Today's Gold and Silver News - 15th August

Image Source: Unsplash

Gold Holds Onto Week’s Gains on Hopes That Future Fed Hikes Will Be Less Aggressive

Gold is ending the week by holding onto much of its recent gains as the recent US inflation data that pointed to the pace of rising consumer prices having peaked, raising the prospect of the Federal Reserve needing to be less aggressive with future interest rate hikes.

This potential for a less hawkish rate trajectory has also weakened the US dollar and given more breathing space for gold to climb with the two assets having a typically inverse relationship. Add in rising geopolitical tensions between the US and China as well as concerns that the global economy is heading for recession, particularly following figures released by the UK today, and it points to a bullish outlook for gold.

However, while gold undoubtedly has a fair wind pushing it along currently, the precious metal’s upside potential will still be capped by the Federal Reserve’s next moves. While expectations on the next rate hike have softened from a 75 basis point increase to a 50 basis point one, the reality is that more interest rate hikes are likely.

As such the release next week of the Federal Open Market Committee’s minutes will be closely pored over by investors keen to gain a march on where the next interest rate move will land. It is important for gold to make gains while momentum is with it and regain the $1,800 an ounce threshold as the medium-term outlook still remains cloudy. Read More

Silver Shows Strength of Support at $20 as Markets Assess True State of Global Economy

Silver is still trading above $20 an ounce with the volatility that the precious metal can be prone to experiencing has calmed for the time being as investors assess what the dominant factor is.

Figures out earlier in the week increased optimism that inflation may have peaked in the US, giving broader markets a boost as well as reining in expectations of how aggressive the Federal Reserve will need to be on future interest rate moves to bring inflation back to its 2% target.

Silver’s complex mix of potential roles as a haven asset, an industrial metal and a store of value over time has left it largely standing still. If the global economy is headed for recession then that will crimp industrial demand, a potential negative for silver, yet equally a recession may see investors return to the traditional haven assets such as silver.

For now, silver investors will be grateful to see the strength of support that there clearly now is for the precious metal with $20 an ounce an important support level. How much higher it can climb will be largely dependent on how aggressive the Fed’s future rate hikes prove to be as there remains a lot of upward potential for silver if you consider where it was trading just a few months ago. Read More

A Worse Financial Crisis than 2008? Peter Schiff forecasts sustained and higher inflation, followed by an implosion of the U.S. dollar

Despite a month-long streak of rallies for U.S. stocks, a financial crisis worse than 2008 is looming, said Peter Schiff, Chief Market Strategist at Euro Pacific Asset Management.

Schiff spoke with David Lin, Anchor and Producer at Kitco News. Schiff warned that if the Federal Reserve keeps raising interest rates, then a worse financial crisis than 2008 will occur. Read More

The Metals, Money, and Markets Weekly: Z is for zero - By Mickey Fulp

Listen to the podcast

Gold price posts fourth weekly gain, but Wall Street split between bulls and bears - Kitco's gold price survey

Despite failing to stage a breakout rally after cooler inflation data, gold is still looking to close Friday with its fourth consecutive weekly gain. However, Wall Street remains split on the precious metal's direction next week.

The slowdown in inflation was the main message from this week's macro data. Yet, Federal Reserve speakers continued to push back against the idea of a potential Fed pivot.

The U.S. Consumer Price Index (CPI) came in at 8.5% in July and was lower than the market expectation of 8.7%, following June's 9.1% annual gain. Core inflation, which strips out volatile food and energy costs, accelerated 5.9% from a year ago, surprising slightly on the downside but maintaining the same pace as in June.

On top of that, U.S. Producer Price Index (PPI) rose more slowly in July, coming in at 9.8% on an annual basis versus the expected 10.4%.

Nevertheless, despite signs of cooling inflation, the Fed remains resolute in its tightening path. The U.S. central bank is "far, far away from declaring victory" on inflation, said Minneapolis Federal Reserve Bank President Neel Kashkari at the Aspen Ideas Conference this week.

"[I haven't] seen anything that changes" the need to raise the rates to 3.9% by year-end and to 4.4% by the end of 2023, Kashkari added. The fed's funds rate is currently in the 2.25%-2.5% range.

San Francisco Fed President Mary Daly also said in an interview with the Financial Times this week that it is far too early to "declare victory" against inflation.

In response, gold gained, but it failed to breakout significantly above the $1,800 an ounce level as many bulls were anticipating. At the time of writing, December Comex gold futures were trading at $1,813.60 an ounce, up 1.3% on the week. Read More

Where is gold's summer rally? This price level is needed for breakout

If gold can't close around the $1,820 an ounce level, a breakout summer rally could be out of the question for the precious metal, with some analysts even warning of a pullback to $1,700 an ounce.

Gold closed Friday's price action with the fourth weekly gain in a row, up 1.5%, with December Comex gold futures last trading at $1,818.10 an ounce.

Many analysts expected gold to see a significant rally after the slowdown in inflation. The CPI numbers came in below expectations this week, with the annual inflation running at 8.5%, following June's 9.1% print. But gold could not capitalize on the immediate gains the precious metal saw.

"The CPI data was lower than many had expected. And that was primarily driven by a drop in energy," TD Securities global head of commodity strategy Bart Melek told Kitco News.

Melek agrees with the Federal Reserve speakers this week, who pushed against a Fed pivot from aggressive rate hikes.

"There continues to be a significant issue surrounding inflation. Chances are that inflation will continue to stay beyond Federal Reserve's preference," Melek said.

The problem is that energy prices could continue to fall in the short term, but the inflationary pressures could return once colder weather kicks in.

"Past August, energy will stop being a source of disinflationary pressure. As winter comes, demand increases. Those price declines we've seen in energy might subside. It is very unlikely that the Fed will be comfortable tilting policy towards lower rates as many had expected in early 2023," Melek noted.

For gold, this means there is still a significant risk of prices retreating back to $1,700 an ounce, Melek warned. "Based on Fed commentators, the central bank is of the view that inflation is a problem and a slower economy will not deter them from continuing to take action," he said. Read More

The most consequential week for commodities in 2022

The Consumer Price Index number released on Wednesday marked a turning point in the markets, argued Kitco's mining audiences manager Michael McCrae.

On Friday McCrae recorded Roundtable with Kitco correspondent Paul Harris and Exploration Insights editor Joe Mazumdar.

The Wednesday inflation news from the Labor Department shows that U.S. consumer prices were unchanged in July. The CPI was flat last month after advancing 1.3% in June. A drop in oil prices was credited. McCrae argued that the inflation narrative has weakened.

"It's just one month's data, but there was a sea change. Money came back to beaten-up tech. The NASDAQ was up 1.51% for the week," said McCrae. "Beaten up copper hit a six-week high on hopes the Fed will stop tightening. It finished the week at the $3.70 pound level."

"Although gold was an inflation trade, it had been taken down in the past few months but also rose this week. Gold shot through $1,800 ounce on the CPI announcement and finished the week in the $1,790 range." Listen to the podcast

Gold will play a big role in the coming global 'monetary reset' as U.S dollar loses its dominance - Maxime Bernier

A global monetary reset is inevitable, as fiat currencies are being debased due to excessive money printing. The U.S. dollar will be dethroned as the dominant global reserve currency by currencies backed by a basket of commodities including gold, according to Maxime Bernier, Founder and Leader of The People's Party of Canada.

"A commodity-backed money system will happen," he stated. "I don't know when, but a fiat money system cannot live too long. And after many decades, with all this debt and money printing across America and Canada and Europe, it will have to end."

"We need to tell central bankers to have an inflation target of zero," he said. "After that, I believe we need to have a monetary reset internationally, having money that will be based on gold or other commodities, like we had in the 19th Century," said Bernier. Read More

Traders buy the dip all week reinforcing support for gold futures at $1800

On Monday, August 8 gold futures opened at $1790 and by the close of trading had broken and closed above its 50-day moving average and closed at $1805 per ounce. Throughout the remainder of the week, December gold futures closed above $1800 on a daily chart. That being said, on Tuesday, Thursday and today December gold briefly traded to an intraday low between $1798 and $1799 prompting traders to buy the dip and move gold back above the key important level of $1800 per ounce.

Image Source: Kitco News

The chart above is a 480-minute candlestick chart of gold futures which shows that in six instances market participants witnessed gold briefly break below $1800 and on each occasion recovered and closed above that key psychological price point. Both the daily and intraday charts demonstrate traders' resolve to buy gold futures on each occasion that they perceived gold had become oversold below $1800. Read More

Inflation is not over yet despite lower CPI, long-term, ‘moderate hyperinflation’ is coming – Nathan Lewis

The latest headline consumer price index (CPI) fell slightly from the previous month, coming in at 8.5%, compared to June’s reading of 9.1%.

Despite a lower CPI reading, inflation will likely persist in the long-run, according to Nathan Lewis, editor and author of the Polaris Newsletter.

“We might get another cycle of currency debasement, currency debauchery, which has been going on intermittently since 1971, since we left the gold standard. The value of the dollar today is about 1/50th compared to gold to what it was in those days, so we’ve been playing this game for a long time. We might get another act in the play coming up soon. I think we should probably expect that, which would be more inflation,” Lewis told David Lin, Anchor for Kitco News. 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.