Today's Gold and Silver News - 18th August

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Silver Continues to Hold Above $20 as Metal Sees Volatility Fade Amid No Fresh Catalyst

Silver is still just about holding above $20 an ounce despite a negative price performance so far this week. 

For a metal that is often prone to bouts of volatility, silver’s price has traded in a very narrow range just above $20 an ounce so far in August. This underlines the strength of support that silver has now built up around this threshold as well as reflecting the fact the macroeconomic picture hasn’t dramatically changed in recent weeks.

Inflation remains a concern, as shown by today’s high figure out of the UK, with central banks likely to continue implementing a series of interest rate hikes to curb rising prices. Equally, the juggling act central bankers face in curbing inflation while not tipping an economy into recession was evidenced earlier in the week with China’s surprise rate cut following a slowdown in the country’s economy. 

Insight into how the US is seeking to balance these dual concerns will be available later today with the release of the minutes of the Federal Open Market Committee's latest meeting. Silver investors will be hoping these minutes point to fewer interest rate rises now needed in the US with the metal very reactive to the actions of the Fed with silver’s multi-month price plunge from April to July triggered by the change to a hawkish approach by the US central bank. Read More

Gold Trades Near $1,775 as Markets Await Fed Minutes Gain Clarity on Bank’s Next Move

Gold is trading around $1,775 an ounce as the markets await the minutes of the Federal Open Market Committee’s last meeting, which should give greater clarity on the US central bank’s view on the current economic situation and the trajectory of future interest rate increases.

Having made considerable gains since dropping below $1,700 an ounce in late July, gold is finding considerable resistance to climb back above the important psychological threshold of $1,800 an ounce. The main driver for the recent price gains has been the prospect of future rate hikes by the Fed being less aggressive and shorter-lasting than previously anticipated. However, this is tempered by the reality that more hikes will nonetheless be needed, which diminishes the appeal of a non-yield-bearing asset such as gold.

Today’s high inflation print in the UK is a stark reminder that while there are signs that the pace at which consumer prices are rising in the US may have peaked, in other parts of the world, inflation is still running away. Gold has so far proven to be driven more by the actions of central banks rather than finding support from its perceived role as a hedge against inflation with this enduring inflation proving a negative for the gold price.

In this environment, it is hard to see where the catalyst may come to push gold back above $1,800 an ounce as long as the US dollar remains as strong as it has been in recent months and while the Fed remains on course for further rate hikes over the coming months. Read More

Credit Suisse downgrades its average gold price forecast to $1,725

Despite gold's resilience in the challenging environment of rising interest rates and a stronger U.S. dollar, the precious metal faces growing bearish sentiment, according to one market analyst.

In a note published Wednesday, commodity analysts at Credit Suisse said they are lowering their gold price forecast for this year because of the rising interest rates and real yields. The Swiss bank now sees gold prices averaging the year around $1,725 an ounce, down from the previous estimate of $1,850 an ounce.

"The downturn in gold prices is a sharp reversal of the price performance at the beginning of 2022, including when gold briefly traded above $2,000/oz in early March on safe-haven demand due to the Russia-Ukraine war. The geopolitical trade was short-lived, with gold declining in subsequent weeks as central banks around the world began to raise rates to combat inflation," the analysts said in the report.

The bank is leaving its 2023 average price forecast unchanged at $1,650 an ounce. For 2024 the analysts see gold prices averaging the year around $1,600 an ounce, down from the initial estimate of $1,650. The long-term price forecast remains unchanged at $1,450 an ounce.

Fahad Tariq, lead author of Credit Suisse's updated forecast, said that downside risks in the gold market are growing. He added that given where interest rates are and surging momentum in the U.S. dollar, gold's current fair value should be around $1,590 an ounce.

"This indicates that gold prices have decoupled from real rates in recent months and are being supported by safe-haven demand, or from a singular focus on high inflation. To us, this suggests downside risk if the bear case outlined above materializes," the analysts said in the report. Read More

Russia is looking into its own gold standard after LBMA ban

Russia is proposing its own international standard for precious metals after getting banned by the London Bullion Market Association (LBMA). And it could have a fixed price in national currencies.

The country’s Finance Ministry said it is “critical” to create the new Moscow World Standard (MWS) to “normalize the functioning of the precious metals industry” and have an alternative to the LBMA.

“The basis of this new structure will be a new, specialized international precious metals brokerage headquartered in Moscow, which will rely on the MWS,” the Finance Ministry said in a letter quoted by Russian media.

Russia is also proposing to fix prices of precious metals in the national currencies of key member countries or via a new monetary unit — such as the new BRICS currency proposed by Russia’s President Vladimir Putin.

The price-fixing committee would include central banks and other large banks from the Eurasian Economic Union (EEU). Member states of the EEU are Russia, Kazakhstan, Belarus, Kyrgyzstan, and Armenia.

The idea would be to make membership attractive to big gold players like China, India, Venezuela, Peru, and other South American countries. Read More

$2,400 gold will come by 2023, Bitcoin falling to $10k is 'more probable' than a rally

Precious metals and Bitcoin have reached pivotal “breakout” points and are on the verge of another major move, according to Patrick Karim and Kevin Wadsworth, technical analysts and founders of Northstar & Badcharts.

Karim and Wadsworth spoke with David Lin, Anchor for Kitco News.

Despite high inflation and geopolitical uncertainty, gold’s performance has been flat this year. However, Karim said that under certain conditions, gold will experience a breakout rally. In particular, he told investors to watch the gold-silver ratio.

“The gold-silver ratio is an [indicator], where if there’s risk-on, if the market melts down or a spike, the gold-silver ratio will crescendo up,” he said.

Once the gold-silver ratio goes below a certain level, Karim said that “silver and gold will outperform U.S. equities, and silver will outperform gold in the initial legs of the recovery phase of U.S. equities.”

Wadsworth agreed with Karim’s analysis.

“We’re in a sideways trading range for gold at the moment,” said Wadsworth. “It’s got a floor of about $1,680, and the top is somewhere just below $2,000… as long as we stay in that sideways trading range, I’ve got no concerns whatsoever. To me, this is just a staging post on the way to much higher values.”

Karim added that if gold can “break out” beyond its $1,800 to $2,000 price levels, then that would be a “game changer” that could see gold reach new heights.

Ultimately, gold is poised to reach at least $2,400 by 2023, according to Northstar & Badcharts’ analysis. Read More

Gold, silver down on demand concerns; no reaction to FOMC minutes

Gold and silver prices are lower in afternoon U.S. trading Wednesday, amid worries about demand for precious metals following this week’s downbeat economic data coming out of China and still-heightened worries about a U.S. and/or global recession. Rising U.S. Treasury bond yields and a firmer U.S. dollar index on this day were also bearish outside market elements for the metals markets. October gold futures were last down $11.00 at $1,768.50. September Comex silver futures were last down $0.29 at $19.79 an ounce.

The just-released minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC) showed members remained concerned about inflation, believing it will remain elevated for some time to come. Members expect “ongoing increases” in the Federal Funds rate—the main U.S. interest rate. The FOMC members also said the U.S. economy’s trajectory was noticeably weaker than what they thought at the previous FOMC meeting. The marketplace was looking for clues on the timing and degrees of upcoming monetary policy tightening from the U.S. central bank. Right now, the Fed funds futures market is putting nearly even odds on either a 0.5% or a 0.75% interest rate increase at the September FOMC meeting. The marketplace, and the metals, showed no significant reaction to the minutes, which contained no big surprises.

Technically, October gold futures prices hit a two-month low today. The gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the August high of $1,814.40. 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 $1,786.30 and then at 1,800.00. First support is seen at the August low of $1,759.70 and then at $1,750.00. Wyckoff's Market Rating: 3.0.

Image Source: Kitco News

September silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $22.00. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at $20.00 and then at $20.25. Next support is seen at $19.47 and then at $19.25. Wyckoff's Market Rating: 3.0. Read More

Image Source: Kitco News

Gold price holding steady loss as Federal Reserve remains focused on inflation threat - Fed Minutes

Gold prices remain under pressure but are largely ignoring the minutes from the Federal Reserve's July monetary policy meeting, even as the central banks continue to focus on the ongoing inflation threat.

The minutes showed that the committee continues to see inflation as a significant risk to the economy.

"Participants observed that inflation remained unacceptably high and was well above the Committee's longer-run goal of 2 percent," the minutes said. "Participants also noted that the high cost of living was an especially great burden on low- and middle-income households. Participants agreed that there was little evidence to date that inflation pressures were subsiding."

The gold market appears to be taking the latest minutes in stride, holding steady losses. December gold futures last traded at $1,779.20 an ounce, down 0.52% on the day.

According to some market analysts, comments from the Federal Reserve that interest rates could remain at higher levels for longer could be a negative for the gold market. Many analysts have noted that gold has managed to hold up well as investors are expecting the U.S. central bank to reserve course on interest rates by mid-2023. Read More

Zimbabwe pushes on with its 'gold plan' to fight inflation, offers miners incentives to beat production targets

Zimbabwe, which has been trying to tame inflation by selling gold coins, is now going a step further. It wants to incentivize the nation's biggest gold miners to produce above the state-planned targets.

Back in July, Zimbabwe's central bank started selling gold coins to get inflation under control by providing a store of value to the country's plunging currency and giving the population an alternative to the U.S. dollar.

One week after kickoff, the country saw strong demand, with the country's central bank selling 1,500 gold coins and planning to release 2,000 more. 

Large miners are now being encouraged by the government to produce more gold. And those who exceed their targets can receive 80% of the payment for the additional output in foreign currency, Bloomberg quoted Deputy Mines Minister Polite Kambamura as saying. The current payment plan is a 60-40 split between foreign and local currency payments.

The country's gold miners see a larger share of foreign currency earnings as a benefit to sustain their operation costs. Gold exports are currently the third top foreign currency earner, followed by platinum and remittances. 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.