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Silver Price News: Silver Close to 2-Month Low as Inflation Remains Too High
Silver is flirting close to its lowest level in almost two months on the prospect of the Federal Reserve, and other major central banks, being forced to implement further interest rate hikes to fully curb high inflation.
The latest inflation data out of the UK has confirmed those fears with consumer prices continuing to rise way above the Bank of England’s 2% target, increasing the likelihood of a 50 basis point increase to its benchmark rate at its next meeting.
While the inflation picture looks healthier in the US, the battle to continue bringing it down remains far from over with Minneapolis Fed President Neel Kashkari the latest to sound a cautionary note stating that while inflation may be falling, “it’s still too high”.
Given that it was the Fed’s adoption of the aggressive monetary policy in April last year that prompted silver to endure a multi-month slump and have kept prices curtailed ever since the prospect of further hikes by the US central bank is negative for silver. Read More
Gold Price News: Gold Set to Drop Below $1,900 on Hawkish Fed Rhetoric
Gold looks set to fall below $1,900 an ounce after the latest UK inflation data showed price pressures remain stubbornly high, increasing the likelihood of the Bank of England implementing another sizeable hike to its interest rate at a time when the Federal Reserve is still undecided on its next move.
Traders and investors should gain more insight into the prevailing view among the Fed’s interest rate committee with the release later today of the minutes from the July meeting. However, since then the mood and rhetoric from senior Fed officials have turned more hawkish with Minneapolis Fed President Neel Kashkari stating that while inflation is moving in the right direction, “it’s still too high”.
The current macroeconomic environment, where more interest rate hikes remain on the cards, is putting pressure on gold as its lack of yield makes other interest-bearing assets more attractive instead. Read More
UK inflation pressure stays strong despite fall in headline rate
Worries about persistently high inflation in Britain grew on Wednesday as key measures of price growth monitored by the Bank of England failed to ease in July, despite a sharp drop in the headline inflation rate.
The annual consumer price inflation rate cooled to 6.8% from June's 7.9%, the Office for National Statistics said - as the central bank and a Reuters poll of economists had predicted and moving further away from October's peak of 11.1%.
The drop in the headline rate reflected falling energy prices and will be welcomed by British consumers who have faced higher inflation than in most other industrialised countries.
But fresh signs of stickiness in core inflation and consumer service prices echoed warnings by BoE policymakers this month that the risks of long-lasting high inflation were beginning to crystallise. Read More
Is the world on the cusp of Bretton Woods 3.0, 52 years after Nixon closed the gold window?
Insatiable demand for gold from central banks as they diversify away from the U.S. dollar and the growing influence of BRICS nations to compete against the greenback’s role as the world’s reserve currency are bringing new significance to a momentous anniversary.
Fifty-two years ago today, then-President Richard Nixon closed the gold window. No longer would the U.S. dollar be convertible to the precious metal. The move signalled the end of the Bretton Woods Agreement.
Economists have noted that since the world moved away from the gold standard, global growth has soared, built on credit and free-floating fiat currencies. In 1972, global GDP was $3.8 trillion. According to estimates from the International Monetary Fund, global GDP today is valued at $105 trillion, and is up $5 trillion from 2022. Read More
Gold prices remain unchanged, near session lows as U.S. housing starts rise 3.9% in July
The gold market is holding the line at session lows as the U.S. housing market construction numbers look to stabilize.
Housing starts dropped by 3.9% to a seasonally adjusted annual rate of 1.45 million units last month, the Commerce Department said on Wednesday. The data came in roughly in line with expectations. At the same time, June’s data was revised lower to a rate of 1.398 million units from the previously reported 1.40 million units.
The report said home construction is up 5.9% from last year’s depressed levels.
The gold market is struggling to attract bullish attention as improving sentiment regarding the U.S. economy impacts safe-haven flows. December gold futures last traded at $1,933.50 an ounce, nearly unchanged on the day. Read More
Gold, silver tread water ahead of FOMC minutes
Gold and silver prices are not straying too far from unchanged levels in quieter U.S. trading Wednesday. Traders are awaiting this afternoon’s release of the minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC). Both markets hit five-month lows Tuesday. December gold was last down $0.50 at $1,934.60 and September silver was down $0.01 at $22.64.
There is a growing group of economists and market watchers that argue the string of Federal Reserve interest rate increases has successfully tamped down price inflation to the point that no further rate hikes are necessary. Today’s FOMC minutes may or may not provide fresh clues on the monetary policy bent of the U.S. central bank.
Technically, December gold futures prices hit a five-month low Tuesday. Bears have the firm overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,980.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,950.00 and then at $1,963.50. First support is seen at this week’s low of $1,927.50 and then at $1,915.00. Wyckoff's Market Rating: 3.5.
Image Source: Kitco News
September silver futures prices hit a five-month low Tuesday. The silver bears have the firm overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Silver Bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at today’s high of $22.855 and then at $23.00. Next support is seen at this week’s low of $22.265 and then at $22.00. Wyckoff's Market Rating: 3.5. Read More
Image Source: Kitco News
Gold price outlook remains bullish but record highs pushed out to the end of Q1 2024 - ANZ
Growing optimism that the U.S. economy can avoid a severe recession even as the Federal Reserve maintains its hawkish bias continues to weigh on the gold market as prices trade near a six-month low.
However, analysts at the Australian-based bank ANZ said that despite short-term selling pressure, they are maintaining their bullish medium to long-term outlook on the precious metal. Daniel Hynes, senior commodity strategist and the lead author of their latest report, said that while he can't rule out a drop below $1,900, he does see signs of solid support in the marketplace.
"We believe the Fed is near the end of its hiking cycle, the USD remains in a structural downtrend and tightening credit conditions could be an economic risk," Hynes said in the report. "These present a supportive backdrop for gold."
Although ANZ remains bullish on gold, the current lacklustre environment has caused the bank to push back its predictions for new record highs. The Australian bank now sees prices averaging around $2,050 an ounce by the fourth quarter of 2023. Prices are expected to reach new highs by the end of the first quarter of 2024, with an average price of around $2,100 an ounce.
The medium-term bullish outlook comes with December gold futures last trading at $1,933.60 an ounce, unchanged on the day. Read More
Gold prices fall to session lows as the Federal Reserve Minutes signals it might not be done raising interest rates
Gold prices have fallen to fresh session lows as the Federal Reserve maintains its hawkish bias, leaving its options for another rate hike open as inflation pressures remain elevated, according to the minutes of the central bank's July monetary policy meeting.
The minutes provided little forward guidance ahead of September's monetary policy decision as the Committee said it will remain data dependent; however, the minutes show a slight tightening bias.
"Participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee's 2 percent objective over time. They noted that uncertainty about the economic outlook remained elevated and agreed that policy decisions at future meetings should depend on the totality of the incoming information and its implications for the economic outlook and inflation as well as for the balance of risks," the minutes said.
The Federal Reserve's aggressive monetary policy tightening has been the biggest headwind for gold, and the precious metal continues to struggle in this environment. December gold futures last traded at $1,926.80 an ounce, down 0.43% on the day. Read More
Federal Reserve minutes reveal angst regarding ‘Upside Inflation Risks’
The minutes from the July FOMC meeting were released today. The document indicated that most Federal Reserve officials still believe that high levels of inflation are an ongoing threat and merit additional interest rate hikes. However, there was not an overall unison regarding the path forward in what can be best described as mixed messages amongst Federal Reserve members.
One of the primary takeaways was that members were divided over the question of further rate hikes. While most Fed officials were in favour of an increase in the terminal interest rate (Fed funds rate), some members believe that further hikes might take rates too high.
According to an article in The Wall Street Journal, “Minutes of the July policy meeting, released Wednesday, said some officials thought the risks of raising rates too much versus too little “had become more two-sided, and it was important that the committee’s decisions balance the risk of an inadvertent overtightening of policy against the cost of an insufficient tightening.” 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.
