Today's Gold and Silver News: 09-02-2023

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Silver Price News: Silver Tracking Behind Gold’s Gains Near 2-Month Low

Silver’s fall from favour so far in 2023 is summed up by the contrasting reaction to the same piece of news by silver and its precious metal peer gold.

While gold has made significant headway as it recovers a significant amount of its losses from Friday, silver has only increased a fraction and continues to trade in a lowly range near its lowest for two months.

The reason for gold’s positive reaction was yesterday’s comments by Federal Reserve Chair Jerome Powell being interpreted as less aggressive than anticipated even though he reiterated the need for more interest rate hikes to ensure inflation is fully tamed. While it would be right to question whether the market’s reaction is appropriate to Powell’s cautionary remarks, the fact remains that gold’s gain was markedly higher than the equivalent increase for silver. Read More

Gold Price News: Gold Shrugs Off Powell’s Comments to Rise Towards $1,900

Gold is recovering more ground as investors shake off Federal Reserve Chair Jerome Powell’s cautionary remarks to push the price back up towards $1,900 an ounce.

The gold market seems to have an element of traders and investors hearing what they want to hear rather than what is actually said as, despite the Fed Chair saying on Tuesday that further interest rate hikes are needed to fully curb inflation, his tone was interpreted as less aggressive than previous and therefore a reason for gold to gain.

While it is fair to say that the period of 75 basis point hikes by the Fed may be behind us, the reality is that the US central bank increased its benchmark rate when it met at the start of the month and is likely to do so again in March.

Given that gold suffers at periods of rising interest rates, due to its lack of yield making other interest-bearing assets more attractive, the fact that the precious metal is once again on an upward trajectory and nearing $1,900 is remarkable. Read More

Gold price to hold the line at $1,800 but investors will have to weigh the costs as real rates remain positive - CIBC

Ongoing uncertainty in global financial markets will support gold prices in 2023, but investors shouldn't expect any fireworks in precious metals markets despite the best start to the year in a decade, according to analysts at CIBC.

The Canadian bank released its 2023 precious metals outlook Monday, and the analysts said that they see gold prices averaging around $1,800 an ounce during the year, roughly 5% below current prices. April gold futures last traded around $1,887.30 an ounce, up 0.13% on the day.

At the same time, CIBC sees silver prices averaging 2023 around $23.50 an ounce. March silver futures last traded at $22.335 an ounce, up 0.71% on the day.

The analysts expect the first quarter to represent the peak in gold and silver prices this year.

"This represents fairly muted downside risk and still provides investors with a safety trade option against more meaningful movements in other fiat currencies," they wrote.

Although market volatility will support gold and silver prices this year, the analysts said that the Federal Reserve's firm stance on interest rates in a muted inflationary environment will ultimately push real rates higher through the year. Read More

Silver prices on pace to average 2023 around $23 - Silver Institute

Despite the recent selloff, the silver market has seen a solid start to the year, and while the price action is expected to be volatile this year, the Silver Institute expects to see higher prices as silver demand is forecasted to reach new record levels.

In a commentary published Wednesday, the Institute said it looks for silver prices to average 2023 around $23 an ounce, representing a 6% increase from last year's average price of $21.70. The comments come as March silver futures currently trade at $22.31 an ounce, up 0.6% on the day.

"This year, we have a cautious outlook for the silver price. This is based on our view that, even if the interest rate hike pace slows, the hikes will continue through to the middle of this year, and potential rate cuts (if any) will be marginal. U.S. inflation will also ease materially due to high base effects, which will see real interest rates rise, weighing on silver and precious metals. Furthermore, the dissipation of recession fears should encourage investors to become more risk-on, to the benefit of equities over silver and gold," the analysts said in the note.

While the Silver Institute may be "cautiously" bullish on silver, the analysts said there is enough uncertainty in the global economy to pose challenges for the grey metal.

The Institute said that healthy demand for silver, while down from last year's record levels, should continue to support persistently higher prices. Read More

Gold, silver slightly up in quieter trading

Gold and silver prices are mildly higher in midday U.S. trading Wednesday. The precious metals markets are getting a very modest boost from slightly friendly outside markets on this day that include a slightly lower U.S. dollar index and firmer crude oil prices. However, gains in both metals were limited by rising U.S. Treasury yields today. April gold was last up $3.10 at $1,887.80 and March silver was up $0.183 at $22.35.

The gold and silver market bulls have lost steam the past week and are working to stabilize prices, which they can correctly argue has occurred at mid-week. Still, both metals markets remain very wobbly.

The marketplace on Tuesday afternoon saw Fed Chairman Powell at a Washington, D.C. economic club meeting reiterate that U.S. inflation has started to come down but has a long way to drop to meet the Fed's inflation objectives. Powell was pressed on last Friday's strong jobs report possibly changing Fed policy to more hawkish, but Powell brushed that notion off, at first. However, at the end of his remarks, he said more strong U.S. economic data could force the Fed to raise rates more than it expects at present. Stock and financial markets gyrated during and right after his comments but at the end of the day Tuesday, Powell's remarks were deemed as not surprising and did not have a major, lasting impact on markets.

Technically, April gold futures prices hit a four-week low Monday. Bulls still have the overall near-term technical advantage. However, a bear flag pattern has now formed on the daily bar chart. 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 $1,900.00 and then at $1,915.50. First support is seen at this week's low of $1,873.20 and then at $1,850.00. Wyckoff's Market Rating: 6.5.

Image Source: Kitco News

March silver futures prices hit a two-month low Tuesday. The silver bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. 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 $23.50. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at this week's high of $22.635 and then at $23.00. Next support is seen at this week's low of $22.065 and then at $22.00. Wyckoff's Market Rating: 5.5. Read More

Image Source: Kitco News

Gold is still overvalued as markets ignore growing central bank risks - Quant Insight's Huw Roberts

Gold's correction below $1,900 after its best start to the year in a decade might not be over, as one market strategist warns that the precious metal is still overpriced.

In an interview with Kitco News, Huw Roberts, head of analytics at Quant Insight, said that gold is slightly overvalued according to his firm's modelling. He added that at its recent peak, gold was about 6.5% above its fair value.

Roberts added that while the correction has cooled the market a little bit, the bullish macro-environment is starting to turn, which could keep pressure on gold in the near term.

"We have macro warranted fair value at $1,822, so the price still has a little bit further to come down," he said.

As to what has been driving gold's outperformance, Roberts speculated that record central bank gold demand has driven bullish sentiment. Gold prices bounced off a two-year low in November after the World Gold Council reported that central banks bought nearly 400 tonnes of gold in the first quarter. Expectations started to grow that central banks would continue to purchase unprecedented amounts of gold. Read More

Investor uncertainty defines price action this week

The strong decline in gold on Thursday and Friday of last week marked a definitive price correction as it gave up almost $90 in two days of trading. The sharp decline confirmed that market participants were continuing to digest the exceedingly strong jobs numbers. They were also laser-focused on every word of any Federal Reserve member for insight into their next moves.

Image Source: Kitco News

Even Chairman Powell commented yesterday about last week’s jobs report because the expectations were that the report would show 188,000 new jobs were added last month and the actual numbers were double that coming in at 517,000. Powell’s comments expressed that even he did not anticipate such a robust report. However, it gave him more latitude to continue the Fed’s hawkish demeanour in that it confirmed that the economy is still strong even after seven rate hikes last year and an additional hike at the January FOMC meeting.

On Friday I expressed that the selloff fell to an important Fibonacci retracement percentage level the 38.2% retracement level. It is almost unanimously agreed by market technicians that a correction to that level is shallow as well as a place that you would look to see if it acts as technical support or if gold continues to lower pricing breaking below that potential support level. 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.