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Silver’s Failure to Regain $25 Point to Current Doldrums But Fair Wind May Soon Blow In
Silver’s failure to climb back above $25 an ounce points to the strength of investor support fading for the time being. On the previous occasions in March that silver had tested this support level, the price had quickly rebounded back above the $25 threshold but this time it has instead continued to drift steadily lower.
Silver is so far being driven by the same factors as gold with the hawkish rhetoric from central banks in the US and Europe putting pressure on non-yield bearing assets such as silver and gold. While this is presenting a firm ceiling for any gains, the war in Ukraine is providing strong support to how low silver can drift. Read More
Gold Trapped In Sideways Drift Between Bearish and Bullish Pillars of Rate Hikes and War
Gold continues to drift sideways around $1,930 an ounce as it is trapped between two equally strong bearish and bullish drivers.
The continuation of the war in Ukraine with Russian troops being primed for a fresh offensive in the east of the country is keeping gold supported due to its time-honored safe-haven appeal. However, gold’s potential for fresh gains is being capped by the hawkish monetary policies of central banks in Europe and the US.
Minutes from the March meeting of the Federal Open Market Committee released earlier this week showed that a number of officials would have favored raising interest rates by 50 basis points, double the increase actually agreed.
The minutes also suggested that there will be a further six rate hikes over the course of the year with each one likely to knock a little of the luster off gold’s appeal to investors with its lack of yield a stumbling block in an environment of rising interest rates. Read More
Russia's central bank scraps gold buying at fixed price for 'negotiated price' after ruble returns to pre-invasion levels
The Russian central bank will stop buying gold at a fixed price from local banks starting April 8 and continue its purchases at a "negotiated price." The move comes after Russia's ruble recovered to pre-invasion levels.
The country's central bank cited a "significant change in market conditions" in its Thursday announcement.
"From April 8, 2022, the purchase of gold by the Bank of Russia will be carried out at a negotiated price," the statement said.
At the end of March, Russia's central bank resumed its gold purchases from local banks and said that it would be buying the precious metal at a fixed price of 5,000 roubles between March 28 and June 30. This was around $52 per gram at the time and below the market value of around $68.
The central bank added that the resumption in buying will ensure supply and uninterrupted production of local gold. Read More
Gold to test $1,950 as bullish sentiment drives prices
Sentiment in the gold market remains extremely bullish as the precious metal continues to consolidate in the face of rising bond yields as the Federal Reserve looks to aggressively tighten its monetary policy through 2022.
The latest results of the Kitco News Weekly Gold Survey show no Wall Street analyst is bearish on gold in the near term, with a substantial majority expecting to see higher prices next week. At the same time, retail investors remain solidly bullish on the precious metal.
Many analysts have noted gold's resilience as 10-year bond yields have risen to their highest level in 3 years. Bonds have sold off as minutes of the March Federal Reserve suggested that committee members could raise interest rates by 50 basis points at the next two meets. The U.S. central bank also expects to start reducing its balance sheet following the May monetary policy meeting.
Despite all this bearish news, gold has managed to consolidate between $1,900 and $1,950 an ounce. While analysts don't see a breakout just yet, they expect prices to continue to test the top end of the range.
"Having had survived having the kitchen sink and more thrown at it by several FOMC members this week, I believe gold could move higher given how much has been priced in by now," said Ole Hansen, head of commodity strategy at Saxo Bank. "Gold is still caught between $1,890 to $1,950, but I increasingly favor the upside to be tested next." Read More
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Silver prices are stuck, but future shines bright as industrial demand grows - Bank of America
Silver prices are stuck in a wide range finding little momentum from subdued investor interest; however, commodity analysts at Bank of America expect the precious metals industrial demand to keep the market well supported.
In a report published Friday, the analysts said that demand from the solar power sector and growing importance in the auto sector will be two critical factors driving silver prices for the next three years.
The bank sees silver prices ending the year at around $32.50 an ounce as the market sees falling supply and growing industrial demand. The long-term bullish outlook comes as silver prices consolidate between $24 and $25 an ounce. May silver futures last traded at $25.81 an ounce, up 0.30% on the day.
"Demand headwinds have been gradually tailing off, and silver usage in solar panels is set to increase further as more photovoltaic (PV) is installed," the analysts said in the report. "Importantly, out to 2025, new PV installations in GW will likely outpace any savings from learning effects that might reduce silver loadings in panels. We assume 19t of silver per GW of capacity installed at the moment." Read More
Gold is the asset investor want to own
Two weeks ago, I highlighted an underlying strength in the gold market as prices have consolidated between $1,900 and $1,950 an ounce in the face of rising bond yields.
Today, that theme continues to dominate the precious metals market. This week, 10-year yields pushed to a three-year high above 2.6%, and yet gold is ending the week with a 1% gain, at the top of its range near $1,950.
It's challenging to convene just how impressive gold's price action has been in this environment. The 10-year yield has broken a trend line that goes back to the mid-1980s. This breakout means we, potentially, are seeing the start of the biggest bear market in bonds in 37 years.
Traditionally, rising bond yields are negative for gold because it raises the opportunity costs of the precious metal, a nonyielding asset. Yields are moving higher as investors prepare for the Federal Reserve to embark on a fairly aggressive tightening cycle.
Ole Hansen, head of commodity strategy at Saxo Bank, had the best description of gold's price action this past week.
“Having survived having the kitchen sink and more thrown at it by several FOMC members this week, I believe gold could move higher given how much has been priced in by now,” he said in a comment for this week's Kitco News Gold Survey. Read More
Gold price to focus on new decades-high inflation numbers next week - analysts
The gold market will pay close attention to the U.S. inflation numbers in what will be a very data-heavy week. Analysts are looking for prices pressures to reach new four-decade highs of well above 8% in March.
The big macro news still being digested by the gold market is the FOMC March minutes revealing the Fed's plan to reduce its balance sheet by $95 billion a month, which will likely be kicked off in May.
The Fed also discussed 50-basis-point rate hikes at upcoming meetings, which the market is already pricing in for May. "Many participants noted that one or more 50 basis point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified," the minutes said.
This is why the March inflation data, which is scheduled to be released on Tuesday, will be one of the key releases to monitor. Market consensus calls expect to see annual inflation at 8.4% — the new four-decade high. Read More
Gold rises as investors brace for Tuesday’s CPI inflation report
As of 4:44 PM EDT gold futures basis, the most active June 2022 contract is trading up $11.70, a gain of 0.60% at $1949.50. There were some alarming forecasts for the upcoming release of the latest inflationary data vis-à-vis the CPI (Consumer Price Index) on Tuesday, March 12. Just last week estimates were released by the Federal Reserve Bank of Cleveland which revealed a detailed estimate of the upcoming CPI report indicating that the level of inflation in March could run as high as 8.41%. Furthermore, estimates for the first quarter of 2022 predict inflationary pressures quarter over quarter could swell as high as 9.1%.
Image Source: Kitco News
The chart above is a 240-minute candlestick chart of gold futures. We have included are trendlines highlighting a series of lower highs, as well as a series of higher lows. This has created a compression triangle and breakout above the current resistance level. This indicates that gold has concluded its consolidation period and moved back into a solid rally mode. This puts our next target for potential resistance at $1967.60. Above that price point, there is resistance at $2000 and major resistance at $2016. Read More
Gold is trading marginally lower ahead of the European open
Moving into the European open, gold is trading 0.18% lower and silver is currently flat. In the rest of the commodities complex, copper (-0.92%) and spot WTI (1.53%) were weak too.
Indices were mixed in the Asia Pac area as the Nikkei 225 (-0.61%) and Shanghai Composite (-2.73%) fell but the ASX rose 0.10%. Futures in Europe are indicating a negative cash open.
In FX markets, the dollar index pushed 0.19% higher but the biggest mover was USD/JPY (0.84%). In the crypto space, BTC/USD is 0.31% higher trading at $42,295.
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.
