statistics said on Wednesday. The latest inflation data was in line with expectations, as economists were looking for a 0.2% increase.
The report said that in the last 12 months to July, headline inflation rose 2.9%, beating expectations for a 3.0% reading and also below June’s 3.0% print.
Core CPI, which strips out volatile food and energy prices, increased 0.2% in July against expectations for a 0.2% reading and June’s 0.1% increase.
The report said that annual core inflation rose 3.2% in July, also in line with economists’ expectations and below the 3.3% reading from the prior month. Read More
This contagion market event could trigger an emergency Fed rate cut – Danielle DiMartino Booth
With markets still nervous after last week's massive selloff and investors split between expectations of a 50-basis-point cut and a 25-basis-point cut in September, Danielle DiMartino Booth, CEO and chief strategist of QI Research, warns that if there is a contagion in other markets, "all bets are off."
DiMartino Booth told Michelle Makori, lead anchor and editor-in-chief at Kitco News, that the Federal Reserve is behind on monetary policy easing and will be forced to play catch-up.
"I don't think that they're going to have a choice by September 18," DiMartino Booth said. "They will have to go 50 basis points. They can try and talk a mean game, but as the data momentum continues, they'll be left without a choice at a certain point, or they're going to appear to be completely obtuse or insensitive, really, for lack of a better word." Watch the podcast
Gold hit by profit taking despite friendly U.S. inflation data
Gold prices are sharply down in midday U.S. trading Wednesday, following another cool U.S. price inflation report. Profit-taking is featured from the shorter-term futures traders, on a “buy the rumor, sell the fact” scenario after this week’s tame U.S. inflation numbers were already expected beforehand by traders. December gold was last down $29.10 at $2,478.70. September silver was down $0.446 at $27.335.
The U.S. data point of the day Wednesday saw the consumer price index for July come in at up 0.2% from June and up 2.9%, year-on-year. The core rate was up 0.2% from June and up 3.2%, year-on-year. Those numbers were in line to slightly lower than market expectations. Tuesday’s July producer price index came in at up 0.1%. Excluding food and energy, the “core” PPI was unchanged from June versus. This week’s tame inflation numbers fell into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve cut U.S. interest rates sooner rather than later. The marketplace is presently pricing in a 0.5% rate cut from the Fed at its September FOMC meeting.
The gold market this week had seen some modest safe-have demand that pushed the yellow metal to near its record highs. The marketplace is expecting tensions in the Middle East to rise, as Iran and/or its proxies are expected to retaliate militarily against Israel after Israel assassinated Hezbollah and Hamas officials a couple of weeks ago.
Technically, December gold bulls have the firm overall near-term technical advantage. However, there are stiff overhead chart resistance levels just above present prices. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,537.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,400.00. First resistance is seen at $2,500.00 and then at today’s high of $2,519.70. First support is seen at $2,475.00 and then at this week’s low of $2,462.70. Wyckoff's Market Rating: 7.0.
Image Source: Kitco News
September silver futures bears have the overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August high of $29.355. The next downside price objective for the bears is closing prices below solid support at $26.00. First resistance is seen at today’s high of $28.175 and then at $28.50. Next support is seen at $27.00 and then at the August low of $26.505. Wyckoff's Market Rating: 4.0. Read More
Image Source: Kitco News
Gold and silver to rally through the end of 2024, copper likely to lag – Prosper’s Scott Bauer
Gold has seen its best performance in decades in 2024 amid its climb to a new record high of $2,483.35, and while the yellow metal has struggled to rally above $2,480 on three separate occasions, one analyst says it's only a matter of time before it succeeds and breaks above $2,500.
“The metals market has certainly been volatile this year with gold, silver and copper leading the charge,” said Scott Bauer, CEO of Prosper Trading Company. “The outlook for precious and industrial metals appears to be positive as demand for gold and silver has skyrocketed, although Dr. Copper may have separated itself from the group.”
Bauer noted that one of the biggest drivers of the bullish outlook for precious metals is anticipation that the Fed will cut interest rates. The CME FedWatch Tool shows that Wall Street has priced in a 100% probably for a cut in September and “around 80% probabilities for further cuts in both November and December.”
“Historically, commodities are typically seen as hedges against inflation,” he said. “However, the U.S. dollar has gained during the same period as these metals, though it’s been retreating somewhat in August.” Read More
Disclaimer: These articles are provided for informational purposes only. They are not offered or intended to be used as legal, tax, investment, financial, or any other advice.
