Today's Gold and Silver News - 21st July

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Gold Just About Holds Above $1,700 Despite Fresh Pain from UK Inflation Data

Gold is just about holding above $1,700 an ounce after the latest UK inflation data showed consumer prices are continuing to rise at their fastest pace in 40 years. 

This persistently high inflation across the world is forcing central banks to increase interest rates on a monthly basis with the Federal Reserve set to implement another 75 basis point move when it meets next week while the Bank of England is mulling a 50 basis point hike. This environment of rising interest rates puts gold under pressure as its lack of yield makes it less attractive than those assets paying interest such as bonds.

It was only a few weeks ago that gold was looking to $1,800 an ounce as a key support but such has been its fall from grace that $1,800 looks a distant memory with investors now hoping that there is stronger resistance at $1,700 to prevent further slides. 

The hope will be that with the next moves by central banks now heavily expected and therefore priced in, the Fed’s likely 75 basis point hike next week won’t prove the negative catalyst to force gold below $1,700, and there remains sufficient support from factors such as rising inflation itself, concerns over economic growth and the continuing war in Ukraine to prevent further falls for gold. Read More

Silver’s Lack of Support Underlined by Metal’s Failure to Climb Back Above $19

Silver’s attempts to climb back above $19 an ounce have yet to prove successful, further underlying the lack of meaningful support for the precious metal.

Today has brought fresh inflation data from the UK that shows that prices are continuing to rise at an ever faster rate with the peak still not yet reached. While inflation would typically be a supportive factor for silver, this has been heavily outweighed by the actions taken by central banks to try and bring runaway inflation back under control.

Next week the Federal Reserve is almost certain to raise interest rates by another 75 basis points while today’s UK inflation data has increased the likelihood of the Bank of England implementing its first 50 basis point hike since the bank gained independence from the UK government. 

These ever-increasing interest rates have diminished silver’s appeal due to its lack of yield with the fall in price from the highs achieved as recently as mid-March both spectacular and painful for holders of silver. The glimmer of hope is that the declines have certainly slowed with signs that the price may be bottoming out…. But then those words have been said before and proven false dawns! Read More

Gold weaker; "volatility collapse" portends bigger price move soon

Gold prices are modestly lower in midday U.S. trading Wednesday, in more subdued mid-summer trading. However, there has been a “collapse in volatility” on the daily bar chart, which suggests a significantly bigger price move is on the horizon in gold—possibly yet this week. Given that gold prices are trending lower on the daily chart, odds favor that a bigger price move being on the downside. Improved trader/investor risk appetite this week is keeping buyers in the safe-haven metals mostly standing on the sidelines. August gold futures were last down $4.90 at $1,705.80. September Comex silver futures were last up $0.042 at $18.76 an ounce.

Global stock markets were mostly higher overnight. U.S. stock indexes are firmer near midday. The U.S. stock index bulls are having a good week so far and have restarted near-term price uptrends on the daily charts. Corporate earnings reports are on the front burner of the stock markets this week. Otherwise, its summertime doldrums trading amid a lack of major, fresh news.

Technically, August gold futures bears have the solid overall near-term technical advantage. Prices are trending lower on the daily bar chart. However, the recent “collapse in volatility” on the daily bar chart (whereby at least three price bars in a row are significantly smaller than previous price bars) suggests a bigger price move is coming soon. It’s important to note that markets typically vacillate between periods of higher volatility and lower volatility, and at present, the gold market is in a period of low volatility. 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 this week’s high of $1,722.00 and then at $1,735.00. First support is seen at $1,700.00 and then at the July low of $1,695.00. Wyckoff's Market Rating: 1.5.

Image Source: Kitco News

September silver futures 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 $17.00. First resistance is seen at today’s high of $19.03 and then at $19.36. Next support is seen at this week’s low of $18.51 and then at $18.00. Wyckoff's Market Rating: 1.5. Read More

Image Source: Kitco News

Take away the support from dollar weakness and gold would have moved much lower

Since last Friday the U.S. dollar has traded under pressure losing value on Friday, Monday, and Tuesday. During the same period gold has been trading under mild selling pressure holding on to a price point just above $1700 per ounce. Recently the dollar hit a high just above 109 on Thursday, July 14 before trading lower for three consecutive days. However, even with dollar weakness for three of the four last trading days gold has not gained any significant value.

Image Source: Kitco News

The decline in dollar value did very little to move gold prices higher. Rather they tempered gold from selling off significantly, keeping the precious yellow metal barely above $1700 per ounce. On Thursday and Friday of last week gold prices dipped below $1700 on an intraday basis, but on both occasions closed just above that key and important psychological price level.

Today the dollar had incremental price gains. As of 5:10 PM EDT, the dollar index is currently fixed at 106.925 after factoring in today’s gain of 0.35%. Concurrently, gold futures lost $16.40 or 0.96%. This clearly illustrates that today's dollar strength has been adding to the selling pressure of gold, but only by a percentage of the overall decline in gold today.

Spot gold is currently fixed at $1696.40 after factoring in today’s decline of $16.40. On closer inspection dollar strength resulted in a $5.50 decline, with the remaining decline of $10.90 directly attributable to selling pressure. This is according to the KGX (Kitco Gold Index).

Recent dollar strength and weakness in gold can be directly attributable to the Federal Reserve’s hawkish monetary policy which has raised rates at each consecutive FOMC meeting since March of this year. Gold traded to its highest level this year in March trading at $2078. This corresponds to the first interest rate hike by the Federal Reserve which also occurred in March. In the last four months, gold has dropped by $383 losing almost 18 ½% in value. Read More

Gold and silver move lower ahead of the European open

Gold (-0.33%) and silver (-0.40%) are once again trading lower ahead of the European open. In the rest of the commodities complex, copper (-0.51%) and spot WTI (-0.71%) are both trading in the red as commodities sentiment suffers. 

Risk sentiment was mixed overnight as the Nikkei 225 (0.44%) and ASX (0.52%) moved higher but the Shanghai Composite (-0.69%) struggled. Futures in Europe are indicating a positive cash open.

In FX markets, the biggest mover overnight was EUR/USD which rose 0.39%. In the crypto space, BTC/USD has pulled back to $22,862.

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.