Today's Gold and Silver News - 9th September

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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.

"Gold investors got excited about a dovish pivot, and those expectations haven't gone away; they have just been pushed back to the second half of 2023," he said.

Although the market currently believes in the Fed's aggressive stance on inflation, Roberts noted that a lot can happen in the next six months. Read More

Perth Mint outpaces U.S. Mint in gold sales last Month

A new trend could be emerging in the physical bullion marketplace as coin sales from the U.S. Mint were weaker than its counterpart in Australia.

In its monthly sales report, the Perth Mint said that it sold 84,976 ounces of minted gold products in August, an increase of 7% from July. At the same time, sales are up 57% compared to August 2021.

Meanwhile, data from the U.S. Mint shows that it sold 51,500 ounces in various denominations of American Eagle Gold bullion coins. Sales are down 20% from July and 62% from last year.

Meanwhile, the U.S. mint sold 850,000 one-ounce America Eagle silver bullion, unchanged from July. However, sales are down 78% from the more than 3 million coins sold last year.

In Australia, the Perth Mint said it sold 1.656 million ounces in silver minted products last month, down 33% from July but up 13% from August 2021.

Some market analysts have said that the Perth Mint's strong sales could be due to more aggressive marketing, especially in Europe.

Everett Millman, precious metals expert at Gainesville Coins, said the Perth Mint could also be benefiting from growing Asian demand as lockdowns in China have started to ease.

"From a logistics perspective, it is probably easy and cheaper to ship gold and silver coins from Australia to India and Asia," he said.

Millman said another factor that could be disrupting U.S. mint sales is that premiums for those coins are higher than other bullion like Kangaroos from the Perth Mint or Austria's Vienna Philharmonic gold coins.

"Consumers are becoming a little more cost-conscious, and they are turning to other coins with lower premiums," he said. Read More

Gold prices remain at session lows as markets digest hawkish comments from Fed Chair Jerome Powell

Hawkish comments from Federal Reserve Chair Jerome Powell regarding U.S. monetary policy are weighing on gold prices as the market remains in negative territory.

Speaking at the Cato Institute's 40 annual monetary policy conference, Powell said that the Federal Reserve will continue to raise interest rates until it can get inflation back under control.

"We need to keep at it until we get the job done," he said. "We need to act now forthrightly and strongly, as we have been doing."

According to some economists, Powell's comments reiterated his stance presented at the Jackson Hole central bank symposium, where he warned that not only will interest rates have to move higher, but they could remain elevated for longer to make sure inflation remains well anchored.

In his comments during the Cato conference, Powell said that history cautions against prematurely loosening.

"It is very important that inflation expectations remain anchored," Powell said. "The longer that inflation remains well above target, the greater the concern that the public will start to just naturally incorporate higher inflation into its economic decision making. Our job is to make sure that doesn't happen."

The gold market fell to session lows as Powell started speaking and has struggled to find any bullish traction as bond yields have pushed higher. December gold futures last traded at $1,718.90 an ounce, down 0.53% on the day. Read More

Gold backs down as Powell reiterates hawkish Federal Reserve

Gold prices are lower in midday U.S. trading Thursday, pressured by comments from Federal Reserve Chairman Jerome Powell that again leaned hawkish on U.S. monetary policy. Powell’s comments boosted the U.S. dollar index and U.S. Treasury yields, both of which had been weaker ahead of his speech. The yellow metal had seen higher prices overnight, but lost those gains to trade near steady when upbeat U.S. jobless claims data were released, and then sold off when Powell made his remarks. October gold was last down $10.80 at $1,707.40 and December silver was up $0.065 at $18.325.

Powell’s speech today was the last scheduled ahead of the FOMC meeting on Sept. 20-21, at which time the Fed is expected to raise the Fed Funds rate by 75 basis points. The Fed’s beige book, out Wednesday afternoon, pointed out weaker U.S. economic growth. Meantime, the European Central Bank met today and raised its main interest rate by 75 basis points, as expected.

Technically, October gold futures bears 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 today’s high of $1,729.30 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 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 today’s high of $18.665 and then at $19.00. Next support is seen at $18.00 and then at this week’s low of $17.74. Wyckoff's Market Rating: 2.0. Read More

Image Source: Kitco News

Expect stronger U.S. dollar as Europe's energy crisis intensifies - Jim Bianco

As an energy crisis plagues Europe and Japan engages in relatively loose monetary policy, the U.S. dollar will continue to gain ground compared to other currencies, said Jim Bianco, President of Bianco Research LLC.

"If [Japan] is not going to raise rates to be more in line with the rest of the world, it weakens their currency," he explained. "The second story is Europe. The Euro and the pound are getting really hurt by this gigantic energy problem that they have, and the amount of money that they're going to have to spend in order to alleviate people's energy bills this winter."

Bianco said that the dollar is a "safe asset," and that given heightened geopolitical instability and market uncertainty, international investors would "put [their] money in the dollar, and then figure out where to go next," due to a "flight to safety."

The U.S. Dollar Index (DXY), which tracks the dollar's strength relative to a basket of other currencies, has risen 14.3 percent over the year. Bianco said that the dollar would continue its upward trend.

"Currencies trend more than anything else," he said. "And they just keep going. A case in point is the yen. When it rose from 100 to 110, people said that's too much. And today it is 145, or at least it was earlier today."

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

Gold and silver move higher ahead of the European open

Gold (0.77%) and Silver (1.52%) have moved higher heading into the European open. In the rest of the commodities complex, copper (1.45%) and spot WTI (1.08%) are trading higher. 

Indices in the Asia Pac area performed well overnight as the Nikkei (0.53%), ASX (0.66%), and Shanghai Composite (0.91%) all closed in positive territory. Futures in Europe are pointing towards a positive open.

In FX markets, the biggest mover overnight was AUD/USD which rose 1.31%. In the crypto space, BTC/USD pushed 6.90% higher. 

News from overnight: Read More

Gold’s Tentative Recovery Shows Support Remains Despite Hawkish Central Banks

Gold is ending the week by making a tentative recovery, underlying the strength of support that remains for the precious metal at $1,700 an ounce despite the hawkish macroeconomic environment.

A week in which the European Central Bank has raised its benchmark rate by 75 basis points and with the Federal Reserve expected to implement a similar sized move later this month wouldn’t naturally be conducive for gold.

Yet while today’s gains towards $1,725 an ounce shouldn’t be misconstrued as the start of a significant recovery, the fact that gold hasn’t sunk further shows that investors still see a role for gold with economies across the world on the brink of or already in recession.

Gold fell sharply earlier in the summer – losing $100 in a matter of weeks – when traders realised that positive US economic data wouldn’t soften the Fed’s aggressive approach to bring inflation back down to its 2% target.

Fed Chair Jerome Powell’s latest comments are consistent with his speech at Jackson Hole last month, and have caused a limited impact on the gold price with the likelihood of another 75 basis point hike later this month now priced in.

This week’s price action suggests that gold has found its natural level for the time being with the threat of a global recession as well as the ongoing war in Ukraine providing enough support to keep it above $1,700 despite the strength of the US dollar and the likelihood of many more rate hikes over the coming months.

Therefore for the price to materially move it would need the next move by the Fed to greatly surpass or underwhelm expectations. 

Source: Kinesis

Silver Enjoys Rare Strong Week as Traders Buy Undervalued Asset

Silver has enjoyed a strong week that could yet see it record a 5% gain as it edges up towards $19 an ounce.

Historically, this remains a very low level for silver with the metal trading at $26 an ounce as recently as April but after a torrid few months and the false dawn of the price having reached its bottom in July, this week’s gains are being greeted warmly by silver investors.

The fact these gains have come despite another central bank, in this instance the European Central Bank, implementing another large hike to its interest rate suggests that the hawkish environment in which there will be many more increases to interest rates over the coming months has been priced in. 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.