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Silver sees improved positioning, technicals and interest to go with its recent rally - WisdomTree
Silver’s 7.95% gain over the past week to Aug. 23 means “silver is on the cusp of reversing all the past month’s losses” and the recent bearishness in the overall market is also quickly coming to an end, according to Nitesh Shah, Head of Commodities and Macroeconomic Research for Europe at WisdomTree.
“Net speculative positioning in silver futures fell 88% in the month to 15/08/2023, with positioning now 1 standard deviation below its 5-year average,” Shah said. “However, we suspect that excessive shorts were being covered in the past week (data will be published by Commodity Futures Trading Commission on Friday 25/08/2023 relating to Tuesday 22/08/2023 i.e. after we publish this note).”
Shah said the technical indicators for silver have also become increasingly supportive.
“Since hitting an intraday local low of US$22.35/oz at 13.30 on 15/08/2023 silver prices have bounced up to US$24.27/oz at 16.30 on 23/08/2023 (+8.6%),” he said. “That low point seems to match the Fibonacci-implied support levels looking at year-to-date silver performance (the 38.2% retracement, Figure 2. At 16.30 on 23/08/2023, silver [prices] appear to have pierced through the 61.8% retracement resistance, which technical analysts would see as a bullish sign.” Read More
Latest market-sensitive news and views - Aug. 28
Editor’s note: This daily digest of the latest news and perspective is a must-read for those in business who need to keep abreast of the newest developments in the marketplace, yet do not have time to scour all the media outlets. In less than 10 minutes, you will be caught up and in the know on the current events impacting the marketplace.—Jim Wyckoff. Read More
Gold rallies on short covering, perceived value buying
Gold prices are posting decent gains and silver prices are slightly up in midday U.S. trading Monday. Short covering by the futures traders is featured in gold, along with some perceived bargain hunting. The silver market is seeing some technical buying amid friendly near-term charts. December gold was last down up $13.30 at $1,953.30 and December silver was up $0.137 at $24.72.
This is the unofficial last week of summer for the U.S. Look for the marketplace to become more active next Tuesday, following the three-day U.S. Labor Day weekend holiday. This is a big week for U.S. economic reports, so traders and investors are likely to become at least a bit more tuned in as the week progresses.
Technically, December gold futures bears still have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,963.50 and then at $1,975.00. First support is seen at today’s low of $1,940.10 and then at Friday’s low of $1,931.00. Wyckoff's Market Rating: 3.5.
Image Source: Kitco News
December silver futures bulls have the overall near-term technical advantage. Prices are trending higher on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the July high of $25.82. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at $25.00 and then at $25.345. Next support is seen at Friday’s low of $24.31 and then at $24.00. Wyckoff's Market Rating: 6.0. Read More
Image Source: Kitco News
Gold and silver will outperform as 'stagflation light' sets in - Saxo Bank
The U.S. economy is set to enter a period of very low growth combined with persistent inflation, and this means precious metals like gold and silver are likely to see significant prices increases, according to Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Saxo Bank recently adjusted their U.S. economic outlook for 2024 to what they refer to as ‘stagflation light’, characterized by “sluggish growth paired with persistent inflation.” Hansen said that the massive rise in real interest rates has made “the funding costs for the US almost insurmountably high,” and contributed to the downgrade of U.S. credit by Fitch.
Hansen also points out the “significant escalation in consumption costs with interest rates” affecting credit cards, new cars, and mortgages, and “a noticeable deceleration in job data and spending.”
“This combination of low growth and moderately high inflation is indicative of stagflation, and if materialized it will confirm a view that the Federal Reserve and central banks around the world in general are fighting a losing battle against stubbornly high inflation and that further action will damage economic growth while doing nothing to tame the sticky nature of prices pressure,” he said. “It leads us to believe that the US Federal Reserve will cut rates before the 2% average inflation target has been reached, leading the FOMC to upgrade its target to 3%, a development that will force a repricing of future inflation expectations, and with that a commodity supportive lowering of real yields.”
Hansen said that in periods of stagflation, “specific commodities attract heightened attention” as inflation hedges and for portfolio diversification. Read More
Hedge funds remain bearish on gold, but a potential short squeeze is building
Hedge funds continue to liquidate their bullish gold bets and increase their short positioning as the Federal Reserve is expected to maintain its hawkish bias and keep interest rates elevated at aggressive levels for the foreseeable future.
The CFTC's disaggregated Commitments of Traders report for the week ending Aug. 22 showed money managers increased their speculative gross long positions in Comex gold futures by 8,061 contracts to 105,085. At the same time, short positions rose by 12,366 contracts to 95,976.
"Sharply higher petroleum complex prices over the last several weeks and spiking rates along the yield curve prompted specs to take on short exposure and liquidate longs. Concerns that gold may go through support to significantly lower levels near $1,840 was also a significant driver," said analysts at TD Securities.
The gold market is now net long by 9,109 contracts, as bullish speculative positioning has dropped to its lowest since mid-March.
Analysts at TDS added that the precious metal has room for speculative positioning to turn negative in the near term.
Commodity analysts at Société Générale noted that gold has seen bearish outflows for three consecutive weeks, with $3.9 billion following out of the market this past week. So far this month, gold's speculative bullish positioning has dropped by more than 7 million ounces, its biggest one-month decline since May 2018. Read More
How gold price gets to $10k: BRICS expansion, gold-backed currency, monetary reset - Willem Middelkoop
The BRICS formal invitation of Argentina, Egypt, Ethiopia, Iran, the United Arab Emirates, and Saudi Arabia to join the bloc moves the world a step closer to a "very dangerous phase" for the U.S. and the next major conflict, according to Willem Middelkoop, Founder and CIO of the Commodity Discovery Fund.
"I don't feel comfortable by all these developments, and we shouldn't call it World War III right away, but we're moving towards a very dangerous phase," Middelkoop told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "This BRICS conference is the next step in a financial economic war. And I'm afraid it's all connected, and I'm not the only one who has warned of a possible World War III scenario."
The new BRICS memberships will take effect from January 1, 2024. However, out of the six new members, Saudi Arabia is yet to officially confirm, with the country’s Foreign Minister Prince Faisal bin Farhan stating, “We await further details” and “based on this information and in accordance with our internal procedures, we will make the appropriate decision.” Read More
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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.
