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Gold Price News: Gold Thrives on US Debt Ceiling Uncertainty, Turkey Elections
Gold continues to hold firm above $2,000 an ounce amid continued uncertainty over the health of the US economy as talks over raising the country’s debt ceiling have yet to find an agreement.
The prospect of the world’s largest economy defaulting is keeping demand for gold and its safe-haven appeal very healthy. Add in a Federal Reserve that looks to have come to the end of its hiking cycle and the medium-term outlook for gold looks supportive.
Investors are also closely monitoring developments in Turkey, where it looks as if the presidential election is set to go for a run-off with the first vote too close to call. Read More
Silver Price News: Silver Hit by Gloomy Industrial Outlook Despite Strong Fundamental Case
In contrast to its precious metal peer gold, silver is struggling to gain much traction having dropped about $2 an ounce from the high touched earlier in the month.
The prospect of the Federal Reserve pausing on any more interest rate hikes should be supportive for silver, as this has been the single biggest headwind for the metal’s price in the last year. However, silver’s greater industrial exposure compared with gold has seen it affected by concerns over the health of the global economy.
Some of these fears look overblown, particularly considering silver draws much of its industrial demand from two industries that look well set to thrive irrespective of the short-term economic situation. Read More
Gold price climbs as New York's manufacturing activity sees sharp drop in May
The gold market moved higher as the New York manufacturing sector reported a steep drop in May, according to the latest data from the New York Federal Reserve.
The regional central bank said its Empire State manufacturing survey's general business conditions index tumbled 43 points to -31.8 in May. The data missed consensus forecasts, which called for a reading of -3.7.
The May data followed April's recovery, with the index coming in at 10.8 last month.
"Manufacturing activity declined significantly in New York State, according to the May survey. After jumping into positive territory last month, the general business conditions index plunged forty-three points to -31.8," the report said.
The components of the report showed that the new orders index plunged 53 points to -28, the shipments index fell 40 points to -16.4, and the number of employees index remained in negative territory for the fourth consecutive month, coming in at -3.3. Read More
Gold price at risk of dropping to $1,900 as rally runs out of steam, markets pricing in Fed rate cuts too early, says ABN AMRO
Gold is already up 10% year-to-date, and its rally is at risk of running out of steam, said ABN AMRO bank.
Gold's stellar rally has taken prices as far as they are likely to go this year, Georgette Boele, senior economist at ABN AMRO, said in a note Friday.
"This year gold prices have rallied by more than 10% versus the U.S. dollar. A weaker dollar and expectations that the Fed hiking cycle will come to an end soon are the main reasons behind its strength. Concerns about the economic outlook, inflation and geopolitics tensions have also helped. We think that the upside is limited from current levels," Boele wrote.
With June Comex prices last trading at $2,018.70 an ounce, gold is at risk of falling back to the $1,900-$1,950 range before resuming its trend higher, Boele pointed out.
Gold's upside is limited because the Federal Reserve won't deliver rate cuts as early as markets expect.
"Markets anticipate Fed rate cuts to start in Q3 so this is reflected in gold prices. We think that rate cuts will come later and that the easing will only to start at the end of this year," Boele explained.
The U.S. dollar will also weigh on gold in the next few months since the greenback is likely to rally as markets re-price Fed's rate cuts for a later period. Read More
Gold, silver up a bit as U.S. debt-limit talks loom
Gold and silver prices are modestly higher in quieter midday U.S. dealings Monday. Traders are awaiting fresh fundamental inputs as a busy data week lies ahead, including negotiations aimed at keeping the U.S. government from defaulting on its debt obligations. June gold was last up $3.10 at $2,023.00 and July silver was up $0.121 at $24.275.
Focus this week is on the U.S. debt-limit extension talks between the White House and Congress. Reports said congressional leaders and President Biden will likely meet Tuesday. The U.S. government could run out of money as soon as June 1. U.S. Treasury Secretary Yellen said over the weekend that progress is being made between Democrats and Republicans, in order to avoid a financially catastrophic U.S. government default on its debt obligations.
Technically, June gold futures bulls still have the solid overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,085.40. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,980.90. First resistance is seen at today’s high of $2,027.50 and then at $2,040.00. First support is seen at last week’s low of $2,005.70 and then at $2,000.00. Wyckoff's Market Rating: 7.5.
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July silver futures bulls and bears are on a level overall near-term technical playing field but the bulls have faded recently. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April and May high of $26.435. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $24.50 and then at $24.735. Next support is seen at last week’s low of $23.91 and then at $23.50. Wyckoff's Market Rating: 5.0. Read More
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Debt ceiling negotiations will resume on Tuesday which supports gold prices
According to the Financial Post today, “In her second letter to Congress in two weeks, Treasury Secretary Janet Yellen confirmed that the agency will be unlikely to meet all U.S. government payment obligations by early June, triggering the first-ever U.S. default. The debt ceiling could become binding by June 1, she said.”
A US debt default would greatly hinder the ability of the Federal Reserve to set short-term interest rates. Reuters today reported that “A default on U.S. Treasury debt would be a leap into the unknown for the Federal Reserve's ability to conduct monetary policy to achieve its job and inflation goals. That's because U.S. government bonds are the key to how the central bank sets its short-term interest rate target. Anything that gums up the Treasuries market could scramble those mechanics.”
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The debt ceiling crisis and potential default continue to be highly supportive of gold prices keeping gold above $2000 an ounce. Read More
Gold to trade in 'uncharted territory' after breaching this price level on reignited recession risk - ANZ
After testing record highs just over a week ago, gold is looking at a broad range between $1,900 and $2,100, with ETF investors waking up in light of renewed recession risk, said Australia and New Zealand Banking Group (ANZ) in its latest note.
"The upward channel suggests a broad range of USD1,900–2,100/oz. Despite prices hitting a record high, the Relation Strength Index (RSI) is not showing an overbought level," ANZ commodity strategists Daniel Hynes and Soni Kumari said.
Gold must break the critical resistance of $2,062 to see another significant move higher. "A break above this level could trigger fresh technical buying, and prices could trade in the unchartered territory of USD2,100/oz," Hynes and Kumari wrote.
At the same time, any hawkish Federal Reserve sentiment could trigger a selloff down to $1,900, they added.
ANZ expects gold to hit $2,100 an ounce by the end of this year and $2,200 in the second half of next year. According to the bank, any price dips will be viewed by investors as buying opportunities. Read More
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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.
