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Gold Price News: Gold Falls Back as US Dollar Strengthens
Gold prices fell for a second straight day on Friday, giving up most of the gains seen in the first half of the week.
Prices eased as low as $2,649 an ounce on Friday, down from around $2,682 an ounce in late trades on Thursday.
Gold KAU/USD – 1hr view – Kinesis Exchange
The US dollar made gains against other major currencies through the week, and this naturally put downward pressure on dollar-denominated gold prices.
Central banks cut rates:
The Bank of Canada on Wednesday cut interest rates by 50 basis points to 3.25%. This was followed by the Swiss National Bank which cut rates by 50 basis points on Thursday, as well as the European Central Bank which made a smaller 25 basis point cut to 3.15% – all in line with market expectations. The latest cuts come in the context of broad expectations that the US Fed will follow suit with a 25 basis-point cut on Wednesday this week.
However, the latest monetary policy decisions were not enough to support gold, leaving the price drifting lower on Thursday and Friday, albeit with prices managing to post a modest 0.7% week-on-week gain.
Market positioning:
Net long positions on the Comex platform rose for the third straight week in the week ending December 10th, according to World Gold Council data. Net long positions increased to 862.9 tonnes, compared with 803.2 tonnes in the week to December 3rd, the figures showed: Gold Open Interest Chart 2021 | World Gold Council. The positioning on Comex is suggestive of a renewed bullish sentiment in the market, although net longs are still below their recent peak of 976.46 tonnes in the week ending September 24th. Read More
Silver Price News: Silver Ends Week with 1.3% Loss
Silver prices fell for a second straight day on Friday to cap the week with moderate losses overall.
Prices fell as low as $30.36 an ounce on Friday, down from around $31.08 an ounce in late trades on Thursday and from a mid-week high of $33.36 an ounce on Wednesday. The combined falls on Thursday and Friday left silver posting a 1.3% loss on a week-on-week basis.
Silver KAG/USD – 1hr view – Kinesis Exchange
Stronger dollar weighs on precious metals:
The US dollar strengthened against other major currencies through the week, weighing on dollar-denominated gold and silver prices, as it makes the precious metals more expensive for buyers in other currencies.
Meanwhile, three central banks, the BoC, SNB and ECB all cut interest rates last week – a notionally supportive element for precious metals prices. However, sentiment seems to have turned bearish in the short-term, following silver’s highs in late October.
Technical analysis:
On the technical charts, silver prices on Thursday managed to push through descending oblique minor resistance at $31.93 an ounce on an intraday basis. However, the sharp and sudden fall to around $31.00 an ounce later in the session appeared to re-confirm this resistance level, lending a bearish tone to the start of Friday’s session. Friday’s fall below the 20-day moving average at $30.97 an ounce further added to the sense that momentum has shifted to the downside. This raises the prospect of a potential re-test of ascending oblique major support at $29.91 an ounce in the coming days. Read More
Gold prices holding fast as New York Fed's Empire Survey drops to 0.2 in December
The gold market is holding on to initial support around $2,650 an ounce but is not seeing any significant bullish momentum after the New York Federal Reserve reported weaker-than-expected activity in the region’s manufacturing sector.
On Monday, the regional central bank said its Empire State Manufacturing Survey dropped to 0.2, down sharply from November’s reading of 31.2. According to consensus estimates, economists were looking for a slightly better reading of 6.4.
“On the heels of a strong November, manufacturing activity held steady in New York State in December. The pace of price increases moderated, and employment declined modestly. Firms were fairly optimistic about future conditions.” ~Richard Deitz, Economic Research Advisor at the New York Fed said in the report.
The gold market is holding in positive territory but is not attracting any new momentum in its initial reaction to the disappointing and volatile data. Spot gold last traded at $2,659.50 an ounce, up 0.49% on the day.
According to some economists, the latest economic data paints a difficult picture for the Federal Reserve as economic activity slows, but inflation remains stubbornly elevated. Read More
Spot gold trades at $2,655/oz as U.S. flash S&P PMI shows strength in services, continued weakness in manufacturing
The gold market was edging lower after the latest U.S. data showed growing momentum in the service sector but further weakening in manufacturing.
S&P Global reported on Monday that its flash Purchasing Managers Index (PMI) for the service sector rose to 58.5 in December, up from November’s reading of 56.1. Activity in the service sector exceeded expectations, as economists had forecasted a reading of 55.7.
The report highlighted that activity in the service sector reached its highest level in over three years.
Meanwhile, the U.S. manufacturing sector continued to contract. According to the report, the PMI for the manufacturing sector fell to 48.3, down from November’s reading of 49.7 and also below the consensus forecast of 49.4.
S&P Global noted that activity in the manufacturing sector hit a three-month low in December.
“[G]rowth remained heavily skewed toward the service sector, where an acceleration of growth contrasted with a steepening decline in manufacturing,” the report said.
The gold market continued to come off its earlier highs following the PMI data release, but remained well off session lows. Spot gold last traded at $2,655.43 per ounce, for a gain of 0.25% on the day. Read More
PBoC will buy gold for months to come as China preps for Trump’s trade war - FX Empire’s Zernov
China’s central bank restarted gold purchases in November after a six-month pause, and the Asian giant will likely continue to build up its bullion reserves ahead of Trump’s trade wars, according to Vladimir Zernov, Market Analyst at FX Empire.
Zernov noted that China spent half a year waiting for gold prices to fall, but they never did.
“China’s central bank did not buy gold since April as it hoped to increase its reserves at lower prices and waited for a strong pullback,” he wrote. “However, this pullback did not happen, and China’s central bank (PBOC) restarted its gold purchases in November. Apparently, the pullback towards the $2600 level was sufficient to lure PBOC back into the market.”
“Not surprisingly, the price of gold rallied after PBOC revealed its purchases,” he added. “The bank added 160,000 ounces to its reserves, which have grown to 72.96 million ounces.”
Zernov said that China’s move showed it remains committed to diversifying its central bank reserves amid rising tensions with the U.S. Read More
A hawkish Fed could trigger a medium-term correction in gold - OANDA’s Wong
Caution is creeping into the gold market as investors prepare for the Federal Reserve to announce a hawkish rate cut following its last monetary policy meeting of the year.
Although gold remains in a holding pattern ahead of Wednesday's decision, one analyst said that the central bank’s messaging could spark a larger correction in the precious metals market. Spot gold prices last traded at $2,653.40 an ounce, up 0.22% on the day, as the market treaded water.
In his latest note on gold, Kelvin Wong, Senior Market Analyst at OANDA, observed that the yellow metal continues to struggle with resistance above $2,700 an ounce. He added that gold faces significant headwinds as bond yields rise and inflation fears persist.
“Market-transacted financial instruments have started to price in a further uptick in U.S. inflationary expectations, as derived from the movements of both the 5-year and 10-year U.S. breakeven inflation rates, which have been trending upwards since the start of the current Fed interest rate cut cycle,” he said in his note. “The primary catalyst for the current medium-term uptrend in the 5-year and 10-year U.S. breakeven inflation rates has been triggered by the proposed policies of Trumponomics 2.0. These policies include deeper corporate tax cuts and higher trade tariffs on U.S. imports, which are likely to revive inflationary pressures in 2025 and beyond.”
Wong also highlighted that real yields on 10-year notes have significantly rebounded after testing support last week at 1.90%. He said that a push towards 2.29% would increase the opportunity cost of holding gold, making it a less attractive asset for investors. Read More
Investors wait for Wednesday’s Fed decision on interest rate cut
The Federal Reserve will convene for the last FOMC meeting of the year on Tuesday and conclude on Wednesday, December 18. Investors consider a third consecutive rate cut by the Federal Reserve is almost a certainty. According to the CME’s FedWatch tool, there is a 95.4% probability that the Federal Reserve will cut rates by 25 basis points (1/4%) taking the Fed’s benchmark “Fed funds” rate to between 4 ¼% and 4 ½%.
However, the remains uncertainty as to the monetary policy path of the Federal Reserve next year. While Fed members have laid out a clear path of rate cuts to normalize interest rates to approximately 3 ½%, it is the pace or timing of upcoming rate cuts that is unclear.
According to Jon Faust, a former senior advisor to Chairman Powell from 2018 until earlier this year, “Right now, either a cut or a hold could be justified. What officials say about the path of the fed-funds rate is likely to be more important than whatever they decide about the December meeting in particular.”
There is however no clear consensus amongst the 18 other Federal Reserve officials. According to an article in the Wall Street Journal, “Dallas Fed President Lorie Logan warned against cutting too far on what she views as a mistaken belief that a more normal interest rate for the economy is much lower. She compared the situation to a ship captain whose depth finder might mistake mud for water.” Read More
The rise of hard money: Physical gold currency launched in Florida – Goldback CEO Jeremy Cordon
There is an ongoing shift in the West in how people view money, with persistent inflation and economic concerns driving interest in alternatives to the U.S. dollar, according to Jeremy Cordon, CEO of Goldback.
"People are really starting to feel inflation now," Cordon told Kitco News anchor Jeremy Szafron. "It was more of this sneaky long-term thing. People are noticing that they can't pay their rent, there's not a lot left over, things cost twice as much at the grocery store, and the packs of food they are used to buying are smaller."
This realization has sparked much interest in alternatives to the current fiat system. "People are buying into Bitcoin and gold. Also, the level of interest in Goldback has exploded over the last few years."
Goldback solves a 2,600-year-old problem in that gold can be spent in small, interchangeable increments, Cordon pointed out, as he shared the details behind the company's Florida launch. Watch the podcast
Gold slightly down on position evening ahead of FOMC
Gold prices are down a bit and silver prices up a bit in quieter midday U.S. trading Monday. The two metals have not strayed too far from unchanged price levels on the day, amid position-squaring ahead of the U.S. data point of the week: the FOMC meeting of the Federal Reserve that begins Tuesday morning and ends Wednesday afternoon with a statement and then a press conference from Fed Chair Jerome Powell. The Fed is widely expected to do a 0.25% interest rate cut. February gold was last down $3.80 at $2,671.90 and March silver was up $0.087 at $31.115.
Goldman Sachs no longer sees another Federal Reserve interest rate cut in January and the investment bank expects Powell to deliver that message at this week’s FOMC statement and Powell’s press conference Wednesday afternoon.
Bitcoin rose to a record high above $106,000 by ongoing optimism over President-elect Trump’s support for crypto currencies. This element could be pulling away some investor buying interest in the precious metals.
Technically, February gold bulls have the overall near-term technical advantage but have faded recently. Prices are still in an uptrend on the daily bar chart, but just barely. Bulls’ next upside price objective is to produce a close above solid resistance at the December high of $2,761.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,629.70. First resistance is seen at today’s high of $2,683.00 and then at $2,700.00. First support is seen at today’s low of $2,661.40 and then at $2,650.00. Wyckoff's Market Rating: 6.5.
Image Source: Kitco News
March silver futures bulls have the slight overall near-term technical advantage but have faded. Silver bulls' next upside price objective is closing prices above solid technical resistance at the December high of $33.33. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at last Friday’s high of $31.63 and then at $32.00. Next support is seen at last week’s low of $30.755 and then at $30.50. Wyckoff's Market Rating: 5.5. Read More
Image Source: Kitco News
Gold to see more volatility in 2025 with a narrower path to $3,000 - MKS’ Nicky Shiels
Gold’s path to record highs in 2025 appears more complex heading into the new year, according to one market analyst.
In her 2025 precious metals outlook, Nicky Shiels, Head of Research & Metals Strategy at MKS PAMP, said she expects gold to trade within a fairly wide range between $2,500 and $3,200 an ounce, with the precious metal’s fate largely determined by the Federal Reserve. At the same time, MKS forecasts gold prices to average $2,750 an ounce for the year, up 14% from this year’s current annual average.
“Gold prices at $3,000+ or $2,500- depend on whether the Fed is ahead or behind the Trumpflation curve; we expect them to be behind, leading to falling real rates and a softer US$ in the latter half of the year,” she said. “Structurally, the positive feedback loop of high-for-longer inflation, ongoing deglobalization, currency debasement, central bank dedollarization, messy and unpredictable geopolitics, unsustainable global debt paths, and an under-owned general investor community ensures that gold remains a safe asset diversifier.”
Although gold has solid fundamental support in 2025, Shiels noted that the probability of a bear market next year is higher than that of a bullish scenario.
In her report, Shiels stated a 30% chance of gold trading closer to $2,500 an ounce next year as President-elect Donald Trump drives American exceptionalism with pro-growth policies such as tax cuts and deregulation. Read More
Live From The Vault - Episode: 203. TRUMP'S BRICS Tariffs Bullish for Gold
In this week’s Live from the Vault, Andrew Maguire explores November’s pivotal turning point for gold igniting a physically-driven rally, while Trump’s proposed BRICS tariffs hasten de-dollarisation and boost global gold demand.
As silver gains momentum, driven by surging industrial and military demand in China, Andrew examines the market shift towards physical over paper trading, highlighting a transformative moment for both metals.
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.
Featured Image - Source: Unsplash
