Today's Gold and Silver News - 29th September

Image Source: Unsplash

Gold Sinks to Fresh Lows After Fed Officials Reiterate Need for Hikes

Gold is falling again with the price now languishing at levels last seen in March 2020 after a series of Federal Reserve officials reiterated the need to keep raising interest rates to try and bring inflation under control.

The Fed’s hawkish policy of raising interest rates has had a doubly negative impact on gold as not only has it made the non-yield bearing asset less attractive, it has also helped strengthen the US dollar to record levels, which given gold’s typically inverse correlation with the greenback has exacerbated its decline. Read More

Silver Slides in Short-Term to Open Value-Seeking Buying Opportunity

Silver’s slide continues following the latest round of comments from senior Federal Reserve officials that reiterated the US central bank’s commitment to continuing to increase interest rates to calm inflation.

While gold, silver’s precious metal peer, is at levels last seen 2 and half years ago, silver is still comfortably above the low for the year touched at the end of August. This reflects the contrasting situation silver finds itself in with the punishment meted out to the metal earlier in the year leaving very little downside room for it. Read More

Gold is in bear territory, but prices to rally back to $1,900 next year: ING

The gold market faces more losses as the Federal Reserve is still in the midst of its historic rate hikes. But once signs of a potential Fed easing emerge, the gold price will return to its rally mode. And that is expected as soon as next year, according to ING's latest outlook.

Gold is now down more than 10% year-to-date — a disappointing return for those using gold as an inflation hedge. December Comex gold futures were last at $1,637.40 an ounce, up 0.24% on the day. 

"Given the amount of uncertainty at the moment coupled with high inflation, many in the market may have thought gold prices should be well supported. However, this has not been the case. Spot gold is trading at its lowest levels in more than two years and has fallen more than 20% from its recent peak in March, pushing it into a bear market," ING's head of commodity strategy Warren Patterson said Tuesday. Read More

Billionaire investor John Paulson: gold price to rise when Fed fails to get inflation back to 2%, economy slows

The gold market can get out of its price downtrend when the Federal Reserve realizes that it can't control inflation, forcing it to pause as the economy slows, said billionaire investor and Paulson & Co founder John Paulson.

The precious metal is a hedge against inflation. But the problem for gold has been long-term inflation expectations not changing much as the Fed tightened.

"One thing about gold is that it's down this year, more or less 8%. It's down a lot less than stocks or bonds. So it has proven to be a source of protecting wealth," Paulson told Bloomberg in a recent interview. "The issue is gold's a hedge against inflation, but while the current inflation rate is high, long-term inflation expectations are still very low. It's like 2.5%. And they haven't really changed while the Fed has been raising interest rates."

Meanwhile, rising yields have been putting additional downward pressure on the metal. December Comex gold futures last traded at $1,635.80 after hitting the lowest level since April 2020. Read More

Weak electronic demand to push silver prices back to $18 by year-end - Capital Economics

 The silver market is seeing some new buying momentum with prices testing resistance just below $19 an ounce; however, one research firm expects prices to end the year on a weak note as industrial demand continues to weigh on the precious metal.

In their latest silver outlook, commodity analysts at Capital Economics said that they expect weak industrial demand to push silver prices back to $18 an ounce by the end of the year.

The bearish outlook comes as December silver futures last traded at $18.93 an ounce, up 3.23% on the day. However, so far this year silver prices are down 19.5%.

Specifically, Kieran Tompkins, commodities economist at the U.K. research firm said in the report that weak electronic demand for silver will weigh on prices through the rest of the year.

"We have been confident for some time that the shift in global consumption patterns away from services and towards goods (especially consumer electronics) in the first two years of the pandemic would prove temporary. There are some signs that a shift back is underway, with growth in real spending on goods stagnating and, by contrast, consumption of services recovering," Tompkins wrote. Read More

Gold, silver rally on safe-haven buying, bullish outside markets

Gold and silver prices are solidly higher and near-daily highs in midday U.S. trading Wednesday, on safe-haven demand amid a nervous marketplace as the calendar is set to turn to what can be a tumultuous month of October for stock and financial markets. The U.S. dollar index is trading solidly lower at midday, bond yields have also dropped during today's session, and crude oil prices are solidly higher—all bullish daily outside market elements for the metals markets. Gold prices did drop to a nearly 2.5-year low overnight. December gold was last up $30.00 at $1,666.00 and December silver was up $0.468 at $18.805.

Technically, December gold prices hit a nearly 2.5-year low early on today. Prices also scored a bullish "outside day" up today. The gold futures bears still have the solid overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. 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 today's high of $1,669.40 and then at $1,680.00. First support is seen at $1,650.00 and then at $1,635.00. Wyckoff's Market Rating: 1.5.

Image Source: Kitco News

December silver futures prices scored a bullish "outside day" up today after hitting a three-week low early on. The silver bears still have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $20.00. The next downside price objective for the bears is closing prices below solid support at the September low of $17.40. First resistance is seen at this week's high of $19.045 and then at $19.40. Next support is seen at Tuesday's low of $18.295 and then at $18.00. Wyckoff's Market Rating: 2.5. Read More

Image Source: Kitco News

Gold attempts a relief rally as the dollar falls from its highest value since May 1, 2002

Since May 2021 gains in the U.S. dollar can be best described as parabolic. The dollar index was trading at approximately 89.60 in January 2021, and in one year nine months have moved from just below 90 to 114.745 a total gain of 24.745 points. In other words, the dollar index when compared to a basket of six foreign currencies gained 21.91% in value. The last time the dollar index was strong occurred in May 2002 as seen on the chart below labelled - Chart 1 - Monthly dollar index. The first time the dollar index closed above 114.75 was in October 2000 approximately 22 years ago.

Since gold is paired against the dollar index today's decline of 1.24% in the dollar index was highly supportive of moving gold substantially higher. As of 5:34 PM EDT gold futures basis, the most active December futures contract is currently trading almost 2% higher (1.97%) which amounts to a net gain of $32.30 and is fixed at $1668.50.

Image Source: Kitco News

Chart 4 (above) is a Japanese candlestick chart in which each candle represents three days of trading. We have created a basic Fibonacci extension from the low of $1170.50 that occurred on August 15, 2018, up to the record high of approximately $2088 that occurred on August 6, 2020. We have highlighted two key retracement levels; the 38.2% Fibonacci retracement at $1737.10 as well as the 50% retracement level at $1628.90. We have also created a red horizontal line at $1680 which we believe is a key and critical level of former support that was taken out last week. Today's strong $32 move in December gold took pricing from the low one dollar above the 50% retracement at $1622.20 and closed just off of the high today of $1671.60 at $1660.50.

Based on the technical studies we presented in charts one, two, and four we have derived the following support resistance areas for both gold and silver. First, December gold currently has support at the 50% retracement at $1628.90. We believe that any rally could easily be short-lived if as I believe the dollar will only briefly decline before returning to a rally mode. Therefore, we see the first level of resistance at $1680 with major resistance at $1737 which is based upon the 38.2% Fibonacci retracement as seen in chart four. The 61.8% in the retracement set of the chart occurs at $1515 which I believe would be an unlikely point that gold would find support. It seems more likely that gold will find support between $1600 and $1620. 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.