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Silver Price News: Silver Seeking Economic Stimulus
Silver staged something of a recovery at the end of last week, despite continued weakness in growth indicators and the US dollar and rate headwinds noted in today’s gold commentary.
However, we note that the medium-term US rate environment remains largely unchanged during the week, with the US 2-Year Treasury yield hovering around 4%.
The market is still digesting the implications of a Chinese stimulus package, with their Minister of Finance suggesting that further fiscal (budgetary) support for the domestic economy might be forthcoming. However, details remain frustratingly scarce. Meanwhile, global economic momentum has improved, led by the US, but on balance remains disappointing, particularly in the Euro Zone. Silver starts this week trading around $31.5/toz.
The most recent CFTC Commitments of Traders (CoT) report published late on Friday suggests that silver speculators slightly trimmed their net long futures positions over the previous week. These now lie c.12% below the 55-month high seen at the end of September, though still consistent with the elevated net long levels seen over the last six months. Conversely, physical silver ETFs/ETCs appear to have seen net inflows at the start of last week, perhaps triggered by bargain-hunting when silver slipped below $31/oz. Read More
Gold Price News: Gold gains ground on Middle East tension
The latter half of last week saw gold recover most of the losses seen since the start of October, despite a rise in the US Dollar Index to a two-month high and a further firming of US rate expectations amid disappointing inflation data.
However, geopolitical tensions remain high, particularly with respect to the Middle East, where the market is bracing for another round of armed retaliation. This undoubtedly remains a support for the yellow metal. Gold starts the week trading at $2664/toz.
The CFTC Commitments of Traders (CoT) report published late on Friday saw gold speculators again pare their net long futures positions from the 54-month high recorded at the end of September, mirroring the recent lack of momentum in spot prices. However, net speculative longs remain at elevated levels. Conversely, aggregate ETF/ETC flows have turned negative over the last week, with net inflows to US vehicles being more than matched by net outflows elsewhere, perhaps prompted by stale bulls taking profits on local currency gold gains.
Looking at the gold chart, last week saw gold successfully defend rising minor oblique support at $2609/oz and close above the then 20-day Simple Moving Average at $2631/oz. Momentum has recovered somewhat, with a supportive RSI and a rather less bearish MACD, though both generated on somewhat weak trading volume. Read More
Wall Street remains cautious on gold, Main Street optimism wanes further for next week
Gold faced a number of headwinds this week, and received no supportive news or data, but the yellow metal held its own and showed its resilience with a steady climb to the finish.
Spot gold kicked off the week trading close to $2,652 per ounce before falling to support at $2,640 overnight Sunday. By 7:30 a.m. Eastern on Monday morning, spot gold was trading just below $2,660 per ounce, but that proved to be the high point for the next few days, as the yellow metal returned to retest the $2,640 support level multiple times on Monday, before finally breaking through just after 10:00 p.m.
Tuesday morning saw spot gold climb from a low of $2,632 per $2,650, but what followed was the week's most dramatic decline, with prices falling from $2,652 per ounce at 8:00 a.m. Eastern all the way to $2,609 two hours later.
After setting a fresh weekly low just above $2,609 shortly before 1:00 p.m., gold settled into a relatively narrow trading range between $2,606 and $2,620 as markets awaited the week's first significant release, the FOMC minutes from the last meeting at 2:00 p.m. on Wednesday. While the minutes showed some fed voters had cold feet about the 50 basis point cut, gold took their reticence in stride, and began a slow but steady grind higher. Read More
Gold & silver price targets: what to expect medium term
Last week, we wrote about the big-picture technicals in Gold and Silver, employing quarterly and monthly charts.
Gold is overbought, but history suggests it can become even more overbought. Meanwhile, Silver made its highest monthly and weekly close in 11 years.
Both metals have room to move before stiff resistance sets in.
Gold is in all-time high territory, so its resistance is harder to peg.
With its breakout from the 13-year cup and handle pattern in March 2024, Gold has a clear path to the measured upside target of $3000/oz.
Although Gold appears to be quite overbought, it has gained only 9% in the last two months. Before that, in early August 2024, it traded at the same level as nearly four months earlier in April 2024.
The more pressing issue is the negative divergence in the Gold to S&P 500 ratio, which has made a lower high since Gold gained another 10%. Read More
Gold, silver down on bearish daily outside market forces
Gold and silver prices are lower in midday U.S. trading Monday, on a quieter news day that is allowing traders to focus more on daily outside markets, which lean bearish: a higher U.S. dollar index and lower crude oil prices. December gold was last down $12.10 at $2,664.20 and December silver was down $0.435 at $31.32.
U.S. stock indexes are higher near midday, with the S&P 500 stock index futures hitting a record high today. That’s also a negative for the precious metals amid less risk aversion and also from a competing asset class perspective.
China September economic data released Monday and over the weekend was again downbeat—a bit bearish for the metals from a demand perspective. Trade data came in weaker than expected. Consumer inflation slowed and deflation among manufacturers persisted. The September consumer price index was up 0.4%, year-on-year, while the producer price index was down 2.8% annually. China’s exports in September were up 2.4% and imports were up 0.3%--both below market expectations. The Chinese finance minister on Saturday commented on the economic stimulus plans to prop up the world’s second-largest economy, but the marketplace was disappointed due to lack of specifics.
The latest CFTC Commitments of Traders report on Friday showed gold speculators again reduced their net long futures positions from a 54-month high recorded at the end of September. However, net speculative longs remain at elevated levels. “Conversely, aggregate ETF/ETC flows have turned negative over the last week, with net inflows to U.S. vehicles being more than matched by net outflows elsewhere, perhaps prompted by stale bulls taking profits on local currency gold gains,” said Frank Watson from Kinesis Money.
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 the contract high of $2,708.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,600.00. First resistance is seen at today’s high of $2,684.20 and then at $2,700.00. First support is seen at $2,650.00 and then at $2,638.00. Wyckoff's Market Rating: 8.5.
Image Source: Kitco News
December silver futures bulls have the overall near-term technical advantage. Prices are still in a nine-week-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May high of $33.50. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at today’s high of $31.75 and then at $32.00. Next support is seen at $31.00 and then at last week’s low of $30.345. Wyckoff's Market Rating: 7.0. Read More
Image Source: Kitco News
Consumer inflation expectations hit 40-year high, pressuring Fed rate plans
Interest rates and expectations for interest rate cuts have dominated financial headlines for several months, and while traders are occupied with dot plots and Fed speak, sentiment among U.S. consumers regarding inflation offers a potential warning sign that the Fed may actually be forced to hold or raise the benchmark rate if the cost of living begins to tick higher again.
“US consumers' inflation expectations for the next 5-10 years skyrocketed to 7.1% in October, the highest in over 40 years,” noted analysts at The Kobeissi Letter. “This metric has DOUBLED in just several months, according to the University of Michigan Consumer Survey.”
“To put this into perspective, median inflation expectations have been at ~3% for the last 3 years,” they highlighted. “Consumer sentiment has been severely damaged by rising prices of necessities, and expectations are getting worse.”
“This comes as core CPI inflation has been above 3% for 41 months, the longest streak since the early 1990s,” the analysts added. “Inflation is still a major concern for Americans. We are beginning to see some signs of inflation reaccelerating again. Last week, Core CPI inflation jumped for the first time since March 2023. The Fed is playing a dangerous game with 50 bps rate cuts.” Read More
Gold lags as Bitcoin and stocks rally, BTC bulls target $70k
Gold was the odd asset out on Monday, while stocks and cryptos rallied higher to start the week as investors embraced a risk-on sentiment despite persistent concerns about the future of interest rate cuts amid ‘sticky’ inflation.
“While consumers might be feeling some price pressure, the costs to producers are not escalating as quickly, which could help ease the situation in the long run,” noted analysts at Bitfinex. “Moreover, we feel that the overall trend in both consumer and producer inflation remains downwards, and any small blips of inflation numbers coming in 10-20 bps higher than expected will be natural as we potentially enter a disinflationary cycle for consumer prices.”
“One key issue that continues to weigh on inflation is the cost of shelter, which remains a significant factor in consumer inflation data too,” they added. “However, when shelter costs are excluded, producer price inflation has consistently remained below the Federal Reserve's 2-percent target.”
“While consumer inflation is admittedly up, the steadiness in producer prices offers a silver lining,” the analysts said. “If these trends continue, they could signal that inflation is coming under control at the production level, which might provide some relief for policymakers and consumers alike in the coming months. Moreover, a downward trajectory for inflation allows the Fed to be less considerate of these moderations during the current cutting cycle.” Read More
Gold price pullback healthy, will serve as springboard for rally to $3,000 – Florian Grummes
The gold rally that has pushed the yellow metal to consecutive record highs in recent months is currently on pause as market conditions suggest overly optimistic expectations from traders, but according to one analyst, the current pullback is a welcome sight, and soon, it will serve as a springboard for the next upward movement.
“With the breakout above the resistance zone between USD 2,520 and 2,535, the gold price was able to ignite the next stage of its two-year rally on September 12th,” noted Florian Grummes, managing director of Midas Touch Consulting. “Prices quickly shot up to a new all-time high of USD 2,685 by September 26th. Since the end of June alone, the gold price has thus gained around USD 400.”
“However, over the past three weeks, the gold market initially entered a volatile consolidation phase at a high level,” he said. “With the pullback to a low of USD 2,605 on Tuesday of [last] week, the bears were temporarily able to make an appearance again. However, the psychological mark of USD 2,600 was easily defended, resulting in a significant recovery to USD 2,661 by Friday.”
Grummes pointed to the combination of the first U.S. interest rate cut, a weaker U.S. dollar, and increasing geopolitical escalations in the Middle East as the source of the strong rally in the gold market. Read More
LBMA 2024: Three central banks say they see global official gold holdings going higher
While central bank demand has slowed in recent months compared to the record purchases reported in the first half of the year, this sector will continue to have an appetite for the precious metal, according to a panel discussion at the London Bullion Market Association (LBMA).
In a panel discussion at the 2024 LBMA Precious Metals Conference, Enkhjin Atarbaatar, Director General of the Financial Markets Department at the Central Bank of Mongolia; Marek Sestak, Deputy Executive Director of the Risk Management Department at the Czech National Bank; and Joaquín Tapia, Director of International Reserves at Banco de México, agreed that gold’s role as a reserve asset in global foreign reserves will continue to grow, even though each central bank views the precious metal differently within its portfolio. Read More
Live From The Vault - Episode: 194
Individual Property is Under Attack! Feat Marc Faber
In this week’s Live from the Vault, Andrew Maguire sits down with Marc Faber, publisher of the Gloom, Boom & Doom Report, to discuss the state of the U.S. economy, the outlook for interest rates, and why gold remains an essential hedge.
The two precious metals experts discuss the impact of rising interest rates on the future of small businesses in a centralised financial system, and warn about the risks posed by the U.S. fiscal deficits and uncontrolled government spending.
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.
Featured Image - Source: Unsplash
