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Gold shines as the US dollar is being treated like monopoly money - abrdn’s Robert Minter
The gold market continues to consolidate near its record above $2,750 an ounce. Despite the precious metal’s 33% rally so far this year, one analyst says this is still the calm before the storm, and now is the time for investors to be overweight in commodities, specifically gold.
In a recent interview with Kitco News, Robert Minter, Director of ETF Strategy at abrdn, advised that investors should ignore potential short-term market volatility and focus on the bigger picture: interest rates are heading lower.
At the same time, lower interest rates and stubborn inflation pressures mean that real interest rates could fall faster than some expect. Minter added that, in this environment, investors should be overweight in commodities, with a specific allocation to gold.
Minter noted that traditionally, this environment has been favorable for gold, yet many investors are still choosing to sit on the sidelines. He pointed out that underwhelming investor interest is one of the biggest bullish factors he sees supporting long-term gold prices.
Minter highlighted that through 2023 and most of this year, institutional and retail investors have been liquidity providers, as they have sold their gold-backed exchange-traded funds (ETFs). He explained that the market was able to absorb the excess liquidity because central banks have been on an unprecedented buying spree. Read More
Gold prices holding near session and record highs as US job openings drop to 7.44 million
The gold market is holding near its all-time highs above $2,775 an ounce as the U.S. labor market shows signs of cooling as the number of jobs available dropped in September.
The number of job openings last month, a measure of labor demand, dropped to 7.44 million, according to the Labor Department's monthly Job Openings and Labor Turnover Survey (JOLTS) report. The number of jobs dropped from August’s downwardly revised numbers of 7.86 million jobs.
According to consensus estimates, economists were looking for job openings to remain relatively unchanged at 7.98 million.
“Over the month, hires changed little at 5.6 million. The number of total separations was unchanged at 5.2 million. Within separations, quits (3.1 million) and layoffs and discharges (1.8 million) changed little,” the report said.
The report said that for the year, job openings have dropped by 1.9 million.
The gold market is just off of its session highs in initial reaction to the weak labor market data. December gold futures last traded at $2,778 an ounce, up 0.8% on the day. Read More
Gold at session highs as U.S. consumer confidence rises to 108.7 in October
Gold prices are setting fresh session highs after the latest data showed consumer sentiment in the United States improved beyond expectations.
The U.S. Conference Board announced on Tuesday that its Consumer Confidence Index rose to 108.7 in October, up from September’s revised reading of 99.2, which was originally reported at 98.7. The data was significantly better than expected, as economists forecasted a nearly unchanged reading of 98.8.
Gold prices are setting new session highs following the positive consumer sentiment data. Spot gold last traded at $2,764.86 per ounce, for a gain of 0.83% on the day.
The key components of the report all showed significant improvement. The Present Situation Index, representing consumers’ assessment of current business and labor market conditions, increased 14.2 points to 138.0, while the Expectations Index, which represents consumers’ short-term outlook for income, business, and labor market conditions, rose 6.3 points to 89.1, well above the threshold of 80 that usually signals an impending recession. Read More
The great currency war: Dollar vs. BRICS and the growing popularity of gold and Bitcoin
The decline of the U.S. dollar is a popular topic of conversation, especially in the wake of the BRICS summit in Kazan. But according to analysts at The Kobeissi Letter, the imminent death of the dollar has been overstated as it just hit its highest share of global payments in 12 years.
“There has been a ton of discussion about the US Dollar losing its dominance as a global currency,” The Kobeissi Letter wrote in a post on X. “However, the data so far continues to suggest otherwise.”
“The US Dollar's share of global payments hit 49%, the most in 12 years, according to SWIFT data,” they said in a follow-up post.
“Over the last two years, US Dollar usage in international payment transactions has jumped by 9 percentage points,” they added. “At the same time, the Euro's share plummeted from ~39% to ~21%, the lowest in a decade. Meanwhile, the Chinese Yuan usage increased from ~2% in 2023 to ~5% currently. What is happening to the Euro?”
“The US Dollar remains the most dominant global currency and it's not even close,” the analysts said. “Can BRICS really dethrone the US Dollar’s dominance?”
Many users were quick to point out that the data used is faulty in that it only tracks transactions on SWIFT, while Russia and its trading partners have been increasingly utilizing other avenues to conduct trade and money transfers. Read More
Gold’s record prices driven by US election uncertainty
In one week, Americans will officially head to the polls to elect a new Congress and President. With the polls too close to call in most battleground states, uncertainty continues to surge through financial markets, prompting investors to turn to gold as a reliable safe-haven asset.
Renewed safe-haven demand for gold has helped push prices within striking distance of recent highs.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said that U.S. political uncertainty is the driving force behind the new safe-haven demand across commodity markets.
“Given the lack of response to the Middle East de-escalation seen in crude oil prices—which slumped the most in two years on Monday—we conclude that the latest strength is increasingly being seen as a hedge against a potential 'Red Sweep' at the November 5 U.S. election, where one political party, in this case, the Republicans, controls both the White House and Congress,” Hansen said in a note. “This scenario raises concerns about excessive government spending, pushing the debt-to-GDP ratio higher while fueling inflation fears through tariffs on imports, as well as geopolitical risks. Investors are turning to precious metals as protection, even as expectations for lower rates and easier financial conditions fade, as the FOMC may end up being forced to pause the current rate-cutting phase.”
At the same time, some analysts have noted that a Democratic sweep next week could also increase government spending and push debt levels even higher. Read More
Gold price powers to new all-time highs ahead of major events
Gold and silver prices are solidly higher in early U.S. trading Tuesday, with gold scoring another record high of $2,784.00 an ounce, basis December Comex futures. Safe-haven demand is keeping a floor under the two precious metals ahead of key U.S. economic data later this week and the U.S. presidential election next week. Technical buying in both metals is also featured amid fully bullish charts. December gold was last up $24.90 at $2,780.60 and December silver was up $0.499 at $34.50.
The important U.S. jobs report on Friday and then next week’s U.S. elections have the marketplace pensive at present. That trepidation is supporting buying interest in the safe-haven gold and silver markets.
Technically, December gold bulls have the strong overall near-term technical advantage. Prices are in a four-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,700.00. First resistance is seen at the contract high of $2,784.00 and then at $2,800.00. First support is seen at the overnight low of $2,752.00 and then at this week’s low of $2,736.90. Wyckoff's Market Rating: 9.5.
Image Source: Kitco News
December silver futures bulls have the solid overall near-term technical advantage. Prices are in an accelerating 2.5-month-old uptrend on the daily bar chart. A bull flag pattern has also formed on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $37.50. The next downside price objective for the bears is closing prices below solid support at $32.00. First resistance is seen at today’s high of $34.725 and then at $35.07. Next support is seen at today’s low of $33.765 and then at $33.26. Wyckoff's Market Rating: 8.0. Read More
Image Source: Kitco News
Market surge: Bitcoin nears all-time high, Nasdaq and gold set new records
Financial markets surged higher on Tuesday, with bulls setting their sights on new all-time highs for Bitcoin (BTC), gold, and the Nasdaq while the DXY and Treasury yields declined.
The latest data from the Bureau of Labor Statistics showed there were 7.44 million jobs open at the end of September, a decrease from the 7.86 million seen in August, while the data from August was revised lower from the 8.04 million open jobs initially reported.
The interest rate path is also top of mind for investors as surging equities prices and a resilient economy have some questioning whether the Fed will have to reduce the number of planned cuts, especially if inflation starts to pick up again.
“Larry Fink, CEO of BlackRock, commented on the market's overly optimistic expectations for substantial Federal Reserve interest rate cuts this year,” noted analysts at Secure Digital Markets. “Although some rate reductions have occurred, Fink argued that the anticipated scale of cuts is not aligned with the broader economic landscape, highlighting ongoing inflation pressures exacerbated by current government policies.”
The CME FedWatch Tool puts the odds of a 25 basis point cut in November at almost 99%, while the odds of another 25bps cut in December stand at 74%. Read More
Gold Surges Near $2,800 as Multiple Factors Create Perfect Storm
Gold prices continued their historic ascent today, with December futures climbing $30.10 to reach $2,785, after touching an intraday high of $2,787.30. The precious metal has demonstrated remarkable strength this year, posting gains of approximately 35% amid a confluence of global factors driving investor demand.
Image Source: Kitco News
The surge comes as spot gold advanced more than $31 to $2,772.67, reflecting purely bullish market sentiment, as the dollar index remained essentially flat at 104.363, down just 0.02%.
Golds historic rise of approximately 35% this year is a result of a combination of factors creating a perfect storm scenario. Geopolitical political conflicts, Federal Reserve interest rate normalization, continued strong demand from global central banks, and uncertainties about the outcome of the upcoming presidential election and the possibility of more fiscal stimulus are the primary components driving gold higher. Read More
Gold’s new wave of record highs driven by investment demand - World Gold Council
In the first half of 2024, the gold market was driven by record central bank demand and unprecedented commercial demand in Asia, specifically China. So far, that initial momentum in the gold market has been maintained as Western investor demand picks up growing slack in other segments of the marketplace, according to the latest report from the World Gold Council (WGC).
The WGC’s Gold Demand Trends for the third quarter stated that total gold demand (including over-the-counter (OTC) investment) rose to 1,313 tonnes – a record for a third quarter and up 5% from the same quarter last year.
The report noted that investment demand was a critical component of the gold market, as the price hit consecutive record highs nearly every week during the three-month period.
Physical demand for small bars and coins and jewelry consumption struggled in the third quarter as prices saw an average increase of 28%; however, Western investment demand more than made up for this weakness.
The WGC reported that total investment demand increased by 364.1 tonnes in the third quarter, a massive 132% increase from the same quarter in 2023. 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.
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