Today's Gold and Silver News - 23rd September

Image Source: Unsplash

Gold in British pounds bounces off lows as BoE raises interest rates by 50 basis points

The gold price in British pounds has bounced off its lows as the Bank of England raised the Bank Rate by 50 basis points and continued to signal its commitment to bring inflation back down to its 2% target.

The 50-basis point move, which pushes U.K interest rates to 2.25%, was in line with market expectations.

Gold against the pound continues to trade in negative territory but has managed a small bounce off its lows in initial reaction. Spot gold priced in sterling last traded at £1,475 an ounce down 0.58% on the day.

The BoE while maintaining its focus on inflation, said that uncertainty around energy prices have stabilized after the government announced consumer support including the Energy Price Guarantee.

“The Guarantee is likely to limit significantly further increases in CPI inflation, and reduce its volatility, while supporting aggregate private demand relative to the Committee’s August projections,” the BoE said in its monetary policy statement.

However, the Bank added that inflation will still remain elevated through the rest of the year. Read More

The Fed will 'absolutely kill' demand, markets, if it keeps tightening - Tavi Costa

High debt-to-GDP, excessive company valuations, and elevated inflation mean that Fed tightening is “going to absolutely kill demand,” said Tavi Costa, Portfolio Manager at Crescat Capital.

“Those three macro imbalances create, in my view, major political constraints when it comes to fighting inflation,” he said. “I don’t think the economy can really handle what we’re doing.”

The Federal Reserve increased its key interest rate by 75 basis points on Wednesday, causing the Dow Jones to close 500 points lower.

“In my view, we’re going to see a bigger decline in equity markets,” Costa claimed. “I don’t think this is an environment where you want to be buying the dip.”

Costa spoke with David Lin, Anchor and Producer at Kitco News, at the Precious Metals Summit at Beaver Creek, Colorado. Read More

Investors want to hold on to their gold as the pain from rate hikes is coming - SSGA's George Milling-Stanley

Now is not the time to liquidate your core gold positions as the Fed has been clear that economic pain will be coming, according to one gold market strategist.

In an interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that gold prices could continue to struggle as three components of the U.S. economy show resilient strength even as the Federal Reserve maintains its aggressive monetary policy stance.

Solid gains in the U.S. dollar, which trades near its highest level in more than two decades, relatively healthy consumer demand and relative strength in equity markets are the three forces the gold market currently faces that are keeping a lid on prices.

"Right now, the gold market isn't in charge. Until we see these conditions change, gold's prospects are going to remain somewhat limited," he said.

Although equity markets have been in a solid downtrend for most of the year, with the S&P in bear-market territory down 21%, Milling-Stanley said that the selloff has been mild compared to the rally seen in the past 13 years. Read More

Gold is so unloved it is becoming immune to Fed's oversized rate hikes - MKS' Shiels

The gold market shows relative strength in the face of rising interest rates and a U.S. dollar that continues to trade near its highest level since 2002. Now could be a tactical time to buy gold, according to one market analyst.

In her latest research note, Nicky Shiels, head of metals strategy at MKS PAMP, said that rising economic risks is helping gold find a solid floor around $1,660, even as the Federal Reserve is maintaining its aggressive monetary policy stance as it lowers its growth outlook.

Wednesday, after raising interest rates by another 75 basis points, economic projections from the U.S. central bank signalled that the federal funds rate will peak around 4.6% in 2023. Although interest rates are expected to rise, the Federal Reserve lowered its growth forecasts, forecasting the U.S. economy will grow 0.2% this year and 1.2%, down from June's projections.

During the press conference, Powell warned consumers economic pain is on the horizon as the central bank focus on bringing inflation down. Read More

Gold, silver see modest gains on safe-haven demand, short covering

Gold and silver prices are firmer in midday U.S. trading Thursday. Heightened geopolitical concerns have prompted some mild safe-haven demand and are keeping the speculative bears on the sidelines late this week. Short covering in the futures markets was featured in gold and silver today, following recent losses. Rising U.S. Treasury bond yields and a very strong U.S. dollar index did limit buying interest in the precious metals today. October gold was last up $6.60 at $1,672.40 and December silver was up $0.125 at $19.605.

Global stock markets were mostly lower overnight. U.S. stock indexes are down at midday and hit nine-week lows today. Risk aversion is still elevated late this week after Russian President Putin mobilized more troops to fight his war with Ukraine, and also implied he could use his nuclear weapons if Russia's integrity is threatened.

The marketplace Thursday was digesting this week's FOMC meeting that saw the U.S. Federal Reserve raise its main interest rate by 0.75%, which is what most expected. Fed Chairman Powell as his press conference after the FOMC statement was released Wednesday afternoon said it's likely the Fed will do two more 75 basis-point hikes this year. He also said a "soft landing" for the U.S. economy is not likely because the Fed must stamp out problematic price inflation. A Barron's news headline today reads, "The Fed signals more pain." Other global central banks Thursday also raised their interest rates, including Switzerland and the U.K.

Technically, October 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 $1,600.00. First resistance is seen at this week's high of $1,687.00 and then at $1,700.00. First support is seen at this week's low of $1,651.50 and then at $1,635.00. Wyckoff's Market Rating: 1.5.

Image Source: Kitco News

December silver futures bears have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $21.00. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at $20.00 and then at $20.25. Next support is seen at today's low of $19.25 and then at $19.00. Wyckoff's Market Rating: 2.5. Read More

Image Source: Kitco News

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.