Today's Gold and Silver News - 13th July

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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

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, silver bulls hamstrung by strong U.S. dollar, weaker crude oil

Gold and silver prices are slightly down in midday U.S. trading Tuesday. Gold hit an 8.5-month low overnight and silver a two-year low. The U.S. dollar index continues its assault on the major world currencies and that remains a main bearish element punishing the metals markets. Also, big losses in crude oil prices today hurt the precious metals market bulls. August gold futures were last down $0.40 at $1,731.30. September Comex silver futures were last down $0.097 at $19.03 an ounce.

Technically, August gold futures prices hit an 8.5-month low overnight. 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 this week’s high of $1,743.00 and then at $1,750.00. First support is seen at today’s low of $1,721.60 and then at $1,710.00. Wyckoff's Market Rating: 1.0.

Image Source: Kitco News

September silver futures prices hit a two-year low overnight. 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 $20.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at this week’s high of $19.31 and then at $19.50. Next support is seen at today’s low of $18.63 and then at $18.50. Wyckoff's Market Rating: 1.0. Read More

Image Source: Kitco News

U.S. dollar marches close to parity with euro, hitting 20-year high, and that is not good for gold price

The U.S. dollar's unrelenting momentum continues to wreak havoc within commodity markets, and while gold prices have outperformed other assets, it has not been immune to the strong greenback.

Looking ahead, some analysts see the risk of gold prices falling below $1,700 an ounce as the U.S. dollar continues to flex its strength in global financial markets.

Joe Perry, U.S. market analyst at City Index, noted that gold's negative correlation to the U.S dollar index is currently at 0.96. A 1.00 reading would be a perfect correlation between the two assets.

"If the DXY continues to move higher, one could suspect that XAU/USD will be moving lower," Perry said.

One important milestone event for the U.S. dollar that analysts are watching is a move to parity with the euro. The euro is the largest component of the U.S. dollar index. The single currency is trading at its lowest point against the U.S. dollar in 20 years, and many currency analysts expect that it's only a matter of time before it falls to parity with the U.S. dollar.

As the U.S. dollar moves higher against the euro, some analysts warn investors not to take the current price environment too lightly. Many analysts have dismissed the U.S. dollar's rally against the euro as being "the cleanest dirty shirt in the laundry basket," which is something the gold market can eventually overcome.

However, some have said the U.S. dollar is seeing broad-based strength within the global currency market, which is a more challenging environment for the precious metal. The U.S. dollar is trading at a 20-year high against the euro, but it is trading at a 24-year high against the Japanese yen. Read More

Silver price falls below $19 again and could continue to struggle as Fed raises rates

There is little sign that the selling pressure in silver will let up anytime soon as the precious metal continues to be hit on multiple fronts.

While silver has managed to bounce off its session lows, the precious metal continues to see significant selling pressure as prices remain below $19 an ounce, trading at a new 2.5-year low.

"The silver market has completely collapsed in its inability to find a bid in the current market environment," said Ole Hansen, head of commodity strategy at Saxo Bank.

The comments come as silver prices last traded at $18.945 an ounce, down nearly 1% today. Some analysts are looking for the precious metal to test support at $18.00 an ounce in the near term.

According to analysts, silver suffers as the juggernaut U.S. dollar continues its rally, trading at a fresh 20-year high. At the same time, the precious metal is also following industrial metals lower as recession fears continue to grow. Along with silver, copper prices have dropped below critical support at $3.50 a pound, falling to their lowest level since November 2020.

Although silver is an important precious metal, 60% of demand comes from industrial uses.

Market analysts note that the factors weighing on silver are driven by the Federal Reserve's monetary policy stance. The U.S. central bank continues to pursue aggressive rate hikes to bring down unprecedented inflation. The Federal Reserve is leading global central banks in rate hikes, which is helping to support the U.S. dollar; at the same time, the central bank's focus on inflation over growth is increasing concerns that it will push the economy into a recession. Read More

Gold's year-end target is $2,050 and here's why 17% price surge still possible – Wells Fargo

The strong U.S. dollar has been hurting gold's price, dragging the precious metal down to 8.5-month lows as it steals its safe-haven appeal. But this is not a game-changer for gold, which can still end the year above $2,000 an ounce, according to Wells Fargo.

The U.S. dollar index rose to another 20-year high Tuesday, while the U.S. 10-year Treasury yield was at 2.921%. August gold futures were flat on the day, last trading at $1,731.60 an ounce after dropping below $1,725 overnight.

"The U.S. dollar has risen 12% since the start of the year. Almost half of that gain has come in the last month. Such big moves are quite rare, but when they do happen, commodity prices typically suffer. The reason is that most commodities are priced in U.S. dollars," Wells Fargo's real asset strategy head John LaForge said on Monday.

The broader commodities index has also suffered due to higher U.S. dollar and rising recession fears, hurting the demand outlook for industrial metals. 

As the U.S. dollar gains, emerging market currencies drop, giving these countries less buying power.

"This loss of buying power can often negatively influence commodity demand and commodity prices," added LaForge. "Considering the strength in the U.S. dollar over the past month, it is not surprising that most commodity prices have been falling, gold especially."

Gold retreated 6% in June, primarily because of the U.S. dollar strength. The precious metal is one of the most sensitive commodities to the U.S. dollar price moves, according to LaForge.

Going forward, Wells Fargo is not expecting another significant move higher by the greenback, seeing it near its peak. However, for gold to move higher, it must create its own momentum. Read More

Fed is 'making a mistake': gold, dollar, yields point to deflationary forces, says Cathie Wood

ARK Invest's CEO and CIO Cathie Wood sees the Federal Reserve as making a mistake by raising rates too fast.

Inflation is still a short-term problem, according to Wood. And this becomes clear when investors start paying closer attention to how gold, the U.S. dollar, and yields have been trading, Wood said during her webinar Tuesday.

"We believe the Fed has been making a mistake, a policy mistake … We are getting all kinds of catalysts ... which should give the Fed a pause," Wood said. "If not pause, it should cause an entire pivot and reversal in policy. They are making a mistake. The markets are telling us they are making a mistake. I think something will break that matters to them if they keep following the lagging indicator called the CPI."

In June, the Fed raised rates by 75 basis points to a range of 1.5%-1.75%, the most significant one-time hike since 1994. And later in July, it is expected to raise rates by another 75 basis points, with the CME FedWatch Tool pricing in the probability of that happening at 90.6%.

The Fed's commitment to the tighter monetary policy comes when inflation runs at 40-year highs. And the latest U.S. annual inflation numbers will likely show continued acceleration to 8.8% in June after posting 8.6% in May, according to market consensus calls. The data will be released Wednesday morning.

However, Wood argued that the Fed should be worried about deflationary forces. "There are all kinds of deflationary signals, which are going to force the Fed, we think, to pivot and reverse its policy," Wood noted. Read More

Gold is trading just under flat leading into the European open

Gold is trading just under flat ahead of the European open at $1724.46/oz. Silver is 0.42% higher at $18.89/oz. In the rest of the commodities complex, both copper (0.95%) and spot WTI (0.88%) are trading in the black. 

Risk sentiment was moderate overnight. The ASX (0.23%) and Nikkei 225 (0.54%) moved higher but the Shanghai Composite closed -0.04% in the red. Futures in Europe are indicating a slightly positive cash open. 

In FX markets the USD has pullback slightly against most of the majors after the recent bout of strength. The biggest mover was GBP/USD which is 0.31% higher. In the crypto space, BTC/USD is 1% higher at $19,509.

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.