Today's Gold and Silver News - 30th August

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Modest gains for gold on short covering, mild safe-haven demand

Gold prices are slightly up at midday Monday, on some short covering in the futures market and some tepid safe-haven demand in cash and futures, after hitting a four-week low overnight. However, bearish elements that include negative charts, a strong U.S. dollar, rising U.S. Treasury bond yields and a hawkish Federal Reserve still have the bears firmly controlling the precious metals markets. October gold futures were last up $3.20 at $1,743.70. September Comex silver futures were last down $0.07 at $18.755 an ounce.

U.S. stock indexes are lower at midday, on follow-through selling pressure after Friday’s big losses. Risk aversion is keener early this week, in the aftermath of the Federal Reserve’s highly anticipated Jackson Hole annual symposium that ended late last week. Fed Chairman Powell in a speech at the confab on Friday kept on script for an aggressively hawkish U.S. monetary policy, which ended some previous market talk of a more dovish “Fed pivot.” The CME’s FedWatch tool shows there is a 70% chance the Fed raises its Fed funds rate by 0.75% at its Sept. 20-21 FOMC meeting.

The U.S. data point of the week on this unofficial last week of summer is the August U.S. employment situation report from the Labor Department on Friday. The key non-farm payrolls growth number is forecast to come it 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 four-week low early on today. The gold futures bears still have the firm 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 $1,750.00 and then at last Friday’s high of 1,762.30. First support is seen at $1,730.00 and then at today’s low of $1,722.50. Wyckoff's Market Rating: 2.5.

Image Source: Kitco News

December 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 $21.02. The next downside price objective for the bears is closing prices below solid support at the July low of $18.175. First resistance is seen at $19.00 and then at last week’s high of $19.385. Next support is seen at today’s low of $18.40 and then at $18.175. Wyckoff's Market Rating: 2.0. Read More

Image Source: Kitco News

The Fed has never hiked rates during a recession, expect stock markets to fall another 50% – Todd ‘Bubba’ Horwitz

The Federal Reserve has no room to pivot and reduce rates, and this is why they are raising rates during this recession, said Todd ‘Bubba’ Horwitz, Chief Strategist at BubbaTrading.com.

First and second quarter U.S. real GDP in 2022 were negative. This indicates a technical recession, which is two consecutive quarters of GDP decline.

“[The Fed] is raising rates during a recession,” said Horwitz. “It’s never been done in history… There is a political agenda behind all of this stuff that’s going on, which is to try to create The Great Reset.”

The Great Reset is a World Economic Forum plan to implement stakeholder-based governance and green energy infrastructure. Opponents of the Great Reset claim that it is a guise to transfer assets from the middle class to the wealthy.

“The [Biden] administration is looking to get the Great Reset,” said Horwitz. “There is going to be no middle class left.”

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

It's time to buy commodities, not equities – Goldman Sachs

Now is the perfect time to get into commodities, according to a note by Goldman Sachs.

Investors should be looking at how to get into commodities as equities are likely to see even more losses, Goldman's analysts Sabine Schels, Jeffrey Currie and Damien Courvalin said in a note.

Yet, Goldman sees recession fears as overblown.

"Our economists view the risk of a recession outside Europe in the next 12 months as relatively low," the analysts said. "With oil the commodity of last resort in an era of severe energy shortages, we believe the pullback in the entire oil complex provides an attractive entry point for long-only investments."

Commodity prices have been retreating after a massive surge following Russia's invasion of Ukraine. The issue with supply chains drove prices to record highs in June. However, the latest recession fears have triggered a pullback in prices on concerns over slowing demand.

The Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium Friday double-downed on these fears as he stayed hawkish and signalled that rates could remain higher for longer.

Powell also warned that there would be "some pain to households and businesses," which "are the unfortunate costs of reducing inflation."

In response to Powell's comments, equities plunged, with the Dow Jones Industrial Average falling more than 1,000 points on Friday and an additional 300 points on Monday. Read More

ABN AMRO downgrades gold price but sees solid support around $1,700

Friday’s comments from Federal Reserve Chair Jerome Powell made it clear that the central bank will continue to aggressively raise interest rates through the end of the year, which will continue to weigh on gold prices, according to one market analyst.

Georgette Boele, senior gold strategist at ABN AMRO, said that she now sees gold prices ending the year around $1,700 an ounce as the Federal Reserve could bring the Fed Funds rate closer to 4%.

The Dutch bank’s new price target is a sharp downgrade from its previous estimate for the precious metal to end the year at around $2,000 an ounce. The downgrade comes as gold prices hover around $1,750 an ounce; Boele noted that so far this year, gold prices have dropped 3.6%; however, she added that prices are expected to hold solid support above last month’s lows.

“We only expect a modest decline in gold prices from the current levels. This is based on our view that we expect the U.S. dollar to remain relatively strong, although we have not pencilled in another strong rally from these already high levels,” Boele said in the report. “Secondly, we think that U.S. real yields are close to a peak or have already peaked. As a result, it is likely that this driver will not add substantial pressure on gold prices from current levels. Third, there is a crucial support area layered at USD 1.680-1700 per ounce. We expect these levels to be tested again and prices could move below these, albeit only temporary.” Read More

BRICS president: Russia and India have no need for the U.S. dollar

Russia and India no longer need the U.S. dollar for mutual settlements, said BRICS International Forum President Purnima Anand.

A new mechanism has been established between the two countries, using only rubles and rupees, Anand told reporters last week.

"We have implemented the mechanism of mutual settlements in rubles and rupees, and there is no need for our countries to use the dollar in mutual settlements," Russian state news agency RIA quoted Anand as saying.

Anand added that a similar mechanism is being developed between Russia and China to eliminate the use of the greenback and employ only rubles and yuan.

This way of paying for goods gives Russia a way to go around the sanctions imposed on the country following its invasion of Ukraine.

"The BRICS countries are opening up to Russia, offering the opportunity for the country to overcome the consequences of sanctions," Anand said.

Russia has also increased its ties with India, as trade jumped fivefold over the past four decades, according to Anand. India has been importing more oil from Russia, while Moscow has stepped up purchases of agricultural products, textiles, and medicine. Read More

The initial shock from Powell’s speech subsides as lows in gold are quickly bought up

Powell’s resolute keynote speech on Friday shook the financial markets to their core. The effect that Chairman Powell had when he rebuffed expectations of the Fed’s tempered monetary policy was strong. His message underscored that the Federal Reserve will continue its hawkish monetary policy and keep raising interest rates in its fight against the spiralling level of inflation.

“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”

His speech resulted in an exceedingly powerful selloff in U.S. equities including a 1000-point drop in the Dow. It also resulted in a $20 drop in gold pricing on Friday. That selling pressure in gold continues on Monday morning in Australia when traders witnessed a further price decline.

Image Source: Kitco News

The chart above is a 60-minute Japanese candlestick chart of gold futures. The chart contains two technical studies including a 50-hour simple moving average and a Fibonacci retracement. The Fibonacci retracement begins at $1679 a low achieved at the end of July up to $1824 the recent top that occurred during the second week of August. The initial shock Powell’s keynote speech took gold pricing from just below $1780 to today’s intraday low of $1731.40. The 61.8% Fibonacci retracement occurs at $1734.60 and when prices moved to these lows earlier in trading today market participants interpreted this selloff as putting gold in an oversold scenario and quickly bought the dip. Read More

Gold and silver trade lower ahead of the European open

Gold recovered from its lows on Monday to close at $1736.52/oz and this morning the yellow metal trades 0.18% lower. Silver is also slightly weaker trading at $18.70/oz. In the rest of the commodities complex, both copper (-0.47%) and spot WTI (-0.05%) are trading lower.

In the risk markets, the Nikkei 225 (1.14%) and ASX (0.47%) traded higher overnight but the Shanghai Composite fell 0.48%. Futures in Europe are indicating a positive cash open. 

FX markets were subdued overnight, the biggest mover was NZD/USD which fell 0.11%. In the crypto space, BTC/USD is back above $20k trading at $20,386.

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.