Today's Gold and Silver News - 6th September

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Gold Holds Above $1,700 as Central Banks Juggle Hikes Against Recession Threat

Gold is starting a new trading week by holding above $1,700 an ounce, illustrating that while the environment where interest rates are constantly rising, there remain sufficient concerns about the macroeconomic and geopolitical global outlook to support the haven asset.

Positive jobs data out of the US on Friday has further demonstrated that the world’s largest economy remains in reasonable health so far, despite persistently high inflation. Whereas in previous months, these bullish figures would have been grounds for traders to anticipate a less aggressive monetary policy course by the Federal Reserve, the comments by senior Fed officials at the recent Jackson Hole gathering well and truly tempered expectations in that regard.

Later this week, the European Central Bank is expected to implement another rate hike, potentially increasing its benchmark rate to 1.25% as the continent’s bankers try to juggle the balancing act to try and curb inflation while not tipping the economy into a recession. Their position has become further complicated by Russia effectively cutting gas supplies to the region with the restart of the key Nordstream pipeline now delayed indefinitely.

This balancing act sums up gold’s current position too. Rising interest rates across the world make it difficult for the non-yield bearing asset of gold to make many gains while the growing fear of recession as well as the continued geopolitical fallout from Russia’s invasion of Ukraine provide sufficient support to gold as a haven asset to keep it above $1,700 an ounce. Read More

Silver Near Two-Year Low Under Pressure From Rising Rates and Energy Crisis

Silver is back above $18 an ounce but remains near the lowest levels in more than two years after the bearish short-term pressures saw the metal start September by dropping into $17 territory.

While silver is largely being driven by the same factor of gold, where a climate of rising interest rates across the world is making non-yield bearing assets like precious metals less attractive, silver is also coming under pressure from a deteriorating economic outlook, particularly in Europe, given the metal’s more industrial exposure than its golden peer.

Russia has increased the stakes in its geopolitical standoff with Europe in the wake of its continued invasion of Ukraine by announcing late on Friday that the Nordstream pipeline, which accounts for the bulk of Europe’s gas flows, will not restart following recent maintenance. This weaponising of energy has placed European economies under further pressure at a time when they are already tackling runaway inflation with the continent now facing the prospect of having to ration energy supplies over the winter.

Against these dual negative backdrops, it is hard to see where silver can get the boost it needs to get it back to the $20 an ounce range it had seemingly stabilised around just a few weeks ago. Yet while the short-term picture remains bearish, the fundamental long-term outlook looks far healthier so for an investor willing to endure some short-term pain, healthy rewards could still be on the horizon. Read More

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

CNBC’s “Pro Playbook” email dispatch on Thursday said: “August was rough for Wall Street, and September could be more of the same. Data compiled by the Stock Trader’s Almanac shows September is on average the worst month for stocks.

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

The Fed is ready to ‘inflict pain’ on economy to bring inflation down; stocks, Bitcoin to see more downside - Alfonso Peccatiello

The Fed will ‘inflict pain’ to get inflation down to 2 percent, said Alfonso Peccatiello, Author of The Macro Compass. The central bank’s resulting policy will adversely affect stocks and cryptocurrencies.

In his August 26th speech at Jackson Hole, Federal Reserve Chairman Jerome Powell adopted a hawkish tone, saying that reducing inflation will “bring pain to households and businesses.”

“Those are pretty strong words for a policymaker,” said Peccatiello. “What he means is that the Fed will not stop until the job is done. The job means that inflation goes back to 2 percent.”

Peccatiello added the effect of the Fed’s policy on “risk assets” like stocks and crypto could be dire.

“[The Fed] has to keep their monetary policy tight,” he said. “When real yields are high, every investment you are making becomes, from an evaluation perspective, less attractive.”

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

Silver moved higher ahead of the European open

Gold is trading flat this morning while silver has moved 0.43% higher. In the rest of the commodities complex, copper (0.74%) and spot WTI (1.72%) have moved higher overnight. 

Risk sentiment was mixed in the Asia Pac area. The Nikkei 225 (-0.09%) and Shanghai Composite (-0.06%) were subdued but the ASX rose 0.34%. Futures in Europe are indicating a weak cash open. 

In FX markets the U.S. dollar index rose 0.48%. The biggest loser was EUR/USD which fell just over half a percent. In the crypto space, BTC/USD is back under $20k. 

News from the weekend and overnight: Read More

Don't rule out a long weekend gold price surprise – analysts

Despite gold's $20 relief rally following the U.S. jobs report, analysts remain cautious, citing negative macro drivers and dangerous technical levels that could take the precious metal lower next week.

A strong U.S. dollar and rising yields forced gold below $1,700 an ounce earlier this week.

"Gold is becoming a punching bag as surging Treasury yields have rejuvenated the king dollar trade. It has just been bad news everywhere for gold. No reprieve in sight for gold until the move higher with global bond yields is over," said OANDA senior market analyst Edward Moya.

December Comex gold is looking to close Friday at around $1,727.20 an ounce, down 2.5% on the week, following a rally on the back of August's jobs report. 

But analysts see Friday's move only as a short covering rally. "The market has been trending lower. We failed to hold levels above $1,800. The $1,700 level is the bottom. I would expect the market to be choppy-range bound. And until we can get above $1,745 on a closing basis, I will remain neutral. Above that, I start to get positive," RJO Futures senior market strategist Frank Cholly told Kitco News. Read More

Gold muted as U.S. jobs data raises doubts over Fed rate-hike path

Gold prices were steady on Monday, having posted their best day in a month in the last session after a U.S. jobs report showed unemployment rising in August, suggesting the Federal Reserve might slow the pace of rate hikes.

Spot gold was flat at $1,710.70 per ounce by 0737 GMT. U.S. gold futures fell 0.2% to $1,719.70. Gold rose as much as 1.3% on Friday after data showed U.S. employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate to 3.7% suggested the labor market was starting to loosen.

"With the Fed meeting just over two weeks away and their 'blackout period' fast approaching, any comments from Fed members this week will be scrutinised by traders as they have the ability to move the needle on Fed policy," said Matt Simpson, a senior market analyst at City Index. "Any comments alluding to a 75 bp hike could keep gold prices under pressure."

Fed's next policy meeting is scheduled for Sept. 20-21.

"Gold gained on Friday as more Americans returned to the workforce. Any easing of the tight labour market will help the Fed tame inflation and potentially reduce its need to tighten rates aggressively," ANZ said in a note.

Gold tends to perform badly amid a high-interest rate environment as it yields no interest. The dollar index hit a 20-year high, making gold expensive for holders of other currencies. Read More

$50,000 gold is likely once the monetary system returns to a gold standard – John Butler

As the world transitions to a gold standard monetary system, the price of gold will skyrocket to $50,000 per ounce, said John Butler, Head of Treasury at TallyMoney and author of The Golden Revolution, Revisited.

“Today, the gold price is too low to allow markets to clear, because assets are over-valued vis-à-vis gold,” he said. “According to my calculations, you’re talking about something in the region of $50,000 per ounce being [reasonable] if you go back to a gold-backed international monetary system.”

Butler claimed that the process of transitioning to a gold standard is inevitable as the U.S. loses its economic dominance and the world becomes multipolar.

“Gold solves for the game-theoretic monetary equilibrium for a multipolar world that is, nevertheless, hugely dependent on international trade,” he explained. “At the end of the Second World War, the U.S. economy was roughly half the entire global economy. By activity today, it’s only 20 percent… If you just extrapolate this trend, ultimately, it’s going to tip the balance regardless of whether the U.S. retains military superiority or not.”

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

Gold and silver move higher leading into the European open

Gold (0.53%) and silver (1.36%) both trade higher leading into the European open this morning. Elsewhere in the commodities complex, copper is 0.42% higher but spot WTI has fallen 0.24%. 

Risk sentiment was mixed in the Asia Pac area. The Nikkei 225 (0.03%) and Shanghai Composite (1.20%) moved higher but the ASX fell 0.38%. Futures in Europe are indicating a slightly weak cash open. 

In FX markets, USD/JPY hit its highest level since 1998. In the crypto space, BTC/USD trades at $19,829. 

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.