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Silver Fails to Rally Back Above $25 in Face of Series of US Interest Rate Hikes
Silver has remained below $25 an ounce in the face of hawkish comments from Federal Reserve Chair Jerome Powell about the pace and strength of the US central bank’s implementation of measures to try and bring inflation under control.
With interest rate rises of 50 basis points now almost certain in May and June with another similar hike increasingly likely in July too, non-yield bearing assets such as silver look less attractive in the medium-term.
For much of this year, silver has found considerable underlying support each time it has dipped below $25 an ounce but on this occasion, the strength of the market reaction to Powell’s comments has diminished silver’s appeal. Read More
Gold Gets Short-Term Boost But Prospect of Rate Hikes Likely to Cap Gains
Equity markets look set to end the week on a downward note after Federal Reserve Chair Jerome Powell indicated that US interest rates could rise as much as 50 basis points in May and the central bank is “committed to using our tools to get 2% inflation back.”
This negative outlook for equities has given gold a small boost and pushed the price back above $1,950 an ounce. However, the Federal Reserve’s “front-end loading” of its implementation of measures to try and wrestle back under control will put gold under pressure in the medium term.
Investors are now anticipating a half-point rate hike in both May and June with the likelihood of a third consecutive increase in July becoming ever stronger. In this environment of fast-rising interest rates, gold is likely to come under pressure as its lack of yield versus other asset classes reduces its appeal. Read More
Sentiment in gold mixed so price could be headed anywhere as resistance holds at $2,000
The gold market could remain neutral, with sentiment providing no clear direction for prices in the near term, according to the latest results of the Kitco News Weekly Gold Survey.
Retail investors remain solidly bullish on gold for next week; however, Wall Street analysts are caught in nearly a three-way tie. The mixed sentiment comes as the gold market has been consolidating for most of the week after the price was unable to break above resistance at $2,000 an ounce.
David Madden, market analyst at Equiti Capital, said that he remains bullish on gold but would not be buying gold at current prices.
"If gold can hold support above $1,920, its broad uptrend remains in place," he said. "I still hold that gold's more likely to push above $2,000 an ounce than fall below $1,900." Read More
The Metals, Money, and Markets Weekly: Pick your poison - inflation or recession
Analysts aren't giving up on gold
Gold has been resilient these past few weeks. Although the market remains caught in a consolidation pattern, investors don't appear to be ready to give up on the precious metal.
The week started with a lot of potential as prices tested resistance at $2,000 an ounce; however, it quickly became clear that the precious metal didn't have enough momentum to break out as it faced a stronger U.S. dollar and rising bond yields.
Gold prices are ending the week down 1.7% after hitting a brick wall late Monday. While the price action is disappointing, it's difficult to be too discouraged when looking at financial market conditions. Gold is holding critical support as the U.S. dollar hit a new two-year high, with the index pushing above 101. At the same time, U.S. 10-year bond yields are on the cusp of hitting 3%, their highest level since early 2018.
Bond yields and the U.S. dollar are surging higher after Federal Reserve Chairman Jerome Powell confirmed that the U.S. central bank is ready to raise interest rates by 50 basis points next month and potentially at the June meeting. Read More
Gold continues to decline as the Fed prepares to fight inflation
The Federal Reserve’s next FOMC meeting is just under two weeks away, and market participants are gaining insight from Chairman Powell and other Federal Reserve voting members. Recent statements by Chairman Powell have indicated a major shift in his position regarding inflation. Up until his most recent statements, he maintained that inflation levels had peaked, were transitory, and would begin to decline. However, he has been forced to reevaluate those assumptions based on the reality that the CPI is currently at 8.5% for March, and the PCE index came in at 6.4% in February. PCE numbers for March will be released on April 29.
Statements by all members of the Federal Reserve have intrinsically contained subtle changes in words used to describe their forward guidance, this was not the case this week when Chairman Powell addressed the issue of inflation head-on.
For the first time, Powell was forced to acknowledge that, “it is appropriate to be moving a little more quickly … Our goal is to use our tools to get demand and supply back in synch…and do so without a slowdown that amounts to a recession …It is going to be very challenging.”
During the March FOMC meeting, the Federal Reserve began its process of interest rate normalization or “lift-off” by raising the Fed Funds rate from virtually zero (0% to ¼%) by ¼% taking interest rates to 25 – 50 basis points. Read More
Why this commodity bull market is different - Queen's Road Capital
While many metal prices have rocketed, mining equities have mostly under-performed, noted Queen's Road Capital CEO, Warren Gilman.
On Friday Gilman recorded a podcast with Kitco correspondent Paul Harris and mining audiences manager Michael McCrae.
Queen's Road Capital (TSX:QRC.V) finances miners. The company focuses on convertible debt securities. Some investments are NexGen Energy, Adriatic Metals, and Los Andes Copper.
Metal prices are up due to supply disruptions and the pandemic, but Gilman said companies are still under-valued.
"It's generally harder to deploy capital in a equity bull market, but this is a different equity bull market," said Gilman. "Commodity prices are doing very, very well. Equities aren't quite keeping pace. That's particularly true in the North American gold space." Read More
Here's what latest gold price pattern tells investors about the metal's next move
After touching $2,000 an ounce at the beginning of the week, gold tumbled more than $70 as the U.S. dollar climbed alongside the U.S. Treasury yields.
With the latest trading pattern, analysts see some undeniably bullish signals.
"Gold has been reaching new highs and consolidating. Right now, it is liquidating because of the higher dollar. But how can you be short gold in this market? Any dips in gold and silver are buying opportunities," Walsh Trading co-director Sean Lusk told Kitco News.
At the time of writing, June Comex gold futures were trading $1,937.90, down $64 from the highs seen early Monday.
This pattern in gold has been pretty dominant over the past few months, said Gainesville Coins precious metals expert Everett Millman.
"Every time gold hits the upper resistance level, it tends to sell off. Similar dynamics happen when it falls to its support levels. Given that part, I'm turning bullish on gold, and I expect a bounce-back," Millman said. Read More
Gold price tanks as Powell is about to ‘overtighten’, cause ‘panic in U.S. equities’
Gold fell by 1% on Friday following U.S. Federal Reserve Chair Jerome Powell’s announcement of a faster pace of monetary tightening this year.
Speaking at an IMF meeting, Powell said that “Inflation is much higher now and our policy rate is still more accommodative than it was then so it is appropriate, in my view, to be moving a little bit more quickly.” Read More
After touching $2k, why did gold price tumble $70?
After touching the $2,000 level at the beginning of the week, gold tumbled more than $70 as the U.S. dollar climbed alongside the U.S. Treasury yields. Here's a look at Kitco's top three stories of the week: Read More
Gold and silver struggle as we head into the European open
Gold and silver both suffered at the weekend open. The yellow metal is down 0.80% and silver has lost 1.83% ahead of the European market open. In the rest of the commodities complex, copper (-1.54%) and spot WTI (-3.27%) have suffered heavily.
As risk-off sentiment bites, indices in the Asia Pac area traded in the red. The Nikkei 225 (-1.95%), ASX (-1.57%), and Shanghai Composite (-4.57%) all fell overnight and European futures are pointing towards a negative open.
In FX markets, the dollar index pushed even higher (0.48%) and the biggest mover was AUD/USD which fell 1.14%. In the crypto space, BTC/USD dropped 1.29%.
News from the weekend and overnight: Read More
U.S. yields are hurting the gold price
The U.S. 10-year yield vs gold chart has started to reach some interesting levels. The chart below is a relative chart measuring the U.S. 10-year yield in percentage terms vs the price of gold. As the chart moves up the performance of U.S. debt performs and vice versa. At the moment gold has been struggling as this alternative safe haven offers some fixed income return unlike just capital gains like gold.
Overnight in the financial markets, yields and the U.S. dollar moved higher as the risk-off trade commenced. You can see from the weekly chart below that the U.S. 10-year yield has outperformed gold significantly this year.
The weekly comparison chart below shows the pair breaking through the red congestion zone with ease but now they are resting at the 50% retracement area will it be as straightforward? 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.
