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Fed won't reach 2% inflation in 2023, gold to see new highs - Gary Wagner
The Federal Reserve won’t reach its 2% inflation target in 2023, but gold will see new highs, according to Gary Wagner, Editor of TheGoldForecast.com.
“There are no tables, no graphs, and no studies that suggest they [The Fed] are going to hit a 2 percent target in 2023,” said Wagner. “If in fact they act upon what they have projected and what they have stated, we’re going to be inundated with strong interest rates throughout the entire year.”
At the last Fed meeting, the Federal Reserve Open Market Committee (FOMC) projected a 5 percent Fed Funds Rate in 2023.
Despite forecasting a grim year in terms of inflation and interest rates, Wagner, a technical analyst, said that he remains “bullish for gold.”
“I’m looking for gold to hit $2,250 to a high of maybe $2,400,” he predicted. “I definitely believe it’s going to breach $2,000 without any question by the second quarter… I’m looking for new all-time highs next year.”
Wagner spoke with David Lin, Anchor and Producer at Kitco News. Read More
Gold is in 'penalty box': Wells Fargo on why gold's next move hinges on silver
The silver market is signalling that gold's weakness is temporary after the yellow metal’s recent run, according to Wells Fargo's head of real asset strategy John LaForge.
Spot silver is wrapping the year up 3.6% at around $24 an ounce. Meanwhile, gold is still catching up — up above $1,800 an ounce and down around 0.4% year-to-date.
"I am a little more positive on silver now that we are back to $23. It is the high-beta play. Silver is showing signs that whatever weakness we see in gold, it is probably short-lived," LaForge told Kitco News. "When silver starts beating gold, it is closer to a bull market in precious metals versus the other way."
With only a few days left in 2022, markets look exhausted. "Stocks have been in a straight march lower. And gold has been taking its cue from risk-on assets like stocks more than reacting to the Fed," LaForge said.
And even though gold has been tracking risk-on assets, it has reacted mildly. "You can sense gold wants to go higher next year. Gold had a rough two and a half years," he added.
Gold is already starting to price in a pause by the Federal Reserve, followed by an eventual pivot. "In the last couple of months, with all the talk about the Fed pivoting, gold started to perk up. Next year, both gold and silver will do well. Silver might do even better," LaForge noted. Read More
Gold prices to push above $1,900 as the Fed remains behind the inflation curve in 2023 - BCA
The gold market has seen a solid end to 2022 and according to one research firm, its momentum in the fourth quarter should continue into 2023.
In its 2023 outlook, analysts at BCA said that they see gold prices pushing above $1,900 an ounce next year. The positive outlook comes as the firm started building a bullish position in November.
The research firm is bullish on gold as they expect a peak in the Federal Reserve's monetary policy, persistently high inflation and global economic uncertainty to support prices through the new year.
"The evolution of gold prices next year will hinge on Fed monetary policy and its impact on the USD's trajectory," the analysts said in the report. "Given a backdrop of elevated uncertainty next year and a dovish Fed, which will weaken the USD, safe-haven demand for gold will rise."
Currently, markets are expecting the U.S. central bank to raise interest rates to a peak between 5.00% and 5.25% in the first half of the year. BCA said that as recession fears grow, it expects the central bank to start cutting rates by the end of the year or early 2024.
Although inflation has fallen from its highs in the summer, BCA warned investors that the threat remains and the analysts see a risk of it becoming unanchored in 2023. Read More
Hedge funds set to mark worst returns in 14 years
Global hedge funds are set to register their worst returns in 14 years in 2022 after aggressive U.S. interest rate rises hit asset prices hard, however, their declines are overall smaller than the slump seen in equity and bond markets this year.
Some hedge fund strategies that put money in commodities and currencies using macro-focused strategies and exploited price differences between related securities outperformed in 2022, handing decent gains to investors.
"More than at any time in recent history, both equities and bonds have been very sensitive to macro events, particularly to inflation prints," said Meisan Lim, managing director of hedge fund research at Cambridge Associates.
According to investment data firm Preqin, hedge fund returns have fallen 6.5% this year, their biggest since a 13% decline in 2008. Read More
How soon will the Fed cut rates after hiking by 425 bps this year?
The Federal Reserve has committed to a historic tightening path at the most rapid pace since the early 1980s. But as the economy comes to a halt and inflation cools, a growing number of economists expect the Fed to be forced to cut rates next year.
The Fed's response to inflation, which at one point was running at more than 40-year highs this year, was to aggressively hike rates, including four consecutive increases of 75 basis points. Overall, rates climbed by 425 basis points in 2022, rising to a range between 4.25%-4.5%.
During the last meeting of the year, the Fed slowed to a 50 basis point increase but remained very firm in its battle to bring inflation down, warning markets that rates are not at a restrictive-enough level and will have to stay higher for longer.
"We've raised 425 basis points this year, and we're into restrictive territory. It's now not so important how fast we go. It's far more important to think about what is the ultimate level. And … how long do we remain restrictive? That will become the most important question," Fed Chair Jerome Powell told reporters after the December FOMC meeting. Read More
Steady-weak price action in gold, silver as 2022 winds down
Gold and silver prices are not straying too far from unchanged levels in quieter early U.S. trading Friday. Many traders are on holiday this week, making for lighter trading volumes and thin conditions. Traders will hit the exit doors early today, ahead of the three-day New Year holiday weekend. February gold was last down $2.40 at $1,823.60 and March silver was down $0.21 at $24.035.
Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The marketplace is quieter this week following the Christmas holiday and just ahead of the new year.
Technically, the gold futures bulls have the firm overall near-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at $1,836.90 and then at this week’s high of $1,841.90. First support is seen at the overnight low of $1,819.80 and then at Thursday’s low of $1,811.20. Wyckoff's Market Rating: 7.0.
Image Source: Kitco News
The silver bulls have the solid overall near-term technical advantage. A choppy, four-month-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing March futures prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at the December high of $24.525 and then at $25.00. Next support is seen at this week’s low of $23.645 and then at $23.00. Wyckoff's Market Rating: 7.5. Read More
Image Source: Kitco News
The Metals, Money, and Markets Weekly Dec.30, 2022: X is for eXit - by Mickey Fulp
More price upside likely for silver in 2023
The longer-term weekly continuation chart for nearby Comex silver futures favors the bullish camp. Prices have been trending up since the August 2022 low and in December hit an eight-month high. A price move above major psychological resistance at $25.00 would get the silver bulls charged up, from a longer-term technical basis, to suggest significantly more price upside in the coming months.
A drop below major psychological support at $20.00 an ounce would be significantly longer-term bearish and would then open the door to sustained and extended price weakness. My bias is that silver prices in 2023 will range from $22.00 to $27.31 and with an upward trend.
Image Source: Kitco News
The investing rules of legendary trader W.D. Gann:
As an added bonus to my silver special, I want to share with you some valuable trading advice dispensed by William Delbert (W.D.) Gann, who is regarded as one of the pioneers of technical analysis and market behaviour. He wrote several books on stock and commodity trading and developed the well-known "Gann angles" and "Gann Fans." Read More
Retail investors see silver prices rallying more than 50% in 2023 to $38 an ounce
The silver market is preparing to end 2022 on a strong note and bullish sentiment among retail investors indicates the rally is just getting started.
This past year has been fairly volatile for the silver market as rising inflation forced the Federal Reserve to aggressively raise interest rates, driving bond yields to a 10-year high and the U.S. dollar to a 20-year high.
During a lacklustre summer, silver prices fell to a multi-year low below $18 an ounce; however, shifting expectations surrounding the Federal Reserve's monetary policy stance propelled the grey metal higher in the fourth quarter.
Silver has rallied nearly 38% from its August lows as it looks to end the year just below $24 an ounce. According to Kitco News' latest 2023 Outlook Survey, retail investors see even higher prices through 2023.
This past week 1,482 people participated in Kitco News' online survey, asking investors where they see silver prices by the end of the year. On average retail investors see silver prices rising to $38 an ounce.
Sentiment among retail investors is also significantly more bullish than indicated by the headline number. Only 85 participants, roughly 5% of the vote, said they saw silver prices ending 2023 below $23 an ounce.
Meanwhile, nearly 48% of participants expected silver prices to end the year higher than $38 an ounce. Read More
Gold holding solid gains above $1.800, ending the year down $5
The gold market could be on the cusp of a new bull market ahead of the new year as the precious hold on to its solid gains from the past month.
The yellow metal is looking to end the last trading day of 2022, roughly $5 below its opening price at the start of the year. February gold futures last traded at $1,825.70 an ounce.
It has been a tumultuous year for the precious metals market. The Federal Reserve's aggressive monetary policy stance weighed heavily on investment demand. In early November, gold prices fell to a two-year low to $1,618 an ounce.
However, since those lows, prices have rallied nearly 13% and this could be the start of another move.
"[Gold] is ready to pop," said Ole Hansen, head of commodity strategy at Saxo Bank, in an email to Kitco News.
Julia Cordova, founder of Cordovatrading.com, said that if gold can hold support at $1,820 an ounce, it could trigger a move to $1,860 an ounce.
"It's threatening to break out once again and if it can manage to hold it this time, a biggly move is coming," she said in a comment on Twitter Thursday.
Although gold has struggled to attract investor attention through 2022, it has still been one of the best-performing assets this year. Gold is ending the year in neutral territory; however, the S&P 500 is looking at a 20% loss, last trading at 3,803 points.
At the same time, silver is ending the year on a strong note, outperforming gold. March silver futures is preparing to end the year around $24 an ounce, up more than 2% year-to-date. Read More
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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.
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