Today's Gold and Silver News: 07-02-2023

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Gold Price News: Gold’s Bubble Burst by Strength of US Jobs Figures

Gold is trying to recover some of the losses it endured at the end of last week after Friday’s US jobs data came in way above expectations. 

Gold had surged above $1,900 an ounce and remained there for most of January on the prospect of the Federal Reserve soon ending its policy of interest rate hikes to curb persistently high inflation. The danger for gold was that the price was reflecting a state in the future rather than the facts on the ground as they were currently and the precious metal, therefore, needed every data point to align with where sentiment had mapped things out.

The massively positive jobs figures out of the US delivered the shock that gold investors were fearing as the strong state of the world’s largest economy gives the Fed plenty more room to continue its policy of rate hikes without fearing triggering a recession. With more hikes now likely, gold has suffered due its lack of yield making it less attractive at times of rising interest rates. Read More

Silver Price News: Silver Sinks to 2-Month Low on Prospect of More Fed Hikes

A disappointing start to 2023 got suddenly worse for silver with the price sinking by $1.50 an ounce to a little above $22 an ounce after Friday’s US jobs figures proved unexpectedly strong. 

With the US jobs market running so hot, this has given the Federal Reserve far more scope to continue its policy of hiking interest rates to ensure that inflation continues on its downward trajectory back to the bank’s 2% target. With more hikes now likely, gold has suffered due to its lack of yield making it less attractive at times of rising interest rates.

Now with more hikes likely over the coming months, silver has once again found itself rejected by investors as the metal’s lack of yield makes other interest-bearing assets more attractive. For example, the digital silver product, Silver KAG, does generate a yield in contrast to the physical metal that underpins it, providing holders with a monthly return based on transactions using the currency. Read More

Gold, silver bulls work to stabilize their markets

Gold prices are modestly up and silver prices a bit weaker in midday U.S. trading Monday. Gold hit a four-week low overnight and silver a two-month low. Bulls are now working to stop the bleeding following a surprisingly strong U.S. jobs report Friday that tanked the precious metals markets. April gold was last up $3.00 at $1,879.40 and March silver was down $0.135 at $22.265.

A feature in the marketplace early this week is a strengthening U.S. dollar index and rising U.S. Treasury yields—both bearish elements for the precious metals markets. This follows last Friday's January U.S. employment situation report from the Labor Department that showed a sharp rise in non-farm payrolls of 517,000. The number was expected to be up only 187,000 jobs, following a rise of 223,000 in the December report. The strong jobs report dashed earlier notions the Federal Reserve might back off on raising interest rates sooner rather than later. A Dow Jones Newswires story this morning is headlined: "Fed cuts look like a dream, not a reality."

Technically, April gold futures prices hit a four-week low overnight and the bulls are fading. Bulls still have the overall near-term technical advantage. However, a three-month-old uptrend on the daily bar chart has been negated, to suggest a near-term market top is in place. Bulls' next upside price objective is to produce a close above solid resistance at the February high of $1,975.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at today's high of $1,894.00 and then at $1,900.00. First support is seen at today's low of $1,873.20 and then at $1,850.00. Wyckoff's Market Rating: 6.0.

Image Source: Kitco News

March silver futures prices hit a two-month low today. The silver bulls have the slight overall near-term technical advantage but are fading fast. Prices have seen a bearish downside "breakout" from a sideways trading range at higher levels. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at today's high of $22.635 and then at $23.00. Next support is seen at today's low of $22.22 and then at $22.00. Wyckoff's Market Rating: 5.5. Read More

Image Source: Kitco News

There is little the Fed can do to bring down inflation and that will be good for gold - MarketGauge's Mish Schneider

Volatility in the gold market continues to heat up as market expectations surrounding the Federal Reserve's monetary policies shift. However, one market analyst, looking at the bigger picture, said that the precious metal will remain an attractive asset in 2023 as uncertainty dominates financial markets.

In an interview with Kitco News, Michele (Mish) Schneider, director of trading education and research at MarketGauge, said that many investors and economists are trying to use outdated models to define current financial market conditions; however, she added that all they are doing is trying to "fit a square peg in a round hole."

While it has been 40 years since consumers have seen inflation this high, Schneider noted that what makes the current environment different from the 1970s and 1980s is that inflation has become a global problem. It has become much bigger than the Federal Reserve and its monetary policies can handle, she added.

The downtrend in globalization, China's reopening, ongoing geopolitical conflicts, and sovereign debt issues are just a few sparks that will limit what the Federal Reserve can do with the tools it has.

"The classic formula of Fed raises rates, and it breaks the back of inflation, that just won't work anymore. The risk is that the Fed will lose control," she said. "We are watching several sparks that could take inflation and gold to a place where it will catch many people off guard." Read More

U.S. default will be 'very damaging to U.S. consumers,' warns IMF head

With the debt ceiling uncertainty looming over the U.S., International Monetary Fund (IMF) managing director Kristalina Georgieva warned that a default in the U.S. would increase rates and harm American consumers.

"It will be very damaging for U.S. consumers if the U.S. defaults, that would push interest rates up," Georgieva said during an interview with CBS's 60 Minutes. "And if people don't like inflation today, they're not going to like at all what may happen tomorrow."

The alarm comes after the Treasury Department's message last month that the U.S. was bumping up against the current borrowing limit of $31.4 trillion. And if the debt ceiling is not raised, the federal government could run out of money to pay all its bills by June.

The Treasury Department already began some extraordinary measures to keep paying the government's bills in January, including suspending investments for selected government accounts. Read More

Gold market sees little reaction as Bank of America warns that it is preparing for a possible government default

The gold market, while off its recent lows, remains below $1,900 and is seeing little reaction to statements from Bank of America that it is preparing for the U.S. government to possibly default on its debt obligations.

In an interview with CNN, Brian Moynihan, CEO of the second largest bank in the U.S., said that a default is an uncomfortable possibility.

"You hope it doesn't happen, but hope is not a strategy – so you prepare for it," he said in the interview.

The comments come as the U.S. hit its debt limit last month. Since Jan. 19, the U.S. Treasury has been using extraordinary measures to pay its bills. Treasury Secretary Janet Yellen has warned Congress that these extraordinary measures could run out by June.

The gold market is not seeing much reaction to Moynihan's comments even as it holds some modest gains late Monday. April gold futures last traded at $1,880.30 an ounce, up 0.2% on the day. Read More

Considering dollar strength gold’s fractional gains were more than respectable

After factoring in two days of dramatic price declines in gold resulting in a loss of just under $90 per ounce, the fractional gains were significant. The significance is in the fact that gold (futures and spot) pricing advanced at all with such a strong dollar.

The dollar gained 0.71% and the dollar index is currently settled at 103.485. As of 5:48 PM EST, gold futures basis the most active April contract is currently fixed at $1880.20 after factoring in today’s gain of $3.60. Spot gold according to the Kitco gold index (KGX) is currently fixed at $1867.40, a net gain of $3.10.

The best way to illustrate how today’s fractional gains were significant is to look at the effect of dollar strength and normal trading in spot pricing. Physical gold gained $3.10 in trading today and that does not tell the complete story.

Dollar strength caused gold to decline by $11.75. Normal trading without factoring in dollar strength or weakness actually took gold $14.85 higher. This is why a fractional gain of three dollars does not fully disclose the significance of gold’s upside move today.

Silver did have a slight decline losing $0.14 to dollar strength, losing nine cents due to normal trading and five cents due to dollar strength with spot silver currently fixed at $22.25. Read More

Spot gold price to trade at record highs, but platinum is the one to watch in 2023 - StoneX

The precious sector will do well this year, with gold and silver expected to gain around 14% by the end of 2023, but platinum will see the biggest returns, according to StoneX.

Despite some recent profit-taking, the set-up for gold is very much a bullish one, said StoneX analyst Rhona O'Connell during a webinar. The U.S. dollar outlook, geopolitical tensions, stagflationary worries, and a sudden surge in central bank gold buying will boost prices to record highs in many currencies, including the U.S. dollar.

StoneX's year-end gold price target is $2,070 an ounce, up 14.2%. This would mark a new record high in U.S. dollar terms but not in real terms, O'Connell noted. "Gold to touch record highs this year (spot not average) in dollars and major currencies, but not in real terms," she specified. "While nominal records are feasible, reflated by the U.S. CPI a $2,075 price target would be 34% below January 1980. Historically real prices have outperformed when inflation is seen as a threat - but now we have monetary policy." Read More

Could Silver Break the current monetary system? Feat. Dave Kranzler

In this week’s Live from the Vault, the hedge fund expert and author of the Mining Stock Journal, Dave Kranzler, joins Andrew Maguire to discuss the potential effects of pricing silver in gold grams, gauging the chances for the silver squeeze to unfold.

As more Eastern and Gulf region countries consider settling global oil and commodity trades using alternative currencies, the two industry leaders debate the power of tokenised, allocated gold in shaking the dollar-based monetary regime.

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.