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Gold Price News: Gold Looking Down Amid Fed Talk of More Hikes Needed
Gold is starting a new week of trading looking down rather than up as traders and investors try to work out the true health of the global economy as well as the Federal Reserve’s next step.
So far the US economy has proven resilient to both stubbornly high inflation and the interest rate hikes implemented to curb rising consumer prices, yet market confidence remains fragile with many still forecasting a looming recession in the world’s largest economy. This fragility is providing some residual support for gold and its haven qualities and slowing the price slide down towards $1,900 an ounce.
This week features a range of speeches from Fed officials and this should provide greater clarity on how likely the US central bank is to implement another hike in September or whether rates have now peaked. Recent comments so far have provided a mixed bag with Raphael Bostic and Austan Goolsbee supportive of a Fed pivot while Michelle Bowman talked of the possibility of another hike still being needed. Read More
Silver Price News: Silver Slides Near $23 On Prospect of More Hike Pain
Silver is sliding down towards $23 an ounce after recent comments from Federal Reserve officials, notably Michelle Bowman, suggested that the US central bank may not yet be finished with its series of interest rate hikes.
Seeing as it was the introduction of the first of those hikes back in April last year that prompted the price of silver to endure a multi-month slump, the prospect of further pain still to come brought silver’s positive run in the second half of July to a crashing halt.
The amount of uncertainty that still remains in the market, both on the likely next steps by the Fed as well as the health of the global economy more generally, has made for a complicated trading environment. Read More
Silver may need a recession and new all-time highs from gold to break $30 - Mike McGlone
The fact that silver continues to lag far behind gold indicates a risk of global economic contraction, and it may take new all-time highs for gold to get silver prices over $30, according to Bloomberg Intelligence senior commodity strategist Mike McGlone.
“Industrial demand-based silver has increasingly languished vs. gold, which may suggest global economic-contraction risks,” McGlone said in his latest report. “The yellow metal is gaining an advantage due to central bank buying and it could take a lag to Federal Reserve easing, and an economic recovery, for silver to outpace gold.”
In the near term, McGlone sees silver prices being hurt by copper more than they are helped by gold. “At about the same price on Aug. 3 as in 2010, silver may face headwinds more aligned with copper than the tailwinds buoying gold,” he said. “Industrial consumption of the white metal is steadily rising at about the 50% threshold, yet the price has been languid, notably vs. the benchmark precious metal.” Read More
CPI could be a make-or-break moment for gold next week as prices look for direction
The gold market is back in no-man's land as the price is pushed and pulled between rising bond yields and continued economic uncertainty. According to some analysts, next week's inflation data could be a "make or break" moment for the precious metal as it struggles to find direction.
Gold's neutral outlook comes as prices look to end the week holding critical near-term support levels but cannot generate enough momentum to retest important resistance. December gold futures last traded at $1,977 an ounce, down 1% from last week.
Although the gold market is looking to end the week off its lows, analysts note that the precious metal still faces some problematic headwinds as economic data does not provide definitive evidence that the Federal Reserve can ease away from its hawkish bias.
Friday's nonfarm payrolls report provided markets with a mixed picture at best as the headline employment number missed expectations, but wage inflation rose. The latest nonfarm payrolls report showed that 187,000 jobs were created in July, compared to economists' expectations for job growth of 200,000. At the same time, wages grew 0.4% last month.
Some analysts have said that for gold to regain its lustre and hold gains above $1,980 an ounce, the June Consumer Price Index, published next week, must come in cooler than expected. Read More
Analysts more bullish on gold following lower job growth, higher wage inflation
The gold market rallied following a weaker-than-expected U.S. jobs report for July, which included downward revisions for May and June and strong wage growth, sending spot gold prices from $1931 to an intraday high of $1946.79
The latest Kitco News Weekly Gold Survey showed that the loss of momentum for the U.S. labor market, even as inflation pressures remain in place, had most market analysts bullish or neutral on gold's prospects for the coming week.
This week, 15 Wall Street analysts participated in the Kitco News Gold Survey. Eight of them, or 53%, said they expect to see higher prices for gold next week, while six analysts, or 40%, had a neutral outlook. Only one analyst predicted lower prices for the precious metal over the next seven days, representing 7% of the total. Read More
Gold, silver down amid rising bond yields, hawkish Fed-speak
Gold and silver prices are lower in midday U.S. trading Monday, with silver prices sharply down and hitting a four-week low. The precious metals are seeing selling interest on rising U.S. Treasury yields, hawkish comments from a Federal Reserve official, and as the near-term technical postures for both markets have turned slightly bearish. December gold was last down $8.10 at $1,968.00 and September silver was down $0.491 at $23.23.
Some hawkish “Fed speak” over the weekend also dampened the metals market bulls today. Federal Reserve governor Michelle Bowman expressed the potential need for further increases in U.S. interest rates to successfully lower inflation to the Fed's target of 2%. Despite recent data suggesting a slow inflation trend, Bowman recommended consistent evidence proving inflation is significantly moving toward the 2% target. Additionally, Fed officials Raphael Bostic and Austan Goolsbee analyzed recent jobs data and suggested that the labor market is improving, which might prompt the Fed to reconsider how long they should maintain the current elevated rates.
Technically, December gold futures bears have the slight overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at the July high of $2,028.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,939.20. First resistance is seen at today's high of $1,981.70 and then at $1,992.20. First support is seen at last week's low of $1,954.50 and then at $1,950.00. Wyckoff's Market Rating: 4.5.
Image Source: Kitco News
September silver futures prices hit a four-week low today. The silver bears have the slight overall near-term technical advantage. Prices are in a fledgling downtrend on the daily bar chart. Silver Bulls' next upside price objective is closing prices above solid technical resistance at the July high of $25.475. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at today's high of $23.775 and then at $24.00. Next support is seen at $23.00 and then at the July low of $22.72. Wyckoff's Market Rating: 4.5. Read More
Image Source: Kitco News
Central banks become net gold buyers in June, ending three-month selling streak
After three months of net selling, central banks once again became net buyers of gold in June as the central bank of Turkey again played a pivotal role, according to data from the World Gold Council.
In its latest report, the WGC said six central banks bought gold in June, with only two sellers in the marketplace. Net purchases totalled 55 tonnes, the report said. Along with Turkey, The People's Bank of China also dominates the marketplace after buying 21 tonnes of gold in June, extending its buying spree to eight straight months.
"Since it began reporting increases in November 2022, gold reserves have grown by 165t (+8%), of which 103t has been bought in 2023, making it the largest buyer y-t-d," said Krishan Gopaul, senior analyst at the WGC, in the report. Read More
Gold to eventually rally as recession is inevitable - Commerzbank
The gold market could continue to trend water around $1,950 an ounce through the rest of the summer as resilient economic growth supports growing expectations that the Federal Reserve will maintain its hawkish bias into the year-end, according to the latest outlook from Commerzbank.
While gold is expected to remain directionless through the fall, the German bank remains optimistic that gold prices can still push higher by the end of this year and into 2024. The long-term bullish outlook comes as gold prices remain under pressure, last trading at $1,970.50 an ounce, down 0.28% on the day.
In her latest gold report, Thu Lan Nguyen, head of commodity research, said that although recession expectations have been pushed to the first quarter of 2024, it is a given that growth will slow.
"While our economists recognize that the probability of a recession in the US has fallen significantly this year, given the scale and pace of the Fed's rate hikes - which amount to 525 basis points since March last year - they believe a recession is almost inevitable. In view of the recent robust growth, however, they no longer expect this to happen this year, but only in the first half of next year," Nguyen wrote. "…In autumn, it should be clear that the US Federal Reserve will not raise its key interest rate any further, which should pave the way for increased speculation about interest rate cuts in the coming year." Read More
In this week’s episode of Live from the Vault Andrew Maguire is joined by Daniel Lacalle, the investment manager, author, and professor of Global Economics, to assess whether the Fed risks driving inflation with escalating rate hikes.
The industry experts discuss whether US Treasury Bonds can still be considered risk-free and whether a default is inevitable amid unrestrained borrowing, before turning to the politicisation of UK banks.
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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.
