Today's Gold and Silver News - 14th July

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Gold’s Dreadful July Pushes Price to 9-Month Low Ahead of Latest US Inflation Data

Gold is challenging levels last seen in late September ahead of the release of the latest batch of US inflation data that is likely to show that the rate at which consumer prices are rising is still yet to peak.

Gold has suffered a dreadful July so far, dropping almost $100 an ounce after falling through the psychologically important threshold of $1,800 an ounce to now be trading around $1,725 an ounce.

Today’s US inflation data will be a key indicator of whether the Federal Reserve needs to maintain its aggressive monetary policy for a while longer yet. The jobs data out of the US at the end of last week illustrated that the world’s largest economy remains in relatively good condition so a high inflation figure today will further embolden the central bank in further large interest rate hikes not just later this month but in the following months too.

It is this environment of ever-increasing interest rates that has been the catalyst for gold’s spectacular recent fall with the precious metal’s lack of yield-reducing its appeal compared to other safe-haven assets such as bonds that are providing greater returns.

Holders of gold will be hoping that the majority of gold’s punishment has already been meted out and with another 75 basis point hike now priced in, its current level represents a low point where it will stabilize from. Read More

Silver Is Showing Signs That Nadir Has Been Reached as It Tries to Climb Back Above $19

Silver failed to hold above $19 an ounce and is now trading at levels last seen two years ago. However, Wednesday brings a glimmer of optimism with the price pointing upwards and attempting to climb back above $19. 

Investors’ attention will be trained on the US inflation figure out later today which will give an indication of how serious a problem these fast-rising consumer prices are becoming. With inflation having long since proven to be far from transitory, the question has changed to when inflation will peak with today’s figure expected to come in higher than May’s print.

It is this combination of high inflation and the subsequent measures by central banks to tackle it by increasing interest rates that have caused silver to plummet over the last three months. By now, having suffered a series of weekly declines, silver is starting to show signs that the end of the pain may be in sight with the price stabilizing around $19 an ounce.

With silver having fallen out of favor so spectacularly, it will need to climb back above $19 as quickly as possible to give greater weight to the theory that it may finally have reached its nadir and attention can instead focus on the positive medium-term fundamental outlook for the metal. 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. Read More

Gold withdraws from the Shanghai Gold Exchange improved

Gold withdrawals from the Shanghai Gold Exchange (SGE) totaled 140t in June, a 37t improvement from May and 7t higher Y/Y (according to the WGC). The economy in China showed decent signs of recovery amid fewer COVID-related restrictions and accommodative policies. June’s manufacturing Purchasing Managers Index (PMI) rebounded to the highest level since last March. This could indicate that the harder times are about to turn.

In terms of investment, Chinese gold ETFs saw a 0.3t (-US$37mn) inflow in June, leading to an 18.3t (US$1bn) net outflow during H1.

The WGC report said, as local economic activities continued to improve, gold withdrawals from the Shanghai Gold Exchange (SGE) extended their recovery in June. But total withdrawals in H1 2022 registered a 12% Y/Y decline due to COVID disruption. Read More

Bank of Canada surprises with 100bps hike, gold priced in CAD sees volatile swings

The Bank of Canada caught the markets off guard by raising rates 100 basis points, taking its key interest rate to 2.5%. This is the biggest one-time hike since 1998.

The reason for such an aggressive move was stubbornly high inflation.

"Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR), and will likely remain around 8% in the next few months," Canada’s central bank said Wednesday.

Markets expected a 75-basis-point hike in July after the Bank raised rates by 50 basis points in June. 

This is the fourth consecutive rate increase by the bank since March, which puts it ahead of its peers and demonstrates its strong commitment to getting 40-year high inflation under control. 

In its decision, the Bank of Canada noted that inflation is not just due to external factors like the war in Ukraine.

"Domestic price pressures from excess demand are becoming more prominent. More than half of the components that make up the CPI are now rising by more than 5%," the bank said. "Also, surveys indicate more consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting." Read More

This is why gold is below $1,800 even as U.S. inflation hits a 40-year high at 9.1%

The gold market has bounced off its low but is still struggling to find solid bullish momentum after U.S. inflation rose 9.1% in June.

Some gold investors have been frustrated with gold's recent price action as the precious metal is traditionally seen as an inflation hedge. As markets digest the latest Consumer Price Index report, gold is starting to see some solid gains. August gold futures last traded at $1,738.30 an ounce, up 0.72% on the day.

However, some analysts note that gold's relatively disappointing price action makes sense within a broader market scope.

Despite gold's rally, analysts note that the precious metal is generally struggling as an inflation hedge because markets don't see inflation as a long-term threat as the Federal Reserve aggressively raises interest rates. Following the June Consumer Price Index report, markets are now pricing in a more than 50% chance that the U.S. central bank will move by a full 1.00%. For comparison, markets were only pricing in less than 8% chance Tuesday.

“While in theory gold prices should benefit from higher inflation numbers, the reality is that these higher inflation figures suggest that the Fed is likely to become even more aggressive in rasing rates to quell strong inflation. This is resulting in a stronger U.S. dollar versus other major currencies as well as placing a lid on future inflation expectations,” said commodity analysts at CPM Group in a note to clients.

Although inflation is rising, the Federal Reserve's resolve to bring it down is pushing real yields higher, causing breakeven rates to fall. Breakeven rates, the difference between nominal and real yields, have fallen across the curve at the fastest pace in two years. Read More

Gold, silver rebound on short covering after hot U.S. CPI

Gold and silver prices are higher in midday U.S. trading Wednesday. Gold hit an 11-month low early on today, following a U.S. inflation report that ran the hottest in 41 years, suggesting the Federal Reserve will keep its aggressive stance on tightening U.S. monetary policy. However, the gold and silver prices reversed course later in the morning when futures market bears decided to take some profits and did some short covering. August gold futures were last up $12.20 at $1,737.00. September Comex silver futures were last up $0.232 at $19.20 an ounce.

Technically, August gold futures prices hit an 11-month low early on today and the reversed course to score a bullish “outside day” up on the daily bar chart. Bears still 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 today's high of $1,744.30 and then at $1,750.00. First support is seen at $1,721.60 and then at today's low of $1,704.50. Wyckoff's Market Rating: 1.5

Image Source: Kitco News

September silver futures prices hit a two-year low Tuesday. 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 $19.50 and then at $19.85. Next support is seen at $19.00 and then at this week's low of $18.63. Wyckoff's Market Rating: 1.5. Read More

Image Source: Kitco News

CPI report leads to extreme volatility in gold’s first 15 minutes of NY trading

Today's CPI report revealed that inflation continues to run exceedingly hot at 9.1%, a level not seen since November 1981. According to the U.S. Bureau of Labor Statistics, "The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.3 percent in June on a seasonally adjusted basis after rising 1.0 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 9.1 percent before seasonal adjustment."

The report said that the increase in inflation was broad-based and that the indexes for gasoline, shelter, and food were the largest contributors. Energy continued to be the number one commodity of most concern. The energy index increased by 7.5% over the month and 41.6% over the last year, the largest 12-month increase since the period ending in April 1980. Higher energy costs contributed to almost half of all items increase.

Headline inflation had a substantial increase well above forecasts from economists polled by the Wall Street Journal. The Wall Street Journal poll concluded that inflationary pressures last month would increase by 8.8% far below the actual numbers. Read More

Gold and silver move lower ahead of the European open

Gold (-0.54%) and silver (-0.75%) have moved lower heading into the European open. In the rest of the commodities complex, copper (-1.04%) and spot WTI (-0.09%) are also in the red. 

Risk sentiment was mixed overnight as the ASX (0.44%) and Nikkei 225 (0.62%) pushed higher but the Shanghai Composite fell 0.10%. Futures in Europe are indicating a negative cash open. 

In FX markets, the dollar index pushed 0.50% higher and USD/JPY (1.00%) was the biggest moving major. In the crypto space, BTC/USD is back at $20k.

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.