Today's Gold and Silver News - 12th July

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Gold Starts New Week Showing Signs of Consolidation After Last Week’s Brutal Plunge

Gold is starting a new week showing signs of consolidating near $1,740 an ounce after last week’s spectacular fall. 

Positive jobs numbers out of the US at the end of last week have provided members of the Federal Reserve with the necessary confirmation that the nation’s economy remains in good enough health to be able to cope with another 75 basis point rate hike later this month.

Later this week the June inflation figure for the US will be published with it forecast to come in higher than May’s print, illustrating the urgency in tackling inflation. 

These inflationary pressures allied to the measures central banks are adopting to bring rising prices under control are the main factors in first gold’s failure to climb despite a risk-off market sentiment and then more recently its plunge to levels last seen in September.

Last week’s spectacular fall has left gold struggling for support but the lows achieved in September and August last year around $1,730 an ounce now looks a crucial support around which the precious metal can stabilize. 

With another sizeable interest rate hike by the Fed now baked in, it is hard to see where gold can find support to climb significantly higher in the short-term so it is likely to remain comfortably below $1,800 an ounce. Read More

Silver Investors Finally Have Glimmer of Hope that Metal May Have Found its Floor at $19

Silver may finally have found a level at which investors are willing to back the metal with the price holding above $19 an ounce. 

While this means that silver is trading at levels not seen for two years, the apparent pause in declines is something to be welcomed for silver investors who have seen the price of their holdings plunge by more than $7 an ounce in recent months.

The main agent of silver’s punishment has been the Federal Reserve’s switch to a more hawkish monetary policy and this month is now almost certainly going to see another 75 basis point interest rate hike by the US central bank after last week’s promising jobs numbers reduced concerns about high-interest rates tipping the economy into recession.

A Fed set on a course of ever-rising interest rates allied to an ever-strengthening dollar has created painful market conditions for silver, which has suffered far more than its golden brother. 

One glimmer of hope for silver holders could be gleaned from the recent US payrolls data. The economy so far is holding up better than many had expected and given silver’s industrial appeal and positive fundamental outlook, brave investors may see the recent holding above $19 as the potential bottom for silver’s price and could be tempted to bet on silver’s recovery from here. With silver, it is often a rocky ride but doesn’t dismiss the possibility of the metal reaching $30 before the end of the year. Read More

JP Morgan traders are in hot water for manipulating the gold market

Jurors were told that JP Morgan has been ripping off the gold and silver markets for years.

Lucy Jennings, a prosecutor with the Justice Department's fraud section, said, "This case is about a criminal conspiracy inside one of Wall Street's largest banks," adding, "To make more money for themselves, they decided to cheat."

Three former JPM employees are in the firing line, including veteran head of precious metals, Michael Nowak, gold trader Gregg Smith and Jeffrey Ruffo, an executive director who specialized in hedge fund sales. They are all charged with racketeering conspiracy as well as conspiring to commit price manipulation, wire fraud, commodities fraud and spoofing from 2008 to 2016.

Spoofing was banned by law in 2010. It involves vast orders that traders cancel before they can be executed in a bid to push prices in the direction they want to make their actual trades profitable. Read More

Gold, silver weaker as U.S. dollar index hits 20-yr. high

Gold and silver prices are modestly down in lazy, summertime U.S. trading at midday Monday. Bearish daily outside market forces squelched the metals market bulls today—a sharply higher U.S. dollar index and weaker crude oil prices. August gold futures were last down $6.50 at $1,735.80. September Comex silver futures were last down $0.076 at $19.16 an ounce.

Technically, August gold futures prices hit an 8.5-month low last Friday. Bears have the solid overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,750.00 and then at $1,771.50. First support is seen at last week’s low of $1,726.00 and then at $1,715.00. Wyckoff's Market Rating: 1.0.

Image Source: Kitco News

September silver futures prices hit a two-year low last week. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May low of $20.525 an ounce. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at $19.435 and then at $19.85. Next support is seen at last week’s low of $18.705 and then at $18.50. Wyckoff's Market Rating: 1.0. Read More

Image Source: Kitco News

Gold bears are overwhelming the market place and price action

Sentiment in the gold market has rapidly deteriorated as hedge funds have increased their bearish bets in the marketplace bringing speculative positioning close to neutral.

However, some analysts are optimistic that the rising bearish sentiment in the marketplace could signal a capitulation move, and prices might be close to a bottom.

"Last week's selloff helped to remove a lot of complacent investors in gold," said Phillip Streible, chief market strategist at Blue Line Futures. "A lot of fat has been trimmed and only the lean longs are left. There is not much more room for gold to go down."

The CFTC disaggregated Commitments of Traders report for the week ending July 5 showed money managers lowered their speculative gross long positions in Comex gold futures by 7,378 contracts to 103,472. At the same time, short positions rose by 11,690 contracts to 86,438.

Gold's net length now stands at 17,034 contracts, down more than 52% from the previous week. Gold's net length is at a three-year low. During the survey period, gold prices dropped below critical support levels, eventually testing long-term support at $1,730 an ounce.

Gold prices dropped 3% during the survey period. Analysts note that gold is suffering as the Federal Reserve looks to raise interest rates by another 75 basis points later this month. Read More

June headline inflation to exceed 8.6%, the annual inflation rate in May

Economists, analysts, and market participants are laser-focused on the Labor Department's CPI (Consumer Price Index) report for June which will be released on Wednesday, July 13. The advanced forecasts released have a common theme or consensus and that is that inflation will continue to run exceedingly hot. Expectations are that headline inflation which includes changes in food and energy costs rose 1.4% compared to the previous month and come in at 8.7% YoY.

"The strong price increase of this year accelerated further in June 2022 and is expected to have climbed to 8.7 %. This is shown by an advanced estimate of Statistics Austria. This means that the inflation rate has risen to its highest level since September 1975. In the meantime, inflation has picked up speed in almost all areas. In addition to recent increases in fuel and heating oil prices, we also see significant increases in restaurant and food prices", according to Statistics Austria Director-General Tobias Thomas.

U.S. News today reported, "On Wednesday, the Labor Department will report the consumer price index for June, with forecasts that it will top the 8.6% rate for annual inflation recorded in May. A run-up in energy prices last month that has since abated is likely to make for an ugly headline number."

CNBC also reported, "The June consumer price index on Wednesday is expected to show headline inflation, including food and energy, rising above May's 8.6% level."

The consensus among different new services is overwhelmingly anticipating that inflation will continue to grow. The CPI report on Wednesday coupled with last week's jobs report will almost certainly result in another aggressive rate hike of 75 basis points at the July FOMC meeting which will convene at the end of this month. Read More

Gold is below its fair value, but silver and copper look better as turnaround plays - Quant Insight

The gold market is at a discount to fair value; however, as long as the Federal Reserve continues aggressively tightening its monetary policy, investors are expected to remain on the sidelines, according to one market analyst.

In an interview with Kitco News, Huw Roberts, Head of Analytics at Quant Insight, said that while gold appears cheap compared to its fair value, macroeconomic conditions don't support a new uptrend anytime soon.

He added that under QI's modeling, gold's fair value should be around $1,791 an ounce. The comments come as gold struggles to find new bullish momentum even as it holds long-term support above $1,730 an ounce. August gold futures last traded at $1,734.60 an ounce, down 0.41% on the day.

Roberts explained that QI evaluates gold's fair value model based on, in very broad terms, economic growth, inflation, financial conditions, including real yields, yield curve and credit spreads, the monetary policy environment, and risk appetite.

Roberts added that the QI models show macroeconomic fundamentals are breaking down for gold, which could point to further weakness in the near term. He said investors using QI modeling are waiting for the macro picture to at least stabilize before buying the current dip.

"Although the model shows that gold is cheap, we don't actually have a strong buy signal at the moment," he said. "From a pure QI perspective. We want the macro model value to turn higher." Read More

Gold price has another 4% to fall by year end – Capital Economics

The gold market continues to struggle following last week’s major selloff, and one firm warned investors that there is still more downside potential for the precious metal.

In a report published Monday, Kieran Tompkins, commodities economist at Capital Economics, said that he sees gold prices ending the year 4% lower from current prices with a year-end target of $1,650 an ounce.

Rising real yields point to lower gold prices through the second half of the year, said Tompkins, adding that gold prices have fallen 15% from the March highs. The comments come as gold prices continue to test long-term support around $1,730 an ounce.

“While the price of gold has fallen sharply over the past couple of months, including another small decline today, it still appears much higher than its typically strong inverse relationship with the yields of longer-dated US TIPS would suggest. We suspect that the gold price will fall further from here, as the usual relationship with TIPS yields partially reasserts itself,” Tompkins said in the report.

The gold market started the year on a strong note as investors looked to protect themselves against an unprecedented rise in inflation. However, Tompkins noted that inflation fears have recently receded and been replaced by recession concerns.

“We highlighted a few months ago that one of the pillars behind gold’s earlier resilience may have been worries about high inflation. But these concerns have eased in recent months, with a big drop back in 5-year/5-year forward inflation expectations roughly mirroring the decline in the gold price,” he said. Read More

A 20-40% housing crash is coming, says investor who called crypto 'The Tulip Mania of the 21st Century' - Peter Grandich

Peter Grandich, who correctly predicted the crypto and stock market crashes, said that he expects a major correction in the real estate market in the United States. He suggested that the recent selloffs in crypto and equities would spill over into housing.

Grandich said that the goal, in this market, is to "not try to lose a lot of money," and warned that real estate "could see a 20, 30, or 40 percent loss and pretty fast."

Grandich spoke with David Lin, Anchor and Producer at Kitco News. Read More

Gold is trading flat heading into the European open

Heading into the European open gold is trading flat and silver (-0.33%) is trading close to $19.00/oz. In the rest of the commodities complex, copper (-0.60%) and spot WTI (-1.33%) are both trading in the red. 

Risk sentiment was generally weak overnight after the negative Wall Street handover. The Nikkei 225 (-1.77%) and Shanghai Composite (-0.87%) both fell while the  ASX (0.06%) managed to keep its head above water. 

In FX markets the focus has been on EUR/USD moving lower to parity. The dollar index has moved another 0.15% higher overnight. In the crypto space, BTC/USD has moved below $20K once again.

News from overnight: 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.