Today's Gold and Silver News - 2nd September

Image Source: Unsplash

Dark clouds for equities in Sept. may be silver lining for gold, silver bulls

Since 1950, the S&P 500 has averaged a loss of 0.5% in September, including a drop of 11.9% in 1974. The benchmark index has also posted September losses in the last two years, dropping 4.8% in 2021 and 3.9% in 2020. This historically weak performance for the month, along with August’s declines and expectations of even higher rates from the Federal Reserve and other central banks, raise concern over a potential retest of the mid-June lows” in the stock indexes.

The above scenario may be what puts in price bottoms in for the gold and silver markets. Gold hit a six-week low Thursday and silver a more-than-two-year low.

The metals markets (hard assets) and the stock market (paper assets) compete for trader and investor monies, and the turbulent months of September and October for the stock and financial markets may be just what the doctor ordered for the safe-haven gold and silver markets.

It can also be argued that the hawkish central banks and notions of weaker global economic growth that are likely to crimp consumer and commercial demand for metals, has now been factored into gold and silver prices.

Don’t be surprised if a “sell the rumour, buy the fact” scenario develops in the gold and silver markets in the near term, regarding the bearish central bank element for the metals.

Also, from a short-term technical perspective, the gold and silver markets are oversold, technically, and due for corrective bounces very soon. Read More

At $1,700 the gold market is on the cusp of ending its bull-market run – TD Securities

The gold market continues to struggle to attract any consistent bullish momentum, and with prices retesting support at $1,700 an ounce, one bank is seeing the precious metal close to a capitulation selloff.

Thursday, commodity analysts at TD Securities reiterated their bearish outlook for gold, saying that the outlook is “bleak” as the Federal Reserve signals further aggressive monetary policy action with further rate hikes and quantitative tightening.

“Precious metals are on the brink. With every tick lower in gold prices, odds of a major capitulation event are growing, which could coincide with a break below a multi-decade uptrend in the yellow metal near $1675/oz,” the analysts said.

TDS said that investors need to continue to watch speculative positioning in the gold market as it remains the critical factor for a capitulation selloff. Speculative positioning in Comex futures markets has dropped sharply since March; however, the analysts said there is room for sentiment and positioning to fall further.

“While the hawkish Fed narrative has driven money manager positioning to multi-year lows, gold markets still feature an extremely concentrated and bloated position held by a small number of family offices and proprietary trading shops. Further, we see risks that this position is somewhat complacent, given it does not appear to be associated with a stagflationary Fed narrative, but was rather accumulated during 2020,” the analysts said.

The bearish outlook comes as markets solidify their expectations that the U.S. central bank will raise interest rates by 75 basis points in September. Last week Fed Chair Jerome Powell also warned markets that interest rates could remain elevated for longer to make sure that inflation remains well anchored. Read More

Strong greenback, rising Treasury yields, lower oil sink gold, silver

Gold and silver prices are lower in midday U.S. trading Thursday, with gold hitting a six-week low and dropping below the key $1,700 level. Silver today scored a more-than-two-year low. Falling crude oil prices, a strong U.S. dollar index and rising U.S. Treasury yields are all bearish elements punishing the metals markets bulls. October gold futures were last down $18.80 at $1,698.10. September Comex silver futures were last down $0.277 at $17.65 an ounce.

U.S. stock indexes are lower at midday hit five-week lows. Risk aversion is higher on this first day of September, a month that history has shown can be a rocky one for stock and financial markets. Gold and silver market bulls are hoping some safe-haven demand develops if September sees rough trading waters.

There are new reports of major Covid lockdowns in China, the world’s second-largest economy. Reports said 21 million people have been locked down in a major industrial region of the country. Economic data out of China Friday was also dour, with the purchasing managers indexes (PMIs) and housing/property indicators showing weakness. This has prompted concerns of slowing consumer and commercial demand in China, which have pressured raw commodity markets this week, with crude oil leading the way down. Other major economies are tightening their monetary policies, which will also work to slow their growth. Many market watchers fear U.S. and global economic recessions are setting in.

Traders are awaiting Friday morning’s employment situation report from the Labor Department. That report is expected to show the key non-farm payrolls growth number at up 325,000 in August versus the July report showing a gain of 528,000 non-farm jobs.

Technically, October gold futures prices hit a six-week low today. The gold futures bears have the solid overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,750.00. 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 $1,713.10 and then at Wednesday’s high of $1,728.70. First support is seen at today’s low of $1,689.80 and then at $1,686.30. Wyckoff's Market Rating: 1.5

Image Source: Kitco News

December silver futures prices hit another more-than-two-year low today. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $19.00. The next downside price objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $18.00 and then at $18.50. Next support is seen at today’s low of $17.40 and then at $17.25. Wyckoff's Market Rating: 1.0. Read More

Image Source: Kitco News

Billionaire Jeff Gundlach's yield curve inversion warning: 'these are reliable signals of economic trouble'

 Investors need to manage risks appropriately as yield curve inversions signal trouble ahead, said DoubleLine Capital CEO, Jeffrey Gundlach.

Recession cues are getting worse, Gundlach tweeted this week, pointing to the 2-year and 10-year yield curve and the 5-year and 30-year curve inverting.

"In the UST Market: 2 year/ 10 year inverted 35 bp. 5 year/ 30 year inverted once again, five basis points right now," he said. "These are reliable signals of economic trouble. Risk manage accordingly."

A yield curve inversion happens when shorter-term Treasury rates move above longer-term yields. The market often considers the inversion of the 2-year and 10-year yield curve as a reliable preemptive sign of a recession down the line. Read More

Financial markets including precious metals continue to recalibrate

Precious metals, U.S. equities, U.S. debt instruments, and the dollar continue a major recalibration as market participants factor in interest rates moving much higher for longer than anticipated before Jerome Powell’s Keynote speech on Friday of last week. Chairman Powell’s keynote speech at Jackson Hole outlined and redefined the Federal Reserve’s monetary policy as it pertains to lowering inflation.

Currently, inflation is running at its highest level in 40 years. The Federal Reserve’s target for an acceptable level of inflation is 2%. In July the CPI (Consumer Price Index) was at 8.5%, declining from 9.1% in June. The Federal Reserve prefers to use the PCE (Personal Consumption Expenditures Price Index) which strips out food and energy costs. The PCE is currently fixed at 6.3% declining from 6.8% in June. By any standard inflation is currently 3 times the acceptable level when gauged against the PCE, and 4 ½ times when gauged against the CPI.

Looking at how the Federal Reserve dealt with times of financial uncertainty in the past one thing is clear. Inflation reduction has never been accomplished without raising interest rates to levels near or above the inflation rate. Chairman Powell’s keynote speech last week was a wake-up call. There has never been a time in history when the Federal Reserve fought inflation without taking rates close to or above the inflation rate. Powell's statement that the Fed will do whatever it takes to reduce inflation signals that interest rates will most likely move to 4% by the end of the year and possibly higher in 2023.

Image Source: Kitco News

As of 5:40 PM EDT gold futures basis, the most active December contract is currently fixed at $1708.80 declining today by $17.40. Last Friday gold opened at $1771 before Chairman Powell delivered his keynote speech at the Jackson Hole Economic Symposium. Gold has dropped almost $70 since Powell delivered his keynote speech. All asset classes in the United States began the process to recalibrate their value as factored in much higher interest rates in the future. Read More

European energy prices skyrocket, risking political unrest and economic calamity - Will Rhind

Energy prices are skyrocketing in Europe, with prices rising to 10 times their decade-long average. This could lead to economic calamity and political unrest, said Will Rhind, Founder and CEO of GraniteShares.

Europe’s expensive energy prices come as Russia, which supplies 40 percent of the European Union’s gas needs, has cut off its Nord Stream gas pipeline, citing maintenance.

Rhind said that Europeans are getting “very nasty surprises” when looking at their gas and electricity bills.

“This is a real problem for people coming into the winter season,” he said. “A lot of these inflationary effects that we’ve seen in the economy are really going to bite towards the end of this year, and the beginning of next year.”

Rhind spoke with David Lin, Anchor and Producer at Kitco News. Read More

Gold and silver move higher ahead of the European open

Gold (0.41%) and silver (1.06%) have moved higher overnight leading into the European open. In the rest of the commodities complex, copper is trading flat, and spot WTI (2.14%) is trading in positive territory. 

Stock markets were lacklustre overnight. The Nikkei 225 (-0.04%), ASX (-0.25%) and Shanghai Composite (0.06%). Futures markets in Europe are pointing towards a positive cash open. 

In FX markets, the biggest mover overnight was EUR/USD which moved 0.31% higher. In the crypto space, BTC/USD is -0.14% lower near the $20k psychological mark.

News from overnight: Read More

Gold Holding Near $1,700 Shows Support Remains Despite Rate Hike Pressure

Gold has climbed back above the key threshold of $1,700 an ounce as global bonds slipped into their first bear market in a generation.

The strength of the US dollar, which is trading near its record high, allied to the prospect of a sustained period of interest rate rises globally had pushed gold below $1,700 but the weakness of bonds has given gold a slight lift as investors seek alternative haven assets.

Today’s trading focus will be aimed at the upcoming US jobs data, which is expected to paint another healthy payrolls picture and follows on from a positive US manufacturing report. However, where previously these data would have been viewed as reasons why the Federal Reserve may not need to be as aggressive with its monetary policy for as long, the recent Jackson Hole meeting has brought a stark reappraisal that large interest rate rises are here to stay for the foreseeable future, with another 75 basis point increase expected later this month.

As such, while traders will undoubtedly keep a close eye on the US payrolls figure, the market reaction for gold is likely to be muted. The fact that gold has once again climbed back above $1,700 an ounce shows there remains support for the precious metal as it mirrors a similar move when gold plunged in July. 

Yet while there is clearly support for gold around $1,700 an ounce, it is hard to see the metal making any further gains given how hawkish the Fed and other central banks around the world now are as they seek to curb inflation.

Source: Kinesis

Silver Slides Below $18 to Lowest in Two Years on Strong Dollar and Hawkish Central Banks

Silver’s slide below $18 an ounce to levels not seen in more than two years has dashed hopes that the bottom recorded in July would prove to be the low for the year. 

A strong dollar, which is trading near record highs, allied by a Federal Reserve intent on raising interest rates multiple times over the coming months has forced silver down and drained away optimism that built up in August as the metal consistently held above $20 an ounce. 

Today’s payroll figures out of the US are likely to reaffirm that the world’s largest economy remains healthy and that high inflation isn’t yet having a material impact on employment nor manufacturing output. While this is a positive for silver, given its industrial use in sectors including solar energy and electric vehicles, for now, this is overwhelmed by the actions central banks across the world are taking to bring double-digit inflation back under control.

It is worth noting that silver futures have now sunk significantly below where the metal can be bought in person, with the physical market at a premium to the paper one. This underlines both how far silver has fallen as well as demonstrating that the fundamental supply and demand outlook is not being matched by the price action on the financial markets, presenting a buying opportunity for a brave investor.

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.