Today's Gold and Silver News - 26th July

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Silver Languishes Below $19 as Markets Look Ahead to Fed’s Latest Interest Rate Hike

Silver is languishing around the mid to late $18 an ounce with no clear market direction as we enter the final week of July. 

This week is set to be dominated by the Federal Reserve’s interest rate decision on Wednesday with silver investors fearing another large hike will be the trigger for fresh pain to be poured onto the metal’s price. 

It was the Fed’s switching of monetary policy back in April that prompted silver’s sharp decline over the following months having started the year climbing up above $26 an ounce. However, those heady days seem but a distant memory for those investors now having seen their holdings plunge by $8 an ounce, or by more than 30 percent. 

The glimmer of optimism for silver is that the price is finally stabilizing at its current levels at that with the market expecting a 75 basis point increase by the Fed, confirmation of that won’t materially affect its price. Recent history suggests that silver has been more heavily punished than gold by the same underlying cause so just because the move feels largely priced in, silver may yet experience a further plunge on Wednesday. Read More

Gold Confirms Signs of Stabilisation but How Long That Lasts is Down to Fed’s Latest Move

Gold is starting a new week by confirming the signs of stabilization seen at the end of last week with it continuing to trade in the mid $1,720s an ounce.

How long this period of stabilization lasts will be down to the market reaction to the Federal Reserve’s latest interest rate announcement on Wednesday.

By now a 75 basis point hike seems all but certain so while there is bound to be an immediate price move following the release of the figure, the hope for gold investors will be that the move has already been priced in and that the gold price can hold around its current levels.

July has proven to be a tough month for gold with the dual pressures of rising interest rates reducing gold’s appeal due to its lack of yield. In particular, the hawkish policies of the Fed have resulted in the US dollar strengthening to near record levels which has increased the negative environment for gold given its typically inverse correlation with the greenback.

The final week of July brings the prospect of further pain still with the Fed’s latest decision but if gold can survive the week largely intact, then the hope will be that inflation figures will finally show signs of having peaked and therefore the central banks can tone down the aggressiveness of their actions, giving gold breathing space over the course of the second half of the year. Read More

Gold prices start the week down despite weak USD, silver prices down 2%

Gold investors appear hesitant to jump into the precious metal even as the U.S. dollar starts the week on a soft note.

According to some analysts, the Federal Reserve's impending monetary policy decision this week has pushed many investors and traders to the sidelines. According to the CME FedWatch Tool, markets see a more than 77% chance of a 75-basis point move. Although the prospect of a 100-basis point move is effectively off the table, analysts have said that gold continues to struggle as the Federal Reserve expects to reiterate its hawkish positioning for further aggressive rate hikes in the fall.

August gold futures last traded at $1,718.50 an ounce, down 0.5% on the day. Although some analysts expect gold has room to run higher this week, it will remain at the mercy of the U.S. dollar, which could see new momentum following the central bank's monetary policy decision.

Currency analysts at Brown Brothers Harriman said that they remain bullish on the U.S. dollar even as it sees three days of consecutive losses.

"We are not yet ready to change our strong dollar call. Yes, the U.S. economic data have been weakening, but we do not think a recession is imminent. When all is said and done, we believe the U.S. economy remains the most resilient. However, we expect a period of consolidation ahead for the dollar until the U.S. economic outlook becomes clearer," the analysts said in a note. Read More

Gold could see a relief rally if Fed raises rates by 75 basis points - Standard Chartered

The gold market is holding its ground above $1,700 an ounce ahead of the Federal Reserve's monetary policy decision this week. While the precious metal has been resilient in the face of challenging headwinds, one market analyst sees the potential for further downside in the long term.

Suki Cooper, precious metals analyst at Standard Chartered, said in a report published Friday, that although gold has struggled in recent weeks, the price action has been encouraging in what is traditionally a seasonally slow period for the precious metal.

She added that gold prices could have room to move higher in the near term following the Federal Reserve's monetary policy decision. Markets are currently expecting to see a 75-basis point hike on Wednesday. The CME's FedWatch Tool shows a 24% chance of a 100-basis point move.

"Given how far gold prices have fallen in recent sessions, we believe the gold market is also pricing in a 75bps hike at the July meeting and that a 100bps hike would come as a surprise and pressure prices below the key level of USD 1,690/oz. If prices were to breach this level, gold would be exposed to significant downside, whereas a 75bps hike may see a relief rally in gold," she said. Read More

Too big to Fail? Exposing the Great Wealth Transfer. Feat. Peter Antico

In this week’s Live from the Vault, Andrew Maguire sits down with the director of ‘The Paradigm of Money’ documentary, Pete Antico, to talk about the unprecedented transfer of wealth between the shrinking Middle-Class and the financial elite.

The macroeconomic scholar exposes Wall Street’s corruption, drawing attention to the trillion-dollar government bailouts profiting ‘Too Big to Fail’ institutions while regular Americans struggle to face inflation.

Gold, silver and copper are ripe for short covering - analysts

Hedge funds continue to add to their bearish bets on gold. Still, analysts say that the downside could be limited and the market is becoming an attractive contrarian move.

The CFTC disaggregated Commitments of Traders report for the week ending July 19 showed money managers lowered their speculative gross long positions in Comex gold futures by 613 contracts to 91,056. At the same time, short positions rose by 11,992 contracts to 109,794.

Gold's net short positioning increased to 18,738 contracts. During the survey period, gold prices tested support at around $1,700 an ounce. Bearish positioning is at its highest level since May 2019.

Analysts have noted that the gold market has been in a solid downtrend as the Federal Reserve has aggressively raised interest rates to slow down the economy and cool rising inflation pressures. The central bank is looking to raise interest rates by another 75 basis points Wednesday. Markets see interest rates potentially rising to between 3.50 and 3.75% by the end of the year.

However, many analysts have also said that these rate hikes have been priced into the market, limiting gold's downside through the rest of the year. Some analysts have also noted that a slowing economy and potential recession could cause the Fed to slow the pace of rate hikes.

"Any sign that the Federal Reserve is relenting on rate hikes will be good for gold," said John Hathaway, senior portfolio manager of Sprott Hathaway Special Situations Strategy. "I look at these numbers as a signal about sentiment and people being despondent, discouraged. It's from these low points in terms of psychology that you get these dramatic rallies." Read More

Gold looks good as the Fed will Pivot on Interest rates after the summer - Sprott's John Hathaway

The gold market has seen sharp declines in the last three months as the U.S. dollar and bond yields have soared higher; however, one portfolio manager is optimistic that the precious metal is close to carving out a bottom as prices hold support at $1,700 an ounce.

In an interview with Kitco News, John Hathaway, senior portfolio manager of Sprott Hathaway Special Situations Strategy, said that while gold still faces some challenging headwinds, the fundamental outlook is starting to shift.

Hathaway's bullish outlook on gold comes as markets look for the Federal Reserve to raise interest rates by 75 basis points on Wednesday. Hathaway said one of the reasons why he is bullish on gold is because the U.S. central bank is closer to the end of its tightening cycle than it is to the beginning.

He added that tightening monetary policy has probably already pushed the U.S. economy into a recession.

"The Federal Reserve's hawkish posturing is cratering the economy," he said. If you look at the economy on a real-time basis, it's declining. "Any sign that the Federal Reserve is relenting on rate hikes will be good for gold."

Hathaway said that he would expect the central bank to start to pivot and slow the pace of rate hikes by the end of the summer. He added that the central bank will not want to push the economy into a recession ahead of the November election.

"By the end of summer, inflation could moderate from 9% and the Fed will declare victory. But moderation is not a victory, inflation will still remain high and a problem for consumers," he said. Read More

This week could be the most important week of the summer

Two exceedingly important events will take place this week. The Federal Reserve will convene and conclude the July FOMC meeting. The Open Market Committee will begin on Tuesday and conclude on Wednesday, July 27 when they will release a statement containing their updated and revised monetary policy. This will be followed by a press conference by Chairman Jerome Powell. With inflation continuing to run exceedingly hot and swell to higher levels.

The second major event is the release of the second quarter GDP on Thursday, July 28. This report will give economists a clear indication as to whether or not the economy is heading into a recession. Currently, the assessment is that the second quarter GDP is expected to show negative growth. If this assessment is correct it would be the second contracting GDP in a row which is the definition of a recession. According to the Atlanta Fed GDP Now its latest data is suggesting a decline of 1.6% for the second quarter. Concurrently Dow Jones, a consensus forecast of economists expects a 0.3% increase.

These two reports collectively could make this week one of the most important weeks of the summer and shape the economic outlook short term.

Image Source: Kitco News

As of 6:04 PM EDT, gold futures are trading under pressure today with the most active August futures contract fixed at $1717.70. The dollar also traded fractionally lower today with the dollar index currently down 0.26% and fixed at 106.34. Read More

Gold and silver move higher ahead of the European open

 Both gold (0.32%) and silver (0.59%) are trading higher leading into the European cash open. Elsewhere in the commodities complex, copper (1.99%) and spot WTI (2.10%) are trading well as sentiment in commodities picked up in general. 

Risk sentiment was good overall overnight. The ASX (0.26%) and Shanghai Composite (0.80%) performed well but the Nikkei 225 fell 0.24%. Futures in Europe are projecting a negative cash open. 

FX markets were slightly quiet. The biggest mover overnight was USD/CAD which fell 0.13%. In the crypto space, BTC/USD is trading at $21,078.

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.