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Gold bulls on the defensive after sharp drop following recent Federal Reserve meeting
Gold bulls were put on the defensive after hedge funds increased their speculative long positions ahead of the Federal Reserve, according to the latest data from the Commodity Futures Trading Commission (CFTC).
The latest CFTC disaggregated Commitments of Traders report for the week ending Jan. 25 showed money managers increased their speculative gross long positions in Comex gold futures by 20,833 contracts to 140,640. At the same time, short positions fell by 8,749 contracts to 39,265.
Gold's net length now stands at 101,375 contracts, up more than 41% compared to the previous week. The prior week, gold bears were caught on the wrong side as market volatility and geopolitical uncertainty pushed prices to a two-month high above $1,850 an ounce.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold's selloff, with prices dropping 3% by Friday after the Federal Reserve monetary policy decision was partly due to the significant long positions. Read More
Gold prices holding $1,800 an ounce following in-line ISM manufacturing data
Gold prices are struggling to hold on to the critical psychological level of $1,800 an ounce as U.S. manufacturing sees solid momentum in January, according to the latest report from the Institute of Supply Management (ISM).
Tuesday, the ISM said its manufacturing index fell to 57.6, last month down from December’s reading of 58.7%. The data was relatively in line with expectations.
The gold market is holding on to modest gains even as prices briefly drop below $1,800 an ounce In an initial reaction to the latest economic numbers. February gold futures last traded at $1,798.40 an ounce, up 0.19% on the day.
Although activity in the manufacturing sector remained steady last month, the report noted a sharp rise in inflation pressures. The report’s Price Index rose to 76.1%, up from December’s reading of 68.2%.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, but January was the third straight month with indications of improvements in labor resources and supplier delivery performance. Still, there were shortages of critical intermediate materials, difficulties in transporting products and lack of direct labor on factory floors due to the COVID-19 omicron variant,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. Read More
Gold price to remain in neutral in 2022 - LBMA survey
After gold's disappointing performance in 2021, analysts are tempering their enthusiasm, according to the London Bullion Market Association's 2022 forecasts.
Tuesday, the LBMA released the results of its annual forecast survey. Among the 34 analysts who participated in this year's survey, expectations are for gold prices to remain relatively stable, averaging 2022 around $1,801.90 an ounce, relatively unchanged from last year's average price of $1,798.60 an ounce.
While the average price is expected to be relatively flat, analysts see the potential for the market to swing within a $780 range. According to the report, analysts are watching three factors to impact gold this year, rising interest rates, the growing inflation threat, and higher market volatility.
"Surprisingly, COVID-19 and geopolitical tensions were not particularly regarded as key influences for the gold price in 2022," the LBMA said. Read More
Gold, silver see modest gains as bulls regain momentum
Gold and silver futures prices are firmer in midday U.S. trading Tuesday. There is some safe-haven demand coming into the gold and silver markets, amid geopolitical and Federal Reserve uncertainty. Short covering from the futures traders is also featured this week. The bulls have put together a two-day winning streak, following last week’s big losses. April gold futures were last up $5.70 at $1,802.00 and March Comex silver was last up $0.227 at $22.62 an ounce.
Image Source: Kitco News
Technically, April gold futures bulls have a slight overall near-term technical advantage. Bulls' next upside price objective is to produce a close 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 December low of $1,755.40. First resistance is seen at today’s high of $1,809.70 and then at $1,820.00. First support is seen at today’s low of $1,796.20 and then at this week’s low of $1,785.80. Wyckoff's Market Rating: 5.5. Read More
Gold was outperformed by these metals this year, what will the rest of 2022 hold? Will Rhind
Palladium and platinum have had a tremendous run-up while gold prices have stayed relatively flat so far this year. Gold prices fell last week after digesting the Federal Reserve’s hawkish signals that it plans to start raising interest rates in March.
"The main reason palladium and platinum rallied was on expectations that supply chain shortages would start to ease up and increase demand, but that has not happened," explained Will Rhind, CEO of GraniteShares ETFs.
The year-to-date performance for palladium is 28%, platinum 6%while gold is at 0%. January was palladium’s best month in 14 years, and it was platinum’s best month since October.
Rhind discussed his outlook on the metals market with David Lin, Anchor at Kitco News. Read More
Dollar weakness, dovish Fed speak, and Russian – Ukraine tensions support gold
Gold futures basis the most active April 2022 Comex contract had modest gains today. After factoring in a net gain of $4.80 (+ 0.27%) April gold is currently fixed at $1801.20. Multiple factors were responsible for today’s reasonable gains. The dollar continued to drop from recent highs and is currently fixed at 96.26.
Image Source: Kitco News
Fed members lack clarity as to rate hikes following liftoff in March
Since last week’s FOMC meeting the Federal Reserve has softened its tone in regards to rate hikes following anticipated lift-off, or interest rate normalization in March. Simply put, the Federal Reserve is lacking clarity in regards to their updated monetary policy which they announced last week.
Yesterday we detailed the identification of a compression triangle which is the result of continued lower highs from June 2021 as well as higher lows that began in August. Gold continues to trade with consecutive higher lows and consecutive lower highs. Based on the work of R.N Elliot we can label recent price action as a contracting or symmetrical (top declining, bottom rising) compression triangle.
Based upon this model which is typically composed of five waves with the concluding fifth wave breaking above the upper resistance trendline, which he has labeled “thrust” once the price breaks and closes above resistance. Currently, our studies indicate that that would occur if gold breaks above $1838, with the first level of strong resistance occurring at $1851. Read More
Biggest gold price losses to hit the market in mid-2022, here's why
Gold prices could be looking at sideways price action for the rest of the year. The biggest test comes in mid-2022 when inflation begins to stabilize and markets absorb higher interest rates, according to DailyFX.com senior strategist Christopher Vecchio.
After a quick rally above $1,850 an ounce, gold could already be running out of steam, Vecchio told Kitco News, pointing to a move in the U.S. Treasury yields.
"I don't necessarily have a lot of faith in gold's move higher," he said. "Underlying fundamentals remain a significant concern. We've seen the U.S. Treasury yields, both nominally and in real terms, move significantly higher at the start of 2022. Historically speaking, gold prices tend to go down when real yields go up. And in an environment defined by tighter monetary policy over the course of this year, real yields will continue to move higher."
Vecchio sees gold ending the year at $1,800 an ounce, which is about where it is trading now. At the time of writing, April Comex gold futures were last at $1,801.40, up 0.28% on the day. Read More
Inflation is really 15%, highest since 1947; Why is the government 'suppressing' data? John Williams
Inflation really should be much higher than what the government is reporting, said John Williams, founder of ShadowStats.
The latest headline consumer price index (CPI), as reported by the Bureau of Labor Statistics, was 7%.
Williams calculates his own version of the CPI using the same way the government used to before 1980.
“After 1980, the biggest change was they looked at housing and where there had been a component in the housing cost, reflecting the cost of owning your own home, they changed that to the new concept of homeowners’ equivalent rent, where the government would estimate how much it would cost to own your own house,” he said.
Speaking to David Lin, anchor for Kitco News, Williams said that inflation should be in the double digits, and in fact, is actually at the highest level since 1947. Read More
Gold and silver are mixed heading into the European open
Gold (-0.15%) and silver (0.14%) are trading mixed ahead of the Europen open this morning. The yellow metal is still hovering just below $1800/oz. Elsewhere in the commodities complex, copper and spot WTI are around 0.12% higher.
Risk sentiment has been helped by Fed members talking down the extent of any potential rate hike. The Nikkei 225 (1.68%) and ASX (1.17%) both followed the lead on Wall St. to close higher. Futures in Europe are pointing towards a positive open.
In FX markets, there was not too much movement overnight. The dollar index is 0.05% lower heading into the EU session. In the crypto space, BTC/USD fell 1% overnight to trade at $38,317. 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.
