Today's Gold and Silver News - 26th August

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Gold, silver up; focus on Jackson Hole Fed confab

Gold and silver prices are higher but down from session highs in midday U.S. trading Thursday. Short covering in the futures markets and perceived value buying in the cash markets are featured in both metals. However, the U.S. dollar index is up from its daily low and crude oil prices have lost their early gains, which did push the metals off their daily highs. October gold futures were last up $8.10 at $1,760.20. September Comex silver futures were last up $0.173 at $19.085 an ounce.

The marketplace is fixated on the Jackson Hole, Wyoming Federal Reserve annual symposium, which began Thursday. A couple of Fed officials made remarks to the press at the meeting, but markets did not react. Traders are more interested in a speech from Fed Chairman Jerome Powell Friday morning. Past Jackson Hole Fed meetings have significantly moved markets. Markets are expecting Powell to lean hawkish on U.S. monetary policy and on the Fed’s fight against inflation.  

Technically, October gold futures bears still have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the July low of $1,686.30. First resistance is seen at today’s high of $1,769.30 and then at 1,775.00. First support is seen at today’s low of $1,753.80 and then at Wednesday’s low of $1,745.50. Wyckoff's Market Rating: 3.0.

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September 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 the August high of $20.87. The next downside price objective for the bears is closing prices below solid support at the July low of $18.01. First resistance is seen at today’s high of $19.26 and then at $19.50. Next support is seen at this week’s low of $18.605 and then at $18.35. Wyckoff's Market Rating: 2.5. Read More

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Jackson Hole 2022: This is what to expect - Gary Wagner

On Friday, Federal Reserve Chairman Jerome Powell will give his speech at the annual Jackson Hole Symposium in Wyoming.

The widely anticipated event will give hints about upcoming Fed policy.

To help market participants, Powell will need to be clear about when the Fed will stop raising rates, said Gary Wagner, editor at TheGoldForecast.com.

Wagner spoke with David Lin, Anchor and Producer at Kitco News.

“The main thing [market participants] want to understand is at what point will the Federal Reserve stop raising rates… and more importantly, at what point will they start to unwind or, in other words, reduce the Fed Funds rate,” said Wagner.

The Fed has raised its rate by 225 basis points from January to July. The inflation rate in July was 8.5 percent, down from 9.1 percent in June.

Prior to the 2021 Jackson Hole speech, Wagner had forecasted higher inflation going into 2022 when the Fed still had not raised rates. Read More

The highly anticipated Jackson Hole Economic Symposium commences today

Each year the Kansas City Federal Reserve hosts one of the most important economic symposiums in Jackson Hole, Wyoming. This major event is attended by the top central bankers in the United States and globally. This year’s event, the 2022 Economic Policy Symposium, "Reassessing Constraints on the Economy and Policy," will be held August 25-27.

While the Federal Reserve Bank of Kansas City is attended by dozens of central bankers, policymakers, academics, and economists from around the world, it will be Friday’s keynote speech by Chairman Jerome Powell that will garner the most attention.

This year’s symposium occurs at a critical time as the Federal Reserve began an aggressive tightening of its monetary policy. Beginning in March of this year the Federal Reserve raised its Fed funds rate for the first time since 2018. More so, they have raised rates at each of the last four FOMC meetings. They raised rates by 25 basis points in March, 50 basis points in May, and 75 basis points at both the June and July FOMC meetings.

Although there is much debate and uncertainty as to the tone and demeanour of Powell’s keynote speech, Chairman Powell will continue to walk an extremely thin tightrope between the current economic contraction and the current level of inflation. The likelihood that the Federal Reserve can pull off a “soft landing” will be difficult at best and impossible at worst.

Image Source: Kitco News

These facts have been highly supportive of gold prices over the last few weeks. Gold has risen from its low of $1678 on July 21 to its current value of $1771.80 today. Today’s gains were a combination of a softer dollar, fractional declines in U.S. Treasuries yields, and market participants actively buying the precious yellow metal. Read More

Gold price would be $150 higher if not for the U.S. dollar – Wells Fargo

The U.S. dollar has been the main culprit holding gold back this summer, but Wells Fargo still projects the precious metal to end the year above $2,000 an ounce.

Despite this week's gains, gold is still trading below $1,800 an ounce as markets await Federal Reserve Chair Jerome Powell's keynote speech at the Jackson Hole symposium on Friday. At the time of writing, spot gold was trading just above the $1,752 an ounce level, up 0.22% on the day.

If not for the U.S. dollar index at 20-year highs, gold would be around $150 higher than its current trading levels, Wells Fargo's real asset strategy head John LaForge told Kitco News.

"I'm still shocked that gold doesn't want to move. The U.S. dollar is what's holding gold back. Gold would have been closer to $1,900 if not for the move in the dollar," LaForge said on Wednesday. "Gold is still that chameleon asset. For six months, it's moving with real rates. And just when you figured that out, it's moving with the dollar. And just when you figure that out, it's moving with some crisis. For something so muted, it's amazing how often it switches teams."

Wells Fargo's year-end target remains $2,000- $2,100 an ounce, but if the U.S. dollar keeps surprising on the upside, that target could be unachievable.

Over the summer, the dollar has become the popular safe-haven play as other economies struggle with more problematic inflation and growth concerns. And the U.S. dollar could hold on to its strength for the next six months, according to LaForge.

"Our base case is that the U.S. will enter a recession somewhere in October or November, which will last until the middle of next year. Typically the dollar loses strength when signals say we are coming out of recession. So, if our base case is correct, you could see the dollar start acting weaker in Q1 of next year in anticipation of that," he described. Read More

Putin's BRICS new currency could benefit gold and Bitcoin – analysts

With the global de-dollarization trend accelerating, the two assets that could stand to benefit are gold and the crypto space, according to analysts.

Earlier this summer, Russian President Vladimir Putin said that Brazil, Russia, India, China, and South Africa (BRICS) are developing a new basket-based reserve currency.

"The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out," Putin said at the BRICS business forum at the end of June. "We are ready to openly work with all fair partners."

The five countries are also trying to create an alternative mechanism for international payments, he added.

BRICS could also see its membership expand, with Turkey, Egypt, and Saudi Arabia considering joining the group.

This is not the first time something like this has been mentioned, with the BRICS countries already starting to incorporate more local currencies for payments in mutual trades. Over the summer, India and Russia have been holding discussions to accept each other's local RuPay and Mir payment systems, according to the Deccan Herald.

Analysts see this new BRICS reserve currency proposal as an alternative to the U.S. dollar and the International Monetary Fund's (IMF) Special Drawing Rights (SDRs) currency.

"One can only think this is a move to address the perceived U.S.-hegemony of the IMF and will allow BRICS to build their own sphere of influence and unit of currency within that sphere," said ING global head of markets Chris Turner. Read More

Gold consolidates above $1,760 hours ahead of Powell’s speech at Jackson Hole

Gold is traded at around $1,765, while investors are in wait-and-see mode. Their attention is focused on the Jackson Hole symposium.

Indeed, in the popular ski destination of Wyoming, later today Jerome Powell will hold his long-awaited speech, closing the 2022 economic summit hosted by the Fed. After the recent mixed U.S. economic data, investors are expecting the Federal Reserve Governor to provide some further details about the next steps of monetary policy that will be followed by the U.S. Central Bank.

So far this year the Fed has already hiked rates from 0.25% to 2.50%, but investors are awaiting the Bank based in Washington to raise rates to 3.50 – 3.75% by the end of 2022.

However, there are no big expectations for next year, with rates that should more or less remain steady. But the uncertainty remains significant, with many unsolved questions, like the trajectory of inflation and if the Fed will continue its hawkish path into 2023.

Considering the overall scenario, gold has shown relatively modest volatility in the last few days, remaining in the range of $1,750 – 1,780.

From a technical point of view, a surpass of the resistances placed at $1,780 and $1,790 could pull up the price to a new test of $1,820. On the other hand, a decline below $1,750 could be seen as a signal of weakness. Source: Kinesis

Silver price continues to consolidate and recovers the $19 mark

The silver spot price has managed to return above $19, confirming the recent signals of stabilisation and consolidation after the decline seen in the third week of August.

In the last few months, silver suffered from both the strength of the U.S. dollar and fears of a global recession. In fact, a significant part of the demand for this precious metal is coming from the industrial sector (such as photovoltaics and electric cars).

Another crucial market driver has been the monetary policy enacted by the Federal Reserve. Indeed the U.S. central banks raised interest rates several times to contrast the growing rate of inflation. There’s now a lot of attention on today’s speech from Jerome Powell in Jackson Hole. 

The global central bankers meeting hosted by the Federal Reserve this year is focusing on “Reassessing Constraints on the Economy and Policy”. Investors are waiting to discover some further insights about the next decisions made by the U.S. Central bank concerning monetary policy. His speech is due at 10 a.m. E.T (4 p.m. central Europe time), with the headline “The Economic Outlook” offering no further insight into what’s to come.

Any dovish output – and even more any signals of a pause in the rate hikes – could represent a positive catalyst for the silver price. However, a strong hawkish view could be seen as a negative driver for both stocks and commodities. Source: Kinesis

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.