Today's Gold and Silver News - 8th August

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Gold Challenges $1,800 as Rising US-China Tensions Boost Metal’s Haven Appeal

Gold is ending the week trading close to $1,800 an ounce as the precious metal has found support from rising tensions between the US and China following Nancy Pelosi’s visit to Taiwan as well as fears that major economies are facing recession. 

Yesterday brought confirmation that the Bank of England would indeed raise its benchmark rate by 50 basis points but rather than this prove a negative for gold as rising interest rates typically are, the supporting commentary was the focus with the central bank painting a pretty pessimistic picture of the country’s economic outlook.

Across the Atlantic, the rhetoric remains very hawkish with Cleveland Federal Reserve Bank President Loretta Mester reiterating the bank’s commitment to bringing inflation down which may require interest rates to be raised above 4%.

Today’s release of the latest US jobs data will provide the latest indicator of the health of the US economy with the expectation that for now, at least the employment picture remains positive. This will give the Fed further scope for future rate rises without risking tipping the economy into recession. In such an environment gold’s upside gains are likely to be capped with $1,800 an ounce an obvious near-term resistance level. Read More

Silver Climbs Back Above $20 as Support Firms Up Despite Prospect of More Fed Hikes

Silver has climbed back above the crucial threshold of $20 an ounce that it has been flirting with for much of this week.

This is an important indicator that support remains for the precious metal and will increase optimism among silver investors who are still recovering from a brutal few months.

It is interesting to note that silver has been able to make some gains this week despite the rhetoric over the trajectory of future rate moves by the Federal Reserve remaining very hawkish, with Loretta Mester the latest senior Fed official to chime in with the need for more large rate hikes. It was the Fed’s switch to a hawkish policy earlier in the year that triggered silver’s multi-month price slump so the fact the metal has been able to hold its level and even make tentative gains does emphasise that the bottom was indeed reached in late July. 

The deterioration of relations between the world’s two superpowers, the US and China, following House Speaker Nancy Pelosi’s trip to Taiwan has bolstered demand for haven assets such as silver but the metal hasn’t benefited as much as gold, the ultimate haven asset. 

With silver now having held above $20 an ounce, investors can look upwards and hope for further recoveries of the price lost in the last few months. How much ground can be recovered will depend on how much the Fed raises interest rates over the coming months with the prices seen in April remaining a long way off for silver still. Read More

Wall Street on the sidelines in gold market as blockbuster NFP raises calls for Fed to hike 75 basis points in September

The gold market is seeing its third week of gains; however, sentiment is again shifting, as prices cannot break above $1,800 an ounce, according to the Kitco News Weekly Gold Survey.

In the latest gold survey, some market analysts said Friday's blockbuster employment report had taken the wind out of gold's sails, at least for the short term.

Ahead of the latest survey results, the U.S. Bureau of Labor Statistics said 528,000 jobs were created in July. The data significantly beat expectations economists were forecasting job gains of around 250,000. The report also noted a solid increase in wages.

While some analysts continue to see more upside potential, many have taken more neutral and bearish stances. Retail investors remain solidly bullish on gold.

"The gold market has given us a taste of what the Fed pivot will look like, but the real pivot isn't here yet," said Adam Button, chief currency strategist at Forexlive.com. He is looking for lower prices in the near term. "Next week's CPI is a big risk for gold and just about everything else."

This week, 16 Wall Street analysts participated in the Kitco News gold survey. Among the participants, four analysts, or 24%, were bullish on gold in the near term. At the same time, seven analysts, or 41%, were bearish on gold. Six analysts, or 35%, cast neutral votes this week. Read More

Gold's Fed-induced short squeeze has disappeared

There is never a dull momentum in financial markets as the weekend ends with fireworks following a chartbuster U.S. employment report.

Market analysts started the week talking about the Federal Reserve potentially pivoting next month on its monetary policy. Those expectations were wiped off the board with just one data point. Data from the U.S. Labor Department showed that more than 500,000 jobs were created in July, significantly beating market expectations. Heading into the report, economists were looking for job gains of 250,000.

Unfortunately, there is not a lot of good news for gold investors in the stellar jobs report. Wages also rose more than expected, rising 0.5% last month. In the last 12 months, wages have risen 5.2%. In a typical economic environment, this should be positive for gold because it is considered inflationary.

However, this environment is anything but normal. The solid employment numbers mean that the Fed can continue to raise interest rates aggressively without having to worry about pushing the economy into a recession. The wage number will also reinforce the Fed's outlook that inflation is still a significant problem.

We are still nearly two months away from the Fed's next monetary policy decision, and markets now see an almost 70% chance of another 75-basis point move. The day before the employment report, markets only saw a 30% chance of a rate hike.

Last week's Fed-induced short-squeeze in the gold market quickly evaporated, at least for now.

Making it even more difficult for gold, the Federal Reserve is not the only central bank aggressively raising interest rates. This past week the Bank of England hiked its interest rates by 50 basis points, the first half-point move since its independence from the government in 1997. Read More

The Metals, Money, and Markets Weekly: L is for lunacy - Mickey Fulp

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Gold's industrial uses include cancer treatments, race cars, and cellphones; Gold will integrate with blockchain technology - Joe Cavatoni

Gold nanoparticles can integrate with chemotherapy for cancer treatments. The McLaren F1 sports car uses gold foil in its engine bay as a heat deflector. And gold is used in semiconductors for cellphones and computers.

These are just a few of the surprising industrial applications of gold, said Joe Cavatoni, the World Gold Council's Head of Global Sales and Regional CEO.

"You don't have an iPhone unless you have gold, you don't have an iPad unless you have gold," he said.

Cavatoni also said that The World Gold Council hopes to use blockchain technology to track and trace gold transactions so that consumers can be certain of gold quality and sourcing.

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

Jobs report a 'game changer' for gold price, focus shifts to next week's inflation numbers

With the surprisingly strong employment situation in the U.S., the Federal Reserve won't be pivoting from its aggressive tightening cycle in September, which will hurt gold in the short term, according to analysts. The focus next week will be on the highly-anticipated inflation numbers.

Gold lost 1% in reaction to the U.S. economy adding 528,000 jobs in July, which significantly exceeded expectations of 250,000. At the time of writing, December gold futures were trading at $1,788.90 after rising above $1,800 an ounce on Thursday.

"Today's employment numbers surprised, and the idea that the Fed could be aggressive with raising rates did not help gold prices," RJO Futures senior market strategist Frank Cholly told Kitco News.

Last week, there was a lot of confidence in the market that the Fed could pivot early from its oversized rate hikes due to the slowing economy. However, all of this shifted this week, especially with the strong employment report, said OANDA senior market analyst Edward Moya.

"This is a game-changer. The amount of confidence that the Fed would pivot was pretty high. Some even expected that to happen as early as September. Now, the focus is shifting to whether the Fed will need to be more aggressive. Gold is just going to struggle here as interest rate hike expectations will be bolstered next week," Moya told Kitco News. Read More

Silver trades higher ahead of the European open

 Gold is trading flat this morning while silver is 0.42% in the black. In the rest of the commodities complex, copper (0.11%) and spot WTI (1.42%) are both trading higher. 

Risk sentiment in the Asia Pac area was positive overnight as the Nikkei 225 (0.26%), Shanghai Composite (0.31%), and ASX (0.07%) all closed higher. Futures are indicating a positive cash open in Europe.

In FX markets, AUD/USD was the biggest mover as the pair climbed 0.40%. USD/JPY pushed 0.29% in the black too. In the crypto space, BTC/USD is up 2.40%. 

News from the weekend and 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.