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Gold price remains down as annual U.S. CPI rises 7.5% in January; another 40-year high
The gold market continues to see some technical selling pressure and is finding little bullish traction following hotter than expected inflation data.
Thursday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.6% in January, after a 0.5 rise in December. The data beat consensus forecasts as economists were forecasting a 0.4% rise.
For the year, the report said that headline inflation rose 7.5%.
Annual inflation was also much hotter than expected hitting a new 40-year high expectations. Some economists were bracing for inflation to rise to 7.3%.
The report noted that rising food prices, energy costs, and shelter costs all rose last month. Food prices rose 0.9% last month. At the same time, the energy index rose 0.9% as electricity prices offset a drop in fuel prices.
Meanwhile, core CPI, which strips out food and energy costs, increased 0.6% last month, up from a 0.6% increase in December.
"This was the seventh time in the last 10 months it has increased at least 0.5 percent," the report said. Read More
Silver to see record physical demand of 1.112 billion ounces in 2022 - Silver Institute
Record physical demand for silver in 2022 might not be enough to drive prices materially higher this year as the precious metal sector continues to suffer from rising expectations that central banks will aggressively tighten their monetary policies to fight the rising inflation threat.
Wednesday, the Silver Institute published a report saying that it expects physical silver demand to reach a record high of 1.112 billion ounces this year, an increase of 8% from solid 2021 levels.
The report said that silver demand is expected to be broad-based. However, many analysts continue to watch silver's industrial component as the world develops green energy.
"Ongoing improvements in the global economy will give silver industrial applications an additional boost, mitigating near-term headwinds from supply chain bottlenecks and the challenges in certain regions from the ongoing COVID pandemic," the silver institute said. "The outlook for silver's use in the photovoltaic (PV) industry remains bright. Government commitments to carbon neutrality have resulted in a rapid expansion of green energy projects. As a result, even with ongoing efforts to reduce silver loadings, record PV installations are expected to lift silver demand in this segment to an all-time high in 2022." Read More
Gold, silver catching bids on inflation worries
Gold and silver futures prices are firmer in midday U.S. trading Thursday, in the aftermath of key U.S. inflation data that ran hot and at a 40-year high. The key outside markets are also in bullish daily postures for the precious metals markets at midday—a lower U.S. dollar index and higher crude oil prices. April gold futures were last up $3.50 at $1,840.10 and March Comex silver was last up $0.32 at $23.66 an ounce.
The key outside markets today see crude oil prices solidly higher and trading around $91.50 a barrel. The U.S. dollar index is lower at midday today. The U.S. Treasury 10-year note yield is presently fetching 1.994%--the highest in over two years.
Image Source: Kitco News
Technically, the April gold futures bulls have the overall near-term technical advantage and are having a good week. Bulls' next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,780.60. First resistance is seen at the overnight high of $1,837.30 and then at $1,850.00. First support is seen at Tuesday's low of $1,816.00 and then at this week's low of $1,807.50. Wyckoff's Market Rating: 6.5. Read More
Hold something real like gold and silver as risks, volatility rise - abrdn
The era of free money is coming to an end as the Federal Reserve looks to tighten its monetary policy and reduce its balance sheet this year. According to one market strategist, investors want to hold something tangible in this environment.
In a recent telephone interview with Kitco News, Robert Minter, Director of ETF Investment Strategy at abrdn, previously known as Aberdeen Standard Investments, said with the Federal Reserve looking to tighten its monetary policy and reduce liquidity, risk, and volatility have once again become fixtures in the marketplace.
He added that the tech sector and cryptocurrencies could struggle to attract investors' capital in the current environment as these are seen as high risk. Investors should look at commodities that will protect against market risk and rising price pressures.
"It is time for investors to get rid of their 'protons' and buy something real that you wouldn't want to drop on your foot," he said. Read More
Inflation spikes higher with the CPI index soaring to 7.5%
The cost of goods and services in the United States climbed 0.6% taking inflationary levels to the highest level seen since February 1982. The forecast by economists polled by Bloomberg News was looking for an increase in inflationary data they underestimated the spiraling costs of goods and services in America. Economists were expecting to see a rise of 0.4%, which would have taken the CPI index from 7% to 7.3%.
Today the Bureau of Labor Statistics (BLS) released the Consumer Price Index for January 2022 confirming what working Americans already knew, that there have been major price increases in the cost of food, electricity, and shelter. the CPI index came in at 40 year high of 7.5% year-over-year.
Gold investors and traders witnessed a roller coaster ride with extreme volatility as the CPI data was released this morning. Gold futures basis most active April 2022 contract opened in trading today at $1834. However, before today’s New York open gold reaction to the inflation report within the first half-hour immediately following trading to a high of $1838 and a low of $1821 (today’s low) and settled at $1831 within a 30-minute time frame. A knee-jerk reaction to the report led to gold trading to its highest value of the day which was $1843 and then staged a moderate selloff taking gold to its current pricing.
Image Source: Kitco News
As of 5:15 PM, EST April gold futures are currently down $9.30 and fixed at $1827.30. This reflects the effect of higher inflation on gold pricing. Bullish market sentiment prevails during times of high inflationary levels, but the fear of higher interest rates has the opposite effect which will take gold lower. A reflection of both bullish and bearish market sentiment based on the high-level inflation and the potential for the Federal Reserve to respond by raising rates quicker than anticipated. Read More
China keeps burning through its mine gold reserves fastest in the world - report
According to the preliminary data released by the U.S. Geological Survey (USGS), global recoverable mine gold reserves amounted to about 54,000 metric tonnes in 2021, which is 2% more than 53,000 tonnes reported in 2020.
USGS defines recoverable mine reserves (not to be confused with resources) as the part of the reserve base that could be economically extracted or produced at the time of determination.
Australia boasts the world's largest endowment of mine gold reserves (11,000 tonnes), followed by Russia (6,800 tonnes), South Africa (5,000 tonnes), and the United States (3,000 tonnes). Read More
Inflation fears have Wall Street eyeing Fed rate hike shocker in March, but gold price is not buying in
The news of U.S. inflation soaring to new four-decade highs is sending shock waves through Wall Street as markets price in a half-point rate hike by the Federal Reserve in March. But the gold market is not buying into the narrative, with prices climbing to test critical trading levels.
With the January inflation data coming in higher-than-expected, there is a growing fear that price pressures might get worse and last even longer than the Federal Reserve anticipates.
Annual inflation pace of 7.5% and core inflation at 6.0% are the fastest rates seen since 1982, with broad-based price increases reflecting strong demand. This could put the U.S. central bank in a corner, forcing it to tighten aggressively.
"This confirms that the Fed needs to act swiftly to contain inflation, as wage pressures have only strengthened in recent months," said CIBC Economics senior economist Katherine Judge. "Inflation will likely accelerate further above the 7% mark next month, while core inflation is also set to accelerate, as higher energy prices combine with base effects and strong demand in core categories." Read More
Turkey wants billions worth of 'under the mattress' gold back in the financial system as it fights inflation, currency devaluation
As Turkey battles inflation at nearly 50% and a very weak lira, the government wants to encourage citizens to convert their "under the mattress" gold worth billions of dollars into lira-denominated bank accounts.
This plan aims to strengthen the lira by depositing 5,000 tons of "under the mattress" gold into the banking system.
Treasury and Finance Minister Nureddin Nebati explained: "With this package, we will put under-the-mattress gold, which is estimated at around 5,000 tons, into the [banking] system. It is equivalent to about $250-$350 billion. A certain part of that amount will support the Central Bank's foreign currency needs," Nebati said at a press conference in London on February 8.
"Under the mattress" gold is a term used to describe the yellow metal stored by citizens at their homes as an insurance policy against rising prices and currency devaluation.
Nebati added that 30,000 gold shops and five gold refineries would potentially help with the logistics. More details of the government's plan to covert private gold holdings into lira bank accounts are expected to be announced within days.
"The most important point is that another instrument to encourage Turkish lira savings has been prepared as an essential aspect of our model," Nebati stated. Read More
Gold and silver move lower ahead of the European open
Following comments from U.S. central bankers, gold (-0.14%) and silver (-1.06%) dropped overnight. The rest of the commodities complex struggled too as copper (-1.15%) and spot WTI (-0.57%) both struggled.
Overnight Japanese markets were closed but the ASX (-0.98%) and Shanghai Composite (-0.66%) both moved lower. Futures in Europe are pointing towards a negative open.
In FX markets, the USD performed well. The biggest mover overnight was AUD/USD which fell 0.54%. In the crypto space, BTC/USD fell 0.50% to trade at $43,284. Read More
Markets Prepare for Hawkish Forecast while Bullion Shows Feat of Resilience
As of today, the US inflation rate is not yet curbing its rally. After the 7.0% increase posted in December, analysts forecasted an increase to 7.3% in January. The data published by the Labor Department showed a new record, with a spike to 7.5%, the highest levels seen since 1982. At the same time, the yield of the 10-year Treasury bond reached - and surpassed - the 2% threshold, for the first time in 3 years.
Kinesis Gold Analysis: Despite rising inflation and US 10-year treasuries yields spiking above 2%, the gold price is continuing to show resilience. Indeed, bullion has managed to strongly remain above the $1,800 per ounce threshold.
After the announcement of US inflation data, gold jumped to $1,840, before slowing down in the evening, once the US dollar had recovered a few pips against the Euro and a large majority of currencies.
Image Source: Kinesis - Gold ($/g) Price Chart - 4 hours - Gold is trading at 58.7 dollars per gram.
From a technical point of view, bullion is still trying to surpass the $1,835 threshold, while the first major support zone is represented by the $1,800 mark. Analyzing the price in $/g, we are still in the 58.5 - 59 range.
We should note that rising inflation and the return of positive yields could present a challenge for precious metals. But so far investors are still trusting gold, which could be an interesting hedge in the case of market disruption. Gold also represents a hedge against the possibility that central banks will not be able to contain the current state of inflation.
Kinesis Silver Analysis: 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.
