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Silver Surfs the Reflation Wave
Silver ended the week on bullish form, with the metal closing above $31/toz for the first time since 16 July, propelled by the same combination of lower US rates and weaker US dollar that has helped gold to fresh all-time highs.
The global reflation theme – to which silver is more directly exposed – also received a further boost on Friday when the South African Reserve Bank chose to exploit the room created by lower US rates, to also cut rates.
Meanwhile, the Bank of Japan struck a less hawkish note in the face of the stronger Yen/weaker dollar. The global rate cycle is clearly accelerating and upcoming announcements and guidance from global central banks will remain a key focus for silver investors going forward. Silver starts the week trading at $30.9/toz
In the meantime, the demand picture for silver appears somewhat mixed. While the most recent CFTC Commitments of Traders Report suggests that investor demand for silver via net speculative long futures positions has returned to elevated levels, ETF/ETC funds have recently seen outflows with clear price sensitivity above $29/toz. Incoming data suggests that industrial growth is soft, although the downside is limited as the silver market is still expected to remain in structural deficit in 2024 on lower supply. Read More
Gold Boosted by Low Rates and High Uncertainty
Gold managed to recoup Wednesday’s post-Fed wobble to end the week near another all-time high above $2625/toz. Despite renewed guidance, markets remain convinced that the Fed will need to do more to underpin the US economy.
CME FedWatch suggests that they will cut by a further 0.75% (vs. 0.5% Fed) and 2.0% (vs 1.5% Fed), by the end of 2024 and 2025 respectively. Unsurprisingly, this has seen both the 2-Year US Treasury yield, and the Dollar Index (DXY) fall to 2-year lows, all of which have boosted gold prices. Ongoing geopolitical tensions and economic uncertainty also remain supportive. Gold starts the week trading at $2625/toz.
Despite elevated prices, gold investment demand has remained robust. The most recent CFTC Commitments of Traders (CoT) report suggests that speculative gold net long futures have returned to the ‘Covid Shock’ levels of March 2020. Meanwhile, physical gold ETF/ETC data suggests that continued net inflows over September. Even gold jewellery demand – previously an area of relative weakness – is showing signs of recovery in the key market of India. Read More
Gold prices trading at session highs as flash PMI showed mixed economic activity
The gold market is holding gains near session highs as U.S. economic activity remains mixed with the manufacturing sector contracting and service sector holding relatively steady.
S&P Global said its flash Purchasing Managers Index for the service sector fell slightly roughly in line with expectations, dropping to 55.4 in September; the data was relatively unchanged from August’s reading at 55.7.
The report said that activity in the service sector dropped to a two-month low.
However, the S&P’s manufacturing PMI dropped to 47, down from August’s reading of 47.9. The data came in weaker than expected; according to consensus estimates, economists were expecting to see a reading of 48.6.
The report said that activity in the manufacturing sector dropped to a 15-month low.
Gold prices are trading near session highs following the mixed economic data. December gold futures last traded at $2,658.70 an ounce, up 048% on the day. Read More
Gold pokes to another record high on safe-haven bids, bullish charts
Gold prices are firmer in midday U.S. trading Monday and hit another record high of $2,659.80, basis December Comex futures. Silver prices are weaker on profit taking after recent good gains. Safe-haven demand and bullish technical charts are fueling the gold market’s ascent. The same goes for silver but to a lesser degree. December gold was last up $8.80 at $2,655.30 and December silver was down $0.35 at $31.15.
In overnight/weekend news, Israel continued its stepped-up military action in Lebanon, while Hezbollah ramped up its missile attacks on Israel. This situation is bound to intensify before it ever de-escalates. The keen uncertainty of this matter has helped push gold prices to record highs recently.
Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,500.00. First resistance is seen at today’s contract high of $2,659.80 and then at $2,675.00. First support is seen at today’s low of $2,638.60 and then at $2,625.00. Wyckoff's Market Rating: 9.5.
Image Source: Kitco News
December silver futures bulls have the overall near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $32.46. The next downside price objective for the bears is closing prices below solid support at $29.00. First resistance is seen at last week’s high of $31.755 and then at $32.00. Next support is seen at the overnight low of $30.67 and then at $30.00. Wyckoff's Market Rating: 6.5. Read More
Image Source: Kitco News
Hedge funds place bullish bets on gold and silver, prepping for Fed’s easing cycle
Gold and silver are experiencing a surge in momentum as hedge funds pile into new bullish bets on the precious metals, with the Federal Reserve preparing to embark on a new easing cycle, according to the latest trade data from the Commodity Futures Trading Commission.
Speculative positioning in gold was already trading at a four-year high and surged further last week. The CFTC's disaggregated Commitments of Traders report for the week ending Sept. 17 showed that money managers increased their speculative gross long positions in Comex gold futures by 28,199 contracts to 241,844. At the same time, short positions rose by 2,299 contracts to 25,489.
The bullish momentum helped gold prices maintain solid support above $2,600 an ounce. Gold’s net length now stands at 216,355, marking a fresh four-year high.
While some analysts have noted that bullish positioning in gold appears somewhat overextended, it remains well-supported after the Federal Reserve met market expectations by cutting rates by 50 basis points. The committee also signaled that it expects long-term rates to fall to 3% by 2026. Read More
Gold trades to another record closing price based on continued cuts by the Fed
Gold futures reached another record high, closing just $0.20 below $2,660, as investors continue to react to the Federal Reserve's recent decision to begin interest rate normalization. The December contract settled at $2,653.40, marking a $6.30 (0.24%) gain despite moderate dollar strength.
Image Source: Kitco News
The Fed's unexpected 50-basis point rate cut has sparked expectations of further reductions in the coming months. Market participants are closely watching the central bank's moves, with the CME's FedWatch tool indicating a near-even split between predictions of another 50-basis point cut or a more modest 25 basis point reduction at the November FOMC meeting.
Anticipation for additional rate cuts has grown significantly, with the probability of a 50-basis point cut in November rising from 13.1% a month ago to 54.8% currently. Federal Reserve officials have hinted at potential cuts totaling between 1% and 1.25% by year-end, signaling a shift in monetary policy focus.
Traders are pricing in various scenarios for the Fed funds rate by December, with the highest probability (50.2%) suggesting a range between 4% and 4.25%. This marks a substantial change from the aggressive rate hikes implemented since March 2022 to combat inflation. Read More
HSBC unveils quantum leap in gold token security
Gold has often been characterized as a ‘barbarous relic’ amid the rise of Bitcoin (BTC) and blockchain technology. For many, the yellow metal has struggled to transition to the digital world, but one bank is set to flip that script on its head thanks to the integration of quantum computing and tokenization.
Last week, HSBC announced that it has successfully trialed the first application of quantum-secure technology for buying and selling tokenized physical gold, a significant step toward protecting critical applications from potential future quantum computing attacks.
In 2023, HSBC became the first global bank to offer tokenized physical gold to institutional investors using distributed ledger technology (DLT). Earlier in 2024, they announced the launch of HSBC Gold Token for retail investors in Hong Kong, allowing them to acquire fractional ownership of physical gold denominated in .001 troy ounce fractions.
This latest advancement shows that HSBC is dedicated to expanding the use of its HSBC Orion digital assets platform and is already thinking about the future threat that quantum computing may pose while simultaneously working to get its blockchain-based offerings up to date. Read More
All roads lead to gold and prices above $3,000 - Sprott Inc’s Ryan McIntyre
While markets were pricing in the Federal Reserve’s 50-basis-point rate cut last week, many economists expected a less aggressive approach. However, according to one fund manager, the U.S. central bank, with its new easing cycle, has sent a strong message to investors.
In an interview with Kitco News last week, Ryan McIntyre, Managing Partner at Sprott Inc., said that Powell is walking a very narrow tightrope between supporting U.S. economic activity and managing elevated asset prices.
Although Federal Reserve Chair Jerome Powell has signaled that the central bank is in no major hurry to lower interest rates, McIntyre said investors should pay more attention to the Fed's actions than Powell's words.
“Clearly, with its 50-basis-point cut, the Fed doesn’t want to be seen as being behind the curve,” he said.
McIntyre added that bigger issues are at play than just the Federal Reserve’s monetary policy. He expects the central bank to continue focusing on supporting the economy, even if inflation remains stubbornly elevated. Read More
Live From The Vault - Episode 191. Russian Buyers Target $3500 Gold
In this week’s episode of Live from the Vault, Andrew Maguire uncovers the behind-the-scenes forces driving gold prices to record highs, with even higher price predictions for the final quarter of the year.
The precious metals expert delivers chart-driven analysis, then delves into the history of central bank gold buying before wrapping up with a short-term silver market outlook.
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.
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