Today's Gold and Silver News - 25th July

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Gold Looks to Be Stabilising Around $1,720 As Markets Look Ahead to Fed Hike Next Week

Gold is little changed so far on Friday as traders digest the week’s events and look ahead to next week’s interest rate decision by the Federal Reserve.

Yesterday saw the European Central Bank finally join the hiking party by raising its benchmark rate by 50 basis points, which was double the anticipated move. This saw the euro strengthen against the dollar and provided slight relief for all those commodities priced in dollars, including gold.

The fact the ECB was forced into a relatively large move highlights the size of the task central banks are facing as they try and bring ever-escalating inflation under control. Next week is likely to see the Federal Reserve implement its second successive hike of 75 basis points but with this now long-trailed, it would take a move that surpasses expectations to materially move markets. 

Having endured a difficult July in which its price has plunged from above $1,800 an ounce to now be languishing around $1,720 an ounce, gold looks to have settled into this new level. On the upside, it is hard to see gold making sizeable gains given the backdrop of ever-rising interest rates globally, while support remains for gold as a haven asset given the market jitters about a looming recession as well as the ongoing war in Ukraine. Read More

Silver is Encountering Tough Resistance Near $19 as Weaker Dollar Fails to Deliver Gains

The threshold of $19 an ounce is proving to be a strong resistance level for silver with the metal failing to climb back above this level even in a week, where the strength of the bearish factors that have been pulling the price down, have eased a bit.

A slightly weaker dollar provided relief to equity markets as well as all those commodities priced in the US currency but still silver finds itself stubbornly below $19 an ounce at around $18.75 an ounce.

This highlights how much the metal has fallen out of favour with investors with the prospect of another large interest rate hike by the Federal Reserve next week diminishing silver’s short-term appeal further still.

The glimmer of hope for silver investors is that while the price might not be making significant gains, it is at least not dropping, which given the series of painful weeks the metal has endured since mid-April is something worth toasting. 

Once this large cloud finally lifts from silver’s outlook, the fundamental picture remains supportive so for those brave enough to buy now, this could be a pivotal moment that marks the start of silver’s long overdue recovery. Read More

The Metals, Money, and Markets Weekly: R is for recession - By Mickey Fulp

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Gold prices holding solid gains as U.S. flash PMI data shows activity in manufacturing, service sectors at two-year lows

Recession fears continue to build in the U.S. as preliminary data showed mixed activity within the manufacturing and service sectors in July.

Friday, the S&P Global Flash US Composite PMI reported roughly in-line activity for the manufacturing sector and slowing momentum within the service sector. The report said that the manufacturing PMI data came in at 52.3, down from June’s reading of 52.7. The data was slightly better than expected; according to consensus estimates, economists were looking for a reading around 22.0.

Meanwhile, activity in the service sector was weaker than expected falling to contraction territory at 47., down from June’s reading at 52.7. Economists were looking for a print around 52.6.

The gold market is holding on to strong gains in initial reaction to the latest economic data. The market continues to see a solid technical bounce after briefly falling below critical support at $1,700 an ounce. August gold futures last traded at $1,734.50 an ounce, up 1.23% on the day.

Readings above 50 in such diffusion indexes are seen as a sign of economic growth and vice-versa. The farther an indicator is above or below 50, the greater or smaller the rate of change. Read More

The rule of threes...

The gold market has struggled in recent months and weeks as the U.S. dollar has been on an unstoppable run higher. Although the U.S. dollar has fallen from last week's 20-year high and parity with the euro, there is still a strong consensus that it will remain elevated for the foreseeable future.

However, there is some good news for gold investors. As strong as the U.S. dollar is, it could be losing its relevancy in global financial markets. Fear is a powerful emotion and it is growing among investors. In the U.S., there is a genuine fear of a recession, which would create a stagflationary environment as inflation remains persistently high.

The Bank of American recently made headlines forecasting a mild recession by the fourth quarter. The second largest bank in the U.S. could be a little late as many market analysts, including the Atlanta Federal Reserve, already see the U.S. in a recession. Data from the regional central bank forecasts second-quarter GDP to fall 1.6%, matching the decline in the first quarter.

Analysts have said that a recession will force the Federal Reserve to, if not stop its tightening cycle to at least slow the pace of rate hikes. At the same time, if inflation remains high, this will lead to lower real yields, a positive environment for gold.

But there is also another fear brewing in the marketplace. John Hathaway, Portfolio Manager of Sprott Hathaway Special Situations Strategy, Chris Vecchio, senior market strategist at DailyFX.com, and David Madden, market analyst at Equity Capital, told Kitco News in three separate interviews that a potential sovereign debt crisis is brewing in Europe. Read More 

The Fed will 'abandon' tightening, causing gold to soar higher - Rich Checkan

Gold's performance has been tumultuous this year, with the war in Ukraine sending the metal above $2,000 per ounce. Recently, however, gold has fallen in price, and is down year-to-date by 7.8 percent.

Spot gold is currently trading at $1,725.

Speaking with Michelle Makori, Editor-in-Chief and Lead Anchor at Kitco News, Rich Checkan, President and Co-Founder at Assets Strategies International, said, "people want to know why gold isn't doing its job. I submit it is… it's falling in value, but at a much slower rate than other asset classes." Read More

Will gold survive another 75 basis point hike

The gold market is ending a five-week losing streak and while sentiment appears to be shifting, some analysts say that the precious metal still faces a challenging environment next week.

August gold futures are looking to end the week with a more than 1% gain, last trading at $1,721.40 an ounce.

All eyes will be on the Federal Reserve next week as markets expect the U.S. central bank to raise interest rates by another 75 basis points. Some currency analysts have said that while the U.S. dollar has fallen from its recent 20-year highs, the Federal Reserve's aggressive stance will continue to support the greenback.

"Amid a backdrop of a hawkish Fed and slowing global growth, we think the dollar will resume its broad-based strength before long," said economists at Capital Economics in a report Friday.

Marc Chandler, managing director at Bannockburn Global Forex, said that while gold prices have room to move higher next week, the central bank's decision could limit gains.

"Not only will the Fed most likely hike by 75 basis points, but it will also signal it is not done with the adjustment. I imagine gold will struggle near $1750 and the 20-day moving average is just above there [$1,752]," he said. Read More

Gold at $1678 has demonstrated technical support on multiple instances

On January 3 gold opened at $1800 and began a dynamic rally that concluded on March 9 when gold hit its highest value this year of $2077. In just over three months gold gained roughly $277 in value or 13.33%. On March 15 the Federal Reserve enacted its first interest rate hike since 2018 and marked the beginning of a major correction that continues to this day. During each of the last three FOMC meetings (March, May, and June) the Fed has raised rates.

The Fed raised rates in March by 25 basis points. Followed by a 50-basis point hike in May and a 75-basis point rate hike in June. It is widely anticipated that the Federal Reserve will raise rates another 75 basis points next week when the July FOMC meeting concludes.

These actions have led to a strong price demise in gold from $2077 on March 9 to yesterday’s low of $1678. In just under five months gold has lost just under $400 per ounce or a loss of -19.21%. The low achieved yesterday at $1678 is the lowest value this year and the last instance of gold trading at this level was on August 9, 2021, the day of the infamous “flash crash”. In yesterday’s article, we focused on the flash crash and compared it to yesterday’s low suggesting that it was a logical place where gold could find technical support. Read More

Image Source: Kitco News

Silver is trading higher ahead of the European open

Gold is flat and silver is 0.19% higher at the start of the week. In the rest of the commodities complex, copper has risen by half a percent, and spot WTI has fallen 1.55%.

Looking at risk sentiment overnight, the Nikkei 225 (-0.77%), ASX (-0.02%), and Shanghai Composite (-0.59%) all dropped overnight. Futures in Europe are looking weak ahead of the cash open. 

In FX markets, USD/CHF was the biggest mover overnight rising 0.40%. In the crypto space, BTC/USD fell 3.11%.

News from the weekend: 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.