Today's Gold and Silver News - 20th October

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Gold on Downward Drift After Latest Hawkish Comments From Fed Official

Gold is drifting steadily downwards to now trade near $1,640 an ounce after a Federal Reserve official stated that the US central bank may need to continue raising interest rates higher than 4.5% if inflation fails to slow. 

Yesterday’s comments by Neel Kashkari, Minneapolis Fed President, were a stark reminder of the difficult macroeconomic environment gold finds itself in with central banks across the world looking to increase interest rates, further diminishing gold’s appeal due to its lack of yield-making interest-paying assets more attractive to investors instead. Read More

Silver’s Recovery Pauses as High Inflation Reiterates Need for More Hikes

Silver has so far failed to climb back above $19 an ounce after the latest comments by a Federal Reserve official that reiterated the need for yet more significant interest rate hikes. 

This hawkish reminder by Neel Kashkari, Minneapolis Fed President, coupled with today’s UK inflation figure coming in above expectations at the highest level in 40 years provided a sufficiently bearish set-up for silver to fail to build on its recent tentative recovery. Read More

Gold prices remain under pressure as U.S. housing starts drop 8% in September

The gold market is trading near session lows and below initial support at $1,650 an ounce; the precious metal is also being weighed down by relatively in-line housing construction data.

Housing starts fell 8.1% to a seasonally adjusted annual rate of 1.44 million units last month, the Commerce Department said on Wednesday. At the same time, data for August was revised lower to a rate of 1.566 million units from the previously reported 1.58 million units.

However, the drop in home construction was relatively in line with consensus forecasts.

For the year housing construction is down 7.7%, the report said.

The gold market is not seeing much reaction to the latest economic data as it sees solid technical selling pressure. December gold futures last traded at $1,638.40 an ounce, down 1% on the day. Read More

It's 'not advisable' for Russia to buy gold to boost reserves, says country's central bank

Purchasing more gold to increase the country's official reserves is counter-productive for Russia at the moment because it increases the nation's money supply, said Russia's central bank deputy governor Aleksey Zabotkin.

The Russian official's comment was in response to a question about whether the central bank could support the country's gold mining industry by buying up all the unsold precious metal. Earlier this year, countries including the EU, U.S., UK, Canada, Switzerland, and Japan banned imports of Russian gold in response to its invasion of Ukraine.

However, the answer revealed more about Russia's money supply policy than its plans for the gold miners.

"In terms of adding gold to Russia's reserves, it is not advisable at the moment because it will push the growth of the money supply," Interfax quoted Zabotkin as saying Tuesday.

Zabotkin pointed out that the Ministry of Finance has the power to determine how much it wants to spend on additional gold reserves and what volumes would be reasonable. Read More

Inflation remains a threat around the world, central bank tightening will keep a lid on gold for now

Rising consumer prices remain a threat worldwide and will continue to force central banks to tighten their monetary policies, which could ultimately keep a lid on gold prices, even against international currencies.

Wednesday, markets received inflation data from Britain, the European Union and Canada. The United Kingdom showed the hottest rise in consumer prices driven by food prices. The Office for National Statistics said its consumer price index (CPI) increased by 10.1% for the year in September. According to consensus estimates, economists were looking for annual inflation to rise by 10.0%.

After a brief dip in August, British CPI has risen back to its highest level in 40 years. The persistent inflation threat comes as the British economy continues to recover from recent market volatility after newly appointed Prime Minister Liz Truss introduced a massive spending plan financed by increasing the nation's debt.

The new government was forced to tear up that plan after the Bank of England intervened in the domestic bond markets to reduce some of the volatility. Read More

Gold price sinks on strong greenback, rising U.S. Treasury yields

Gold and silver prices are down in midday U.S. trading Wednesday. The precious metals are being punished by a strong U.S. dollar index and rising U.S. Treasury yields. These two bearish elements continue to supersede any other potentially bullish factors for the metals. December gold hit a three-week low today and was last down $19.40 at $1,636.60 and December silver was down $0.235 at $18.365.

Technically, the gold futures bears have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,700.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,622.20. First resistance is seen at today’s high of $1,659.50 and then at this week’s high of $1,674.30. First support is seen at $1,630.00 and then at $1,622.20. Wyckoff's Market Rating: 1.5

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The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at the September low of $17.40. First resistance is seen at today’s high of $18.755 and then at $19.00. Next support is seen at this week’s low of $18.155 and then at $18.00. Wyckoff's Market Rating: 2.0. Read More

Image Source: Kitco News

Gold in CAD gears up for another 75 bps hike from Bank of Canada

Gold priced in Canadian dollars now has an even bigger obstacle to overcome next week as analysts start to price in another 75 basis point rate hike from the Bank of Canada due to problematic core inflation that is not cooling down.

Gold in Canadian dollars is doing slightly better than gold in U.S. dollars. During the last 30 days, gold in CAD is up 1%, while gold in USD is down 2.8%.

This week's highly anticipated macro number has been September's inflation data. But it offered a mix of good and bad news.

Annual inflation showed signs of cooling in September, coming in at 6.9%, down from August's 7%, and marking the third monthly deceleration. However, excluding food and energy prices — a measure more important to the Bank of Canada — prices rose 5.4% from 5.3% in August.

While gasoline prices have been decelerating, food prices saw one of the most significant increases — up 11.4%, the fastest price acceleration since 1981.

In light of this, analysts believe Canada's central bank will be disappointed with this report. To get inflation under control, the Bank of Canada was one of the first central banks to tighten policy this year, hiking rates by a total of 300 basis points. The biggest one-time increase happened in July when the Bank raised rates by 100 basis points. Read More

Federal Reserve Presidents Bullard & Kashkari confirm Fed can't pause hikes

In an exclusive interview with Kathleen Hays of Bloomberg News today Federal Reserve Bank of St. Louis President James Bullard reinforced the resolve of the Federal Reserve to continue their aggressive rate hikes to curb high inflation. James Bullard said that it is good news that markets are pricing in anticipated interest rate hikes, making it important that officials "follow through" and implement those increases to curb high inflation.

He said that the Federal Reserve has continued to be surprised that inflationary pressures continue to grow confirming that the goal of the Federal Reserve is to get their fed funds rate closer to 4.5% or 4.75%. Bullard said that a 75-basis point rate hike at the November FOMC meeting "has been more or less priced into markets". However, he added that he'd prefer to wait until the meeting to decide his preference for the size of the hike.

He did not confirm that a November 75-basis point rate hike would be followed by an additional 75- basis point rate hike in December saying that he didn't want to "prejudge" what he would support at the December meeting. 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.