Today's Gold and Silver News: 02-02-2023

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Gold Price News: Gold Steady Ahead of Latest Fed Interest Rate Move

Today brings the much-anticipated Federal Reserve interest rate announcement, which is set to dominate market activity.

While the move itself has long since been priced in, with a 25 basis point hike broadly expected, attention will be on the statement released alongside the announcement as well as Fed Chair Jerome Powell’s comments that follow it. 

Gold has found itself inextricably linked with the words and actions of the Fed and its officials with the price plummeting last year during the series of 75 basis point hikes the US central bank implemented and staging an impressive recovery over the final months of last year and into January that was driven by a change in sentiment in how soon the Fed would stop increasing rates any further.

Today’s expected 25 basis point move will be the smallest hike since the Fed started increasing rates in the second quarter of last year and will be the latest indicator that the US central bank feels its aggressive policy has yielded the result it was designed to do with inflation now on a downward trajectory. Read More

Silver Price News: Silver At Bottom of Range Ahead of Key Fed Rate Decision

Silver is trading towards the bottom end of the range it has found itself stuck in for the whole of the year so far with the price currently at around $23.40 an ounce.

The main focus for markets today will be the latest interest rate decision by the Federal Reserve, with a 25 basis point increase to benchmark rates widely expected. For silver this should be another positive factor with confirmation that the Fed is slowing the pace of its hikes and ultimately nearing the end of the aggressive policy it adopted in the second quarter of last year.

It was this switch to a series of 75 basis point hikes by the Fed that saw the price of silver plummet from close to $26 an ounce in April down to below $18 an ounce in early September. Read More

Gold price seeing some selling pressure as JOLTS reports 11 million job openings in January

The gold market is seeing some selling pressure as healthy momentum in the U.S. labor market, with the number of jobs available rising significantly higher in January, weighs on the precious metal.

Job openings, a measure of labor demand, jumped to 11.01 million on the last business day of January, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Wednesday. Last month there were 10.46 million job openings.

The data beat expectations as economists were looking for job openings to drop to 10.28 million.

The gold market, unable to break resistance at $1,950 an ounce, is seeing some technical selling pressure, with bearish momentum picking up following the latest labor market data. April gold futures last traded at $1,940.70 an ounce, down 0.24% on the day.

According to some analysts, the market continues to see mixed labor market data, which doesn't bode well for investors expecting to see the Federal Reserve end its tightening cycle within the first half of the year. Read More

Why is central bank gold buying at 55-year highs?

Central banks had their eyes on gold last year, purchasing 1,136 tonnes — the most since 1967, according to the World Gold Council (WGC). This also marked the second-highest level on record going back to 1950 and was a more than 150% increase from last year.

The WGC's Gold Demand Trends report from Q4 revealed that central banks bought an additional 417 tonnes of gold, following Q3's massive purchase of 445 tonnes.

"Geopolitical uncertainty and high inflation were highlighted as key reasons for holding gold," the WGC said in a report published Tuesday.

Central banks are paying attention to gold because of how it performs during times of crisis and its role as a long-term store of value. "It's hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace," the report pointed out.

The last time there was so much gold buying by central banks, the U.S. dollar was still backed by gold.

"Central bank purchases are highlighting the fact that gold remains a very important asset in the monetary system. Even though gold is not backing currencies anymore, it is still being utilized. Why? Because it is a real asset," Juan Carlos Artigas, Global Head of Research at the World Gold Council, told Kitco News.

Most of the 1,136 tonnes total was once again "unreported," said the report. "Echoing Q3, data for the final quarter of the year was again a combination of reported purchases and a substantial estimate for unreported buying," the report highlighted. Read More

Gold price rallies, post-FOMC, as USDX, U.S. bond yields sink

Gold and silver prices are higher and near their daily highs in afternoon U.S. trading Wednesday, in the wake of a slight interest rate increase from the Federal Reserve that was widely expected. April gold was up $15.30 at $1,960.40 and March silver was up $0.199 at $24.03.

The U.S. data point of the week is the Federal Reserve Open Market Committee (FOMC) meeting that just ended. The FOMC raised its Fed funds rate range by 0.25%, as expected, following the last meeting’s 0.5% rate hike. The FOMC statement said U.S. inflation has eased a bit but remains too high, suggesting more rate hikes are coming. The press conference by Fed Chairman Jerome Powell saw the chairman maintain his vigilance at stomping out problematic price inflation. Yet during his remarks, the marketplace saw its mood improve markedly as the U.S. stock indexes rallied, the U.S. dollar index tanked, U.S. Treasury yields declined, and gold and silver prices rallied. It could be that the marketplace was just relieved Powell did not sound even more hawkish than he had in his recent remarks. The European Central Bank and Bank of England hold their monetary policy meetings Thursday.

Today’s ADP national employment report for January showed a rise of 106,000 workers, which was below the consensus forecast for a rise of 190,000. Gold prices up-ticked just very slightly following the report. The ADP report is a precursor to the more important employment situation report for January from the Labor Department on Friday morning. The key non-farm payrolls number in that report is forecast to come in at up 187,000 jobs.

Technically, April gold futures bulls have the solid overall near-term technical advantage. A three-month-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at the January high of $1,966.50 and then at $1,975.00. First support is seen at $1,950.00 and then at today’s low of $1,936.10. Wyckoff's Market Rating: 8.0

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March silver futures bulls have the overall near-term technical advantage. However, trading has been choppy and sideways for weeks. Silver bulls' next upside price objective is closing prices above solid technical resistance at the January high of $24.775. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at last week’s high of $24.415 and then at $24.67. Next support is seen at today’s low of $23.44 and then at this week’s low of $23.05. Wyckoff's Market Rating: 6.5. Read More

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LBMA annual survey sees gold prices averaging the year around $1,859 an ounce, silver to hold around $23.65

After its best start to the year in a decade and up 20% from its November lows, the London Bullion Market Association (LBMA) members are looking for gold's hot rally to cool slightly through the rest of the year.

In its annual forecast survey, the LBMA said participating analysts are "cautiously optimistic" about gold and silver this year. The analysts see gold prices rallying 3.3% this year with an average annual forecast of $1,859.90, compared to last year's average price of $1,800.09 an ounce.

At the same time, analysts see average silver prices rallying 8.8% to $23.65 an ounce, compared to 2022's average price of $21.73.

The most bullish forecast in the LBMA survey is reserved for platinum. Analysts see platinum's average price for 2023 at $1,080.40 an ounce, up 12% from last year's average price of $960.508.

Meanwhile, analysts are bearish on palladium, with a 2023 average forecast of $1,809.80 an ounce, down more than 14% from the 2022 average price of $2,112.06.

According to the survey, the analysts see three major factors driving precious metals prices this year. Of the 30 analysts surveyed, 43% expect the U.S. dollar and the Federal Reserve's monetary policy to have the most significant impact on gold and silver. At the same time, 14% see inflation as the main driver, and 11% are watching geopolitical factors. Read More

Gold price jumps as Fed Chair Powell talks disinflation but warns it's too early to declare victory

The gold market is reacting positively to Federal Reserve Chair Jerome Powell saying that the disinflationary process is underway but warned that it is too early to declare victory.

The Fed raised rates by an additional 25 basis points Wednesday, adding that "ongoing increases in the target range will be appropriate" to get inflation down to the 2% goal.

"With today's action, we've raised rates by 4.5 percentage points [in this tightening cycle that began last year]," Powell told reporters at a press conference that followed the Fed announcement.

However, markets were more focused on the "disinflation" comments that Powell shared. "It is gratifying to see the disinflationary process now getting underway," he said. "We can now say, for the first time, that the disinflationary process has started. And we see it really in goods prices so far."

Powell admitted that the Fed expected goods prices to start to come down at the end of 2021. "We've thought this would happen since the very beginning, and now here it is actually happening," he noted, pointing to the improvement in the supply chains and shortages and the demand coming back towards services.

But despite this progress, Powell cautioned against declaring victory on inflation just yet. "It's very difficult to manage the risk of doing too little and finding out in six or 12 months that we actually were close but didn't get the job done, and inflation springs back, and we have to go back in. And now you really do worry about expectations getting unanchored," he said. Read More

This is the big 2023 shocker that will get gold price to record highs this year - Goehring & Rozencwajg

Markets are looking for the Federal Reserve to wrap up its tightening cycle as inflation decelerates. But not all agree with this premise. Goehring & Rozencwajg sees inflation as a decade-long problem that will trigger new record-high prices in gold.

Gold will play a massive catch-up game to the commodity complex this year as prices rise above $2,050 an ounce, Goehring & Rozencwajg managing partner Leigh Goehring told Kitco News. "Gold is going to hit record highs this year. In August of 2020, we peaked at $2,050, and then again in March 2022. This year we're going to break through the all-time high," Goehring said. "It's time for people to want to be bullish on gold. Since 2020, the average oil indices are up 200%, and the GDX at one point was down almost 35% from its 2020 peak."

Gold will see this massive surge because the Fed is ending its aggressive tightening cycle, and the market is not pricing in inflation correctly. "The Fed will stop raising rates, and then we'll get another big inflation problem. This is the decade of inflation. The Fed will stop raising rates and maybe even begin to lower them, but something else is going to happen that will kick off another spiral in inflationary psychology," Goehring described.

And once people realize that inflation will not come down to the Fed's 2% target as expected, they will turn to gold. 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.