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Gold & Silver Market Analysis for Monday 10th January
Kinesis Money Gold Analysis: Last Friday, the gold price experienced a moderate rebound after US labor data disappointed investors. On the Forex market, the greenback has lost ground, with the dollar index falling below 96 points.
To put this in context, bullion jumped from $1,786 to $1,796, confirming an inverse correlation with the dollar. The rebound was curbed by the resistance zone placed at $1,800, meaning that bullion has started this week with a slight decline. Overall, the gold price shows little volatility at present, with only marginal movements (by a few dollars).
Even if the main focus for the Federal Reserve is on curbing the growth of prices, a weaker US labour market could reduce pressure on the central bank to instigate further hawkish decisions.
From a technical point of view, a surpass of the $1,800 mark would denote strength for gold, even if a clear positive signal would only come about with a return of the price above the $1,830 resistance zone. Read More
Capital Economics is top LBMA gold forecaster for bearish 2021 prediction
Commodity analysts were a little too optimistic on precious metals last year, and the bears proved to be the most accurate, taking the London Bullion Metal's Association's top forecasting prize for 2021.
In a press release published Monday, the LBMA said that Caroline Bain, chief commodities economist at Capital Economics, had the top gold forecast for last year; she expected prices to average the year around $1,805. Her estimate last year was only $6 above the actual average price of $1,798.60 an ounce.
Bain's gold outlook was not the most bearish among gold analysts; however, she did see gold prices capped at $1,900 an ounce. Read More
Gold a bit weaker as traders fear rising bond yields
Gold prices are modestly down in midday U.S. action Monday. Rising government bond yields around the gold are working against the safe-haven metals bulls. February gold futures were last down $2.70 at $1,794.80 and March Comex silver was last up $0.01 at $22.405 an ounce.
Global stock markets were mixed overnight. U.S. stock indexes are solidly lower at midday. Trader and investor risk aversion is keener early this week. Rising bond yields amid tighter monetary policies from major central banks of the world are giving the marketplace pause. Last week the Federal Reserve suggested it will raise U.S. interest rates three times in 2022, in order to curb rising inflation that is becoming more problematic. Some analysts expect more than three rate hikes from the Fed this year. Read More
Gold is staring down the barrel of surging yields and Fed's QT, can it handle it?
It's just the second week of 2022, and gold is already looking at two major obstacles it needs to come to terms with — surging U.S. Treasury yields and Federal Reserve's quantitative tightening (QT). And now Goldman Sachs is warning of four rate hikes this year and balance sheet runoff as early as July.
Gold is already down 2% year-to-date as it trades below its key psychological $1,800 an ounce level. At the time of writing, February Comes gold futures were trading at $1,798.50, up 0.06% on the day.
After rising to around $1,830 an ounce during the first week of the year, things began to shift after the hawkish minutes from the December Federal Reserve meeting were released. According to the minutes, a "tight" U.S. labor market and problematic inflation could require quicker rate hikes and a balance sheet reduction. Read More
China's yuan firms, but upside limited as Fed in hawkish mode
China's yuan edged up against the dollar on Tuesday on robust corporate demand, but traders said opportunities for a break higher are limited as expectations that the U.S. Federal Reserve will move faster to hike interest rates underpin U.S. yields.
Traders will be closely watching Fed Chair Jerome Powell later in the day for more clues on the central bank's plans.
Following prepared remarks for his nomination hearing on Monday in which he will pledge to prevent high inflation from becoming "entrenched", Powell will face questions from senators in his bid for a second four-year term. "In the short term I really don't think the yuan is going to weaken much, as yuan longs will still find opportunities to enter," said a trader at a foreign bank. At the same time, "it's difficult for the market consensus to turn based solely on the effect of Fed hikes." Read More
More than six tonnes of gold liquidated from global ETF in December, ETF holdings down 173 tonnes in 2021 - WGC
A fitting end to a disappointing year, global gold-backed exchange-traded funds (ETFs) saw further outflows in December, according to the latest data from the World Gold Council.
In a report published Friday, the WGC said that 6.4 metric tonnes of gold flowed out of global ETFs last month. December capped a year that saw a total of 173 tonnes of gold liquidated from ETFs worldwide, the report noted.
The outflows last month were led by North American as funds liquidated 22 tonnes of gold last month. The report added that European-based and Asian-based funds saw inflows totaling 16 tonnes.
"North American outflows once again stemmed from larger US funds, likely triggered by the US Federal Reserve (Fed) indicating its intent for multiple interest rate hikes in 2022 to combat decades-high inflation, while planning to scale back asset purchases early in the year," the analysts said in the report. Read More
Hedge funds shy away from gold as markets expect aggressive Fed tightening
Expectations that the Federal Reserve will meet the growing inflation threat with aggressive interest rates hikes are making investors hesitant to jump into the gold market, according to some analysts, quoting the latest trade data from the Commodity Futures Trading Commission.
The latest data shows that sentiment among hedge fund and money managers has been relatively stable, with overall exposure declining last week.
The CFTC disaggregated Commitments of Traders report for the week ending Jan. 4 showed money managers dropped their speculative gross long positions in Comex gold futures by 6,137contracts to 124,252. At the same time, short positions increased by 1,982 contracts to 44,744.
Gold's net length now stands at 79,508 contracts, relatively unchanged compared to the previous week. The gold market started the first week of the new year on a strong note, despite the neutral sentiment among hedge funds. During the survey week, gold prices pushed to a six-week high above $1,830 an ounce; however, the market could not hold those recent gains. Read More
This is the difference between gold price surging above $2k or plunging below $1,600 in 2022
There are many opposing forecasts out there when it comes to gold price action in 2022. But what's the main difference between gold climbing back above $2,000 or dropping below $1,600 an ounce?
RBC Capital Markets has outlined two outlooks for gold — the high and the low scenarios. The high one sees gold trading above $2,024 an ounce on average in 2022. And the low one estimates for gold to trade at $1,576 an ounce.
The difference between those two outlooks is COVID-19 developments and equity market performance.
"The high scenario would be one where inflation has taken hold and the economy under-performs expectations. And so it looks like a much more risk-off outlook," RBC Capital Markets vice president of Global Commodity Strategy Chris Louney told Kitco News. Read More
Inflation & gold; both sides of the double-edged sword are razor-sharp
There is extreme duplicity between inflation and gold. Currently, that duplicity is acting as a double-edged sword with both sides honed to razor sharpness. On the one hand, as inflation moves higher, it makes gold a favorable asset to hold in your portfolio. It is considered one of the better inflationary hedges.
However, in the case of inflation and interest rates, higher inflation will pressure gold lower based on the fact that it will force the hand of the Federal Reserve to raise rates more aggressively in both how many rate hikes the Federal Reserve will initiate this year and possibly the size of the individual rate hikes.
Currently, market participants are waiting for the release of the U.S. core CPI (Consumer Price Index) on Wednesday. Economic forecasts are predicting a rise to the highest level seen in nearly 40 years. The U.S. core CPI index came in at an unheard-of rate of 4.9% in November of last year. Read More
Gold and silver trade higher ahead of the European open
Gold has risen half a percent overnight to trade above $1800/oz again. Silver has also used 0.77% in higher to trade at $22.60/oz ahead of the European open. In the rest of the commodities complex, copper is 0.36% higher while spot WTI rose 0.62%.
Risk sentiment was pretty bearish overnight as the Nikkei 225 (-0.90), ASX (-0.77%), and Shanghai Composite (-0.73) all struggled. Index futures in Europe are trading well ahead of the cash open.
In FX markets, AUD/USD was the biggest mover overnight rising 0.34% and commodities currencies performed well in general. In the crypto space, BTC/USD rose 0.75% to trade at $42,129. 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.
