Today's Gold and Silver News - 19th July

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Dollar’s Dip From Record High Gives Gold Light Relief as Fed Hike Expectations Dim

A slight weakening in the dollar has given gold the opportunity to recover some of the ground it lost last week and be trading comfortably above $1,700 an ounce at around $1,720. 

More cautious comments from Federal Reserve officials have dialed back expectations that the US central bank will hike interest rates by 100 basis points when the committee meets at the end of this month. Some hawkish comments by other Fed committee members had proven the catalyst for gold to sink to its lowest level in 11 months as well as register its fifth consecutive week of declines. 

However, with a 75 basis point move now looking likelier, the US dollar has weakened slightly from the record it hit last week, providing relief across equity and commodity markets. 

Nonetheless, a strong dollar allied by central banks seeking to continue increasing interest rates presents a challenging environment for gold to make much headway and after the dramatic plunges of recent weeks, it is hard to see how the precious metal can gain sufficient momentum to climb back above $1,800 an ounce. Read More

Silver Starts Week on Optimistic Note as Weaker Dollar Sees Price Challenge $19

Silver is enjoying a rare positive start to the week with the price attempting to climb back above $19 an ounce.

A slight weakening in the US dollar has allowed both equity and commodity markets to enjoy a brief bit of respite after a punishing few months. With expectations now switching back to the Federal Reserve hiking increase rates by “just” 75 basis points rather than the 100 basis points that was being mooted last week, this has seen the dollar fall back from its record high and caused all those assets priced in the US currency, including silver, to gain as a result.

Expectations on how high or for how long silver can gain must be tempered by the fact that a 75 basis point hike later this month by the Fed, the second in consecutive months, still represents a huge increase in recent history, while the silver’s spectacular fall from investors’ favor in recent months needs more than a slight weakening in the dollar for it regain their love.

In the short-term, silver holders will be hoping that there is sufficient momentum today for the metal to climb back above $19 an ounce and for that level to become the support against future bearish factors.

After a brutal three months, silver must surely be close to reaching its bottom and after a false dawn last week, perhaps today’s gain is finally it? Read More

Bank of America sees mild recession in Q4; inflation remains the biggest threat to consumption

Recession fears continue to rise as the second largest bank in the U.S. expects to see a mild contraction by the end of the year.

In a report published last week, Michael Gapen, U.S. economist at Bank of America Global Research, said he sees the fourth-quarter real GDP falling 1.4% for the year. Previously BofA was expecting the U.S. economy to avoid a recession this year.

"Our previous baseline outlook for the U.S. economy featured a growth recession, with output growth falling below our estimate of potential growth while avoiding an outright contraction. However, a number of forces have coincided to slow economic momentum more rapidly in recent months than we previously expected, and we have taken the signal from this data on board," the report said.

Specifically, the bank noted that consumer spending, according to credit card and debit card activity, is losing momentum. According to Gapen's research, the biggest risk to the U.S. economy remains the persistent rise in inflation.

Last week, the Consumer Price Index rose 9.1% for the year in June, hitting a fresh 40-year high.

"With much of the recent rise in inflation coming from food and energy prices, commodities that face relatively inelastic demand in the short run, households may have less available for discretionary purchases," the report said.

Bank of America also noted that new homeowners face higher mortgage costs and rising home prices, which is weighing on the housing market, a critical component of U.S. GDP. Read More

Gold, silver lifted modestly by bullish outside markets

Gold and silver prices are trading mildly higher in midday U.S. trading Monday. Bullish outside market that see the U.S. dollar index sharply lower and crude oil prices solidly higher are helping to lift the precious metals markets to start the trading week. A lack of fresh, markets-moving economic or geopolitical news early this week has metals traders looking at the outside markets for direction. August gold futures were last up $5.50 at $1,709.10. September Comex silver futures were last up $0.216 at $18.81 an ounce.

Global stock markets were higher overnight. U.S. stock indexes are higher at midday. Corporate earnings reports are on the front burner of the stock markets early this week. Lackluster, lower-volume summertime trading may pervade many financial markets in the coming weeks, until the Labor Day holiday weekend in early September. Traders and investors will be focused more on family vacations before school starts.

Technically, August gold futures prices hit an 11-month low last Thursday. Bears have the solid overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,750.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,650.00. First resistance is seen at today’s high of $1,722.00 and then at $1,735.00. First support is seen at last week’s low of $1,695.00 and then at $1,685.00. Wyckoff's Market Rating: 1.0.

Image Source: Kitco News

September silver futures prices hit a two-year low last Thursday. The silver bears have the strong overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $19.50 an ounce. The next downside price objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $19.00 and then at $19.36. Next support is seen at $18.50 and then at $18.00. Wyckoff's Market Rating: 1.0. Read More

Image Source: Kitco News

The gold market has turned bearish

For the first time in three years, hedge funds have become net bearish on gold, according to the latest data from the Commodity Futures Trading Commission.

Although the gold market is technically oversold, many analysts have said that the bearish momentum in the marketplace could push prices below $1,700 an ounce.

"Investors cut net length by a very large 6% of open interest (3 million oz) as it became very apparent that real rates on the short end of the curve will continue to increase and there was little chance of upside, as nominal policy rates jumped higher and inflation expectations eroded along with the pending economic slump," said analysts at TD Securities. "Continued Fed hikes and less economic activity should see gold length continue to erode, with prices also likely to remain under pressure in the weeks to come.

The CFTC disaggregated Commitments of Traders report for the week ending July 12 showed money managers lowered their speculative gross long positions in Comex gold futures by 11,803 contracts to 91,669. At the same time, short positions rose by 11,364 contracts to 97,802.

For the first time since May 2019, gold's speculative positioning has turned net short by 6,133 contracts. During the survey period, gold prices tested support at around $1,700 an ounce.

"The gold market clearly turned bearish," said commodity analysts at Société Générale. Read More

Dollar weakness erases gold’s losses resulting in modest gains

As of 5:44 PM EDT gold futures basis, the most active August 2022 contract is fixed at $1707 after factoring in today’s gain of $3.40 or 0.20%. At the same time, the dollar gave up 0.57% and is fixed at 107.30. This means that gold had a fractional decline before factoring in the increase because of dollar weakness.

Image Source: Kitco News

This can also be seen in spot gold pricing which is currently fixed at $1709.30. On closer inspection dollar weakness added $8.90 per ounce and traders bid the precious metal lower by $8.20 resulting in a net gain of $0.70. This is according to the Kitco Gold Index.

While dollar strength or weakness is intrinsically always a component of the net change in gold prices, recently it is been the predominant driver moving gold to lower pricing as the dollar moved to its highest value since 2002. Last week the dollar traded to a high of 109, well above a double top that occurred at approximately 104. 104 had been the highest trading value of the dollar index since the middle of 2002.

The dollar has been gaining substantial value since April of this year when it traded just below 90. From its low in April to last week’s high of 109 the index gained 19% when weighed against the basket of currencies that the index is measured against.

On Thursday and Friday of last week, gold prices slipped briefly below $1700. Today gold traded to a low of $1704.40. However, it closed well above its high today of $1722. Read More

Gold trades flat ahead of the European open

Gold is trading flat leading into the European open while silver is around 0.21% in the black. Looking at the rest of the commodities complex, copper is nearly 1% lower while spot WTI is 0.82% higher. 

Indices were mixed in the Asia Pac area as the Nikkei 225 (0.65%) and Shanghai Composite (0.02%) moved higher but the ASX fell 0.56%. Futures in Europe are indicating mixed open.

In FX markets, the greenback moved lower overnight. The biggest mover was AUD/USD which rose 0.60%. In the crypto space, BTC/USD fell 3.21%. 

News from overnight: 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.