Today's Gold and Silver News - 8th September

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Gold prices hold steady as Bank of Canada remains committed to fighting rising inflation

Gold priced in Canadian dollars is holding on to modest gains but remains at relatively low levels as the Bank of Canada continues to aggressively tighten its monetary policy, raising interest rates by 75 basis points.

The BoC's monetary policy decision was in line with market expectations. At the same time, the central bank said that it will continue to tighten its monetary policies as it focuses on cooling inflation pressures.

"Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further. Quantitative tightening is complementing increases in the policy rate. As the effects of tighter monetary policy work through the economy, we will be assessing how much higher interest rates need to go to return inflation to target. The Governing Council remains resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target," the BoC said in its monetary policy statement.

The gold market is not seeing much reaction to the latest central bank decision. Spot gold priced in Canadian dollars last traded at $2,245.14, up 0.34% on the day.

Adam Button, head of currency strategy at Forexlive.com, said the central bank's statement is more hawkish than expected.

"Many analysts thought 3.50% would be the top, but that's looking unlikely. The BOC appears to be unbothered by house prices, which are down by about 18% since February," he said.

Although inflation pressures eased in July, the Bank of Canada said that higher consumer prices remain a threat.

"The Bank's core measures of inflation continued to move up, ranging from 5% to 5.5% in July. Surveys suggest that short-term inflation expectations remain high. The longer this continues, the greater the risk that elevated inflation becomes entrenched," the statement said. Read More

Gold outperforming yen and pound as currencies hit multi-decade lows against U.S. dollar

Gold's lacklustre performance against the U.S. dollar could be masking its role as a global safe-haven asset as it outperforms the Japanese yen and British pound sterling.

The gold market continues to hold support at $1,700 an ounce but is struggling to attract consistent momentum after ending August down 2% on the month, its fifth monthly loss. December gold futures last traded at $1,721.40, up 0.50% on the day.

Despite the dismal performance against the U.S. dollar, gold is starting the new month with solid gains against the sterling and the yen. Spot gold against the yen last traded at ¥4,292 an ounce, up 1.77% on the day. Gold's rally has broken a two-month consolidation period.

In the U.K., spot gold is up roughly 1% against the pound, last trading at £1,491 an ounce. The yellow metal appears to be on the cusp of breaking out of a one-month consolidation pattern.

The rally in gold against sterling comes as the currency falls to a 35-year low against the U.S. dollar. Meanwhile, the U.S. dollar is trading near a 25-year high against the yen.

"Gold's performance against the pound and yen and other global currencies puts to rest the question of whether or not gold is a store of value," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "Gold strength in other currencies is a sign that when the U.S. dollar starts to weaken, gold will explode higher." Read More

Brace for a possible U.S. debt crisis if inflation stays elevated, democracy itself is at risk - Michael Gayed

The U.S. could have a sovereign debt crisis as Treasury yields rise and other countries fail to pay back their dollar-denominated loans, said Michael Gayed, portfolio manager and Publisher of the Lead-Lag Report. These trends, in turn, could pose risks to U.S. democracy.

Gayed's research shows that Treasury yields, on a weekly basis, have been rising 68.6 percent of the time in 2022, a level that is unprecedented. Rising yields could weaken a government's ability to fulfil its debt obligations.

"My hope is that this anomaly ends, and that we're not headed for a sovereign debt crisis," said Gayed. "We want to be really careful about how despotism happens. Conditions create the monster. What I'm really referring to is how the Weimar Republic created conditions for Hitler's rise to power."

Although Gayed said that another Hitler-like despot is not necessarily going to arise, he stressed that conditions in the German Weimar Republic of the 1920s, with its high inflation and debt troubles, are analogous to the U.S.'s similar problems today.

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

Gold, silver bounce as USDX, Treasury yields decline today

Gold and silver prices are higher and near daily highs in midday U.S. trading Wednesday, on short covering in the futures markets and perceived bargain hunting in the cash markets, following recent losses. The U.S. dollar index and U.S. Treasury yields backed down from their higher levels today, which also encouraged some buying interest in the metals markets. However, a big drop in crude oil prices to an eight-month low today did limit the upside in the precious metals. October gold was last up $11.50 at $1,714.90 and December silver was up $0.352 at $18.26.

Technically, October gold futures bears still have the solid overall near-term technical advantage. Prices are in a four-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 this week's high of $1,727.00 and then at $1,740.00. First support is seen at $1,700.00 and then at $1,686.30. Wyckoff's Market Rating: 2.0.

Image Source: Kitco News

December silver futures bears still have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $19.50. The next downside price objective for the bears is closing prices below solid support at $17.00. First resistance is seen at this week's high of $18.465 and then at $18.80. Next support is seen at today's low of $17.74 and then at last week's low of $17.40. Wyckoff's Market Rating: 2.0. Read More

Image Source: Kitco News

Gold remains undervalued as markets continue to price in a pivot in second half of 2023 - Quant Insight

Despite a strong start in August, the gold market has struggled to find any consistent bullish momentum as prices remain below $1,750 an ounce.

The markets' expectations for more aggressive monetary policy action from the Federal Reserve continue to support the U.S. dollar, which is weighing on gold; however, one market analyst said that bullish momentum trade is building in the precious metal.

In an interview with Kitco News, Huw Roberts, head of analytics at Quant Insight, said that according to his company's research, the precious metal has entered a macro regime and has broken below its fair value levels.

According to Quant Insight, with rising interest rates and a strong U.S. dollar, gold prices should be trading around $1,760 an ounce. Although gold is about 2% below its fair value, Roberts said that traders could be waiting for a better entry point.

He added that gold has room to go lower as the Federal Reserve continues to raise interest rates throughout the year.

"You can't argue that throughout 2022 the Federal Reserve has been consistent that inflation has become their number one priority and the combat inflation they need to tighten financial conditions," he said.

Although it's a challenging environment for gold, Roberts said there is still potential for the precious metal. He explained that in July, markets prematurely started to expect the U.S central bank to pivot on its aggressive monetary policy; however, hawkish comments from Powell dashed that expectation. Markets see a 76% chance of a 75-basis point move later this month. Read More

Gold futures gain $16.60 but upcoming rate hikes could limit any sustained rally

As of 5:05 PM EDT gold futures basis, the most active December contract is currently fixed at $1729.50 after factoring in today's gain of $16.60 or 0.97%. Dollar weakness was a primary contributor to moving gold higher accounting for approximately 60% of gold's $17 price increase. Currently, the dollar index is fixed at 109.55 which is a daily decline of 0.59%. Considering that gold gained just shy of 1% simple math indicates that market participants were active buyers accounting for approximately 40% of today's price advance.

Image Source: Kitco News

Spot gold pricing had similar gains in trading today. After factoring in today's gain of $15.70 physical gold is currently fixed at $1717.90 according to the KGX (Kitco Gold Index). Just as in gold futures gains in physical gold occurred as a combination of dollar weakness and normal trading. Dollar weakness accounted for $10.40, with the remaining gain of $5.30 attributable to market participants bidding the precious yellow metal higher. Read More

Gold and silver move higher heading into the European open

Gold (0.08%) and silver (0.76%) have moved higher overnight. In the rest of the commodities complex, copper (0.76%) and spot WTI (0.87%) have also both moved into the black. 

Risk sentiment was good overnight as the Nikkei 225 (2.30%) and ASX (1.77%) both moved higher but the Shanghai Composite fell 0.18%. Futures markets are initiating a positive cash open in Europe. 

In FX markets, the biggest mover overnight was AUD//USD which fell around 0.20%. Other than that there was not too much movement. In the crypto space, BTC/USD trades at $19,340. 

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.