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Gold's tedious coiling action tightens as inflation surges
The key $1,800 area continues to be a magnet for gold. Rallies have been sold, and sell-offs have been bought with traders on both sides continuing to be whipsawed out of position. Since mid-2021, any advance, or decline, that bullion has made quickly ran out of steam and has returned to the $1,800 zone.
This frustrating sideways movement inside of a tight $100 range has resulted in what technicians call "coiling action", which will likely end in a sharp move in either direction. The tighter and lengthier the trading action becomes around $1,800, the more pronounced the eventual move will be, whether up or down.
Gold Futures closed the month of January just below $1800 per ounce, remaining inside an 18-month bullish symmetrical triangle that is awaiting a strong catalyst to break in either direction soon. On the upside, a monthly close above $1900 would support the next leg higher in gold. On the downside, a monthly close below $1750 would set up a possible move towards strong support being tested at $1675.
The longer the consolidation, the bigger the move will be once the breakout occurs. Read More
Sentiment in gold market caught between rising market volatility and Fed rate hikes
Wall Street analysts are hesitant about gold in the near term. Still, retail investors remain bullish as the precious metal appears to be on the precipice of another breakout, with prices holding near a two-week high.
The results from the latest Kitco News Weekly Gold Survey show sentiment is extremely mixed on Wall Street, but the bullish sentiment is clear on Main Street as consumers continue to fear the rising threat of inflation and the loss of their purchasing power. Read More
Spiraling inflation and geopolitical concerns result in a strong breakout in gold
Once again there are dual components that have created the perfect conditions for gold to run dramatically higher. First was yesterday’s inflationary data indicating that the CPI index has increased to 7.5% in January. Secondly, the geopolitical tensions in Ukraine and Russia have continued to strengthen.
As of 3:02 PM, EST April gold futures have staged a strong and dynamic rally taking the most active contract to $1864 which is a net increase of $26.60 or 1.47%. Gold has traded to a high today of $1865.20 and that high occurred within the last 10 minutes of trading. Gold futures opened today at $1827 and traded to a low of $1821.10. This rally is absolutely a haven play as we have concurrent strength in the U.S. dollar and a defined selloff in U.S. equities.
Image Source: Kitco News
Currently, the dollar index is fixed at 96.105 which is a net gain of 0.58% or approximately 55 points. Dollar strength can be seen when we look at spot gold pricing through the eyes of the KGX (Kitco Gold Index). Currently, the KGX is fixing spot gold pricing at $1860.50 which is a net gain of $33.90. On closer inspection gains due to normal trading our $40.65 a strong gain of 2.23%. However, when we factor in dollar strength we must subtract $6.75 or 0.37%. Read More
The Metals, Money, and Markets Weekly by Mickey Fulp - February 11, 2022
Fear and volatility pushing gold price above $1,850
Gold prices have broken above critical resistance at $1,850, ending the week at its highest level in three months.
Gold caught a bid late Friday as tensions between the U.S. and Russia heightened. The precious metal started to rally after the White House recommended that all U.S. citizens leave Ukraine in the next 48 hours.
The news also created some significant selling pressure in equity markets, with the Dow Jones Industrial Average looking to end the session down more than 500 points or 1% on the day. Meanwhile, gold prices are up more than 1% on the day, last trading at $1,863.80 an ounce.
I’m not a big proponent of buying gold as a geopolitical safe haven only because of the track record. When tensions start to ease, gold is the first thing that gets sold. But the reason why I am paying a little more attention to this breakout is because of the market volatility that is being created. Geopolitical tensions have added fuel to the fire, but the reality is that market volatility is not going away anytime soon. Read More
Gold price looks to take $1,850 as markets fear emergency Fed move
Gold is catching a bid as markets worry the Federal Reserve could opt for an emergency rate hike before the March meeting to try and tame inflation.
Gold is up nearly 2% on the week as more investors turn to the precious metal amid a widespread risk-off sentiment in the marketplace. At the time of writing, April Comex gold futures were trading at $1,841.30, up 0.21% on the day.
This week's shockingly high U.S. inflation report has added more uncertainty regarding the Fed's tightening plan.
With consumer prices rising 7.5% in January, the highest in 40 years, Goldman Sachs is now projecting seven 25 basis points hikes this year. There is also growing consensus for a 50 basis point hike in March. And some are even not ruling out an emergency move by the Federal Reserve prior to the March meeting.
Federal Reserve Bank of St. Louis President James Bullard further encouraged these hawkish views, stating he supports the fed funds rate hitting 1% after just three meetings. Read More
Inflation is at a four-decade high, could a recession be next?
Inflation is now at yet another four-decade high, with the headline consumer price index surpassing (CPI) December’s reading of 7% to reach 7.5% in January, according to the latest data release from the Bureau of Labor Statistics.
All eyes are now on the reaction of the Federal Reserve. Michelle Makori, editor-in-chief of Kitco News, discussed likely responses from the U.S. central bank, as well as the assets that will benefit most from a high inflationary environment, with Mike Lee, founder of Mike Lee Strategy, and David Nelson, chief strategist of Belpointe Asset Management LLC. Read More
Gold, silver sales are still being taxed, is that about to change soon? Jp Cortez
Unlike traditional investments like stocks and bonds, retail investors who buy and sell precious metals must pay sales taxes, but that could soon change. So far, 42 states have removed some or all of the taxes from gold and silver transactions. “The last several years have been really promising in eliminating sales taxes in many states,” Jp Cortez, Policy Director, Sound Money Defense League explained. “Last year Arkansas and Ohio both decided to move forward with removing sales tax on precious metal transactions.”
Cortez continued, “This year Kentucky, Mississippi, Hawaii, New Jersey, and Tennessee are all considering removing sales taxes on gold and silver purchases as well.”
The Sound Money Defense League is a public policy project in collaboration with money metals exchange to remonetize gold and silver.
Cortez spoke to David Lin, anchor at Kitco News on eliminating taxes on gold and silver transactions. Read More
Is gold price about to sprint?
Inflation in the U.S. is now at 7.5% — the highest level in forty years. For the U.S. stocks, this means more losses as markets price in a more aggressive Federal Reserve. But for gold, this means more demand as investors turn to the precious metal for protection.
Also, a warning from the U.S. that Russia could launch military action in Ukraine "any day" is pushing gold prices well above the $1,850 an ounce level. Here's a look at Kitco's top three stories of the week: Read More
Gold continues to hold at higher levels ahead of the European open
After a strong move on Friday gold has mildly retraced overnight and trades at $1855/oz. Silver is half a percent higher and trades at $23.67/oz. In the rest of the commodities complex, copper is 1% higher and spot WTI is just shy of trading half a percent in the black.
Stocks struggled overnight as concerns over the Russia/Ukraine conflict built. The Nikkei 225 (-2.23%) and Shanghai Composite (-0.98%) both fell but the ASX (0.37%) bucked the trend due to the strong performance of the commodities market.
In FX markets, the biggest mover was NZD/USD (-0.24%) but the rest of the majors traded within ranges. In the crypto space, BTC/USD traded 0.30% higher at $42,189. Read More
Kinesis Macroeconomic Analysis
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.
In the wake of the price rally seen in the last few months around the world, it seems that this has been a deciding factor in sharply changing policy makers' plans. Indeed, the pace of inflation has become the most important topic on the financial markets worldwide - a scenario that has already forced the Bank of England to increase rates twice.
Looking at the European Central Bank, Ms Lagarde was finally less dovish in her last meeting, generating a solid rebound of the Euro. In light of this, many other second and third-tier central banks have also started to hike rates, or at least to prepare markets for a switch to hawkish policies.
Regarding the Federal Reserve, after the accelerating pace of the tapering process at the end of 2021, there are now no more doubts that the Fed will hike rates in March. The “at least” 3 rate hikes forecasted for 2022, has shifted to a much more aggressive target, with interest rates widely predicted to be above 1.50% by the end of the year - most likely to be in the 1.50-2 range, according to the CME Fedwatch tool.
It is clear that this scenario could be challenging also for the stock markets, while bond yields are now breathing, after having struggled for a prolonged period of a zero-interest environment. 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.
