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Gold Pulled Down Below $1,950 as Equities Show Surprising Resilience
The fragile optimism on equities amid a resilient earnings season has seen European indices edge higher on Wednesday and put downward pressure on gold, pushing the price down below $1,950 an ounce.
The small increase on stocks reflects the large number of bearish factors that are offsetting the bulk of the bullish ones. The near-flattening of the Ukrainian city of Mariupol starkly illustrates how damaging and long-lasting Russia’s invasion of Ukraine is likely to be with any hope of peace looking increasingly remote.
Add in the cost of living crisis as a result of ever-rising inflation and now the International Monetary Fund’s slashing of its forecast for global growth and it is difficult to see where traders are finding the current positive drivers.
In this environment, with fear over the possible escalation of the war in Ukraine an ever-present concern, gold still retains upside potential and could easily spring back above $2,000 an ounce as it achieved last week. Read More
Silver Slips Below $25 But Positive Outlook for Metal Could See Price Rise Again
Silver has slipped below $25 an ounce on a day when traders are seeing the positives from a resilient earnings season against a backdrop of the ongoing conflict in Ukraine and an escalating inflationary environment.
It will be interesting to see silver’s reaction having fallen below this significant threshold as on most of the recent times it has dropped below $25, a wave of buying swept in to bump it back above this level. And while today may be seeing silver come under pressure, the wider outlook remains very bullish for the metal. Read More
Gold price continues to ignore housing data, trades back around 1950 an ounce
Gold prices remain under pressure and are back within their previous trading channel. The precious metal is unable to find any bullish traction even as fewer consumers bought home last month.
Existing home sales fell to a seasonally adjusted and annualized rate of 5.77 million units last month, down 2.7% compared to February’s annualized rate of 6.02 million homes, the National Association of Realtors (NAR) said on Wednesday. The drop was in line with consensus forecasts.
This is the second consecutive month home sales have declined; however, the NAR is expecting to steady demand even as mortgage rates and home prices rise through 2022.
“"The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power," said Lawrence Yun, NAR's chief economist. "Still, homes are selling rapidly, and home price gains remain in the double-digits.” Read More
Gold, silver bulls fading and need a fresh spark
Gold and silver prices are modestly weaker in midday U.S. trading Wednesday, on some more downside corrective action after recent gains. Bulls are fading and need a fresh fundamental element to boost them and to keep alive the near-term price uptrends in the two precious metals markets. June gold futures were last down $4.20 at $1,955.00 and May Comex silver was last down $0.146 at $25.245 an ounce.
Image Source: Kitco News
Technically June gold futures bulls still have the overall near-term technical advantage but have faded this week and need to show fresh power soon. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,915.00. First resistance is seen at $1,972.50 and then at Tuesday’s high of $1,985.10. First support is seen at today’s low of $1,941.00 and then at $1,928.00. Wyckoff's Market Rating: 6.5.
May silver futures bulls have the overall near-term technical advantage but have faded this week and need to show fresh power soon. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $26.495 an ounce. The next downside price objective for the bears is closing prices below solid support at $24.00. First resistance is seen at $25.50 and then at $25.75. Next support is seen at $25.00 and then at $24.50. Wyckoff's Market Rating: 6.5. Read More
Silver price to see fireworks in first half of 2022, challenges in second half - Silver Institute
Silver investors should expect to see a more nuanced market in 2022 as industrial demand is expected to remain strong while investor demand remains relatively flat, according to the Silver Institute's annual World Silver Survey.
The research for this year's report was completed by Metals Focus. In a telephone interview with Kitco News, Phillip Newman, a founding partner at the British precious metals research firm, said that challenging forces will dominate the silver market throughout the year.
Investors continue to navigate fragile and volatile financial markets, created by Russia's invasion of Ukraine and, at the same time, protect themselves from the growing inflation threat, Newman said. Meanwhile, looking at silver's industrial side, the precious metal faces consistent demand as the global green energy transition moves forward. However, the growing threat of stagflation and a potential recession could push demand further out.
Putting everything together, Metals Focus expects to see solid silver prices in the first half, with prices rising to a peak of $28 an ounce. Newman said he expects prices to average $23.90 an ounce for the year, down 5% from the 2021 average price. Read More
Inflation risk vs. hawkish Fed: There's a new price floor for gold – BMO
Gold is trading in an environment of high inflation and geopolitical risks, which is somewhat offset by the Federal Reserve's aggressive tightening plan, according to a report by BMO Capital Markets.
What this means for gold is a new price floor of $1,800 an ounce. Here's how BMO explained its thinking:
"Multi-decade high inflation, which shows little sign of easing, the fallout from Russia's invasion of Ukraine, and mounting recessionary fears, are outweighing negative gold sentiment arising from an increasingly hawkish Fed, a rebound in equities and dollar strength," according to BMO's analysts. "Gold will likely continue to be buffeted by data releases and central bank commentary, which give an indication of macroeconomic health and policy direction, but as highlighted in this report we now expect gold prices to remain above $1,800/oz until mid-2023."
Gold's main drivers for 2022 are recessionary concerns, rising inflation, and geopolitical uncertainty. On the other hand, its main headwinds are aggressive monetary policy tightening and a higher U.S. dollar.
In this environment, BMO sees gold hitting a new record high this year after the precious metal already attempted to breach the psychologically important $2,000 an ounce level twice this year. Read More
Is gold the next big play? Gold price heading to $2,100 - Wells Fargo
It is not the time to be disappointed by gold's underperformance versus some other commodities, according to Wells Fargo, which sees gold as the next potential big play.
With high inflation, geopolitical uncertainty, and stocks not performing well, more investors are looking for store-of-value type assets. And despite Bitcoin getting most of the attention over the past year, it looks like 2022 could be gold's year, said Wells Fargo's head of real asset strategy John LaForge.
"On the store-of-value front, bitcoin has been getting much of the attention lately, but we think gold may be the next play. Gold's price chart appears to be slowly grinding higher, while bitcoin's price has been stuck in a wide $30K to $69K range for the past 12 months," LaForge said in a note this week.
Without getting too much into the debate about which asset is a better hedge, LaForge said gold is looking to hit $2,100 an ounce by the year-end.
"We believe bitcoin has gold beat in ease of use, storage, and verifiability, but gold can be physically held, is universally recognized, and has had one-quarter of the volatility. In the not too distant future, if bitcoin financial products mature as we expect, investors may choose to own a little bit of both gold and bitcoin for their store-of-value diversification needs," he said. "The bottom line is that we still like gold and are maintaining our 2022 year-end target price range of $2,000-$2,100 per ounce." Read More
Gold and silver are trading lower ahead of the European open
After recovering slightly during Wednesday's session gold (-0.27%) and silver (-0.46%) are trading lower ahead of the European open. In the rest of the commodities complex, copper is half a percent down while spot WTI is 1% in the black.
Once again equities were mixed overnight. The ASX (0.31%) and Nikkei 225 (1.23%) rose again while the Shanghai Composite fell 2.04%. Futures in Europe are indicating a positive open.
In FX markets, EUR/USD rose 0.41% as was the biggest mover overnight. BTC/USD is also trading half a percent higher.
News from overnight: Read More
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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.
