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Silver Continues to Fall as Investors Punish Its Lack of Yield in Time of Rising Interest Rates
Silver is struggling to find a footing currently as after failing to hold on to $25 an ounce last week it now finds itself below $24 an ounce at its lowest level since February.
The prospect of a series of interest rate hikes by the Federal Reserve has placed non-yield-bearing assets such as silver under pressure with this significant bearish factor outweighing a series of potentially bullish factors for the precious metal.
The Fed is expected to raise interest rates in each of the next three months which has strengthened the dollar and pulled down assets, such as silver, that are priced in the US currency.
Silver seems to have been meted out considerable punishment by traders currently for its lack of yield in an environment where interest rates are set to rise as from a fundamental perspective the case for silver still looks strong. Read More
Drop on Equity Markets Fails to Boost Gold as Fed Outlook Continues to Weigh on Price
Markets have started the week on a negative tone after being rattled by concerns that the ongoing lockdown in China, as the country seeks to control its latest wave of coronavirus, will have a significant impact on global growth and supply chains.
Equity indices across the world are a sea of red given these worries over the growth outlook for the world’s second-largest economy and a key supply hub for so many of our everyday items.
Yet while negative moves on equity markets are typically met with the reverse reaction on gold, the precious metal also finds itself being pulled downward to be trading a little above $1,900 an ounce at its lowest level for about three weeks.
Gold’s inability to benefit from falling stock markets is a reflection of how difficult it will be for gold to make significant gains given the interest rate outlook outlined by the Federal Reserve last week. Read More
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Gold price gives up $1,900 and silver falls below $24 an ounce, analysts see room for lower prices
Gold and silver are starting the week with some heavy selling pressure as gold prices drop below $1,900 an ounce and silver falls below $24 an ounce.
According to some analysts, the drop below the critical psychological level opens the door to further losses as bearish sentiment rises in the marketplace.
James Stanley, senior market strategist at DailyFX, said that if gold prices see a sustained break below $1,900, he could see prices testing support at $1,879 or even $1,842.
Ole Hansen, head of commodity strategy at Saxo Bank, said he is watching support at $1,890 an ounce.
"Gold led by silver has joined the weakness seen across metals and commodities in general on concerns a succession of aggressive rate U.S. hikes will boost the dollar while sending real yields higher as inflation is being brought under control," Hansen said. Read More
Gold, silver plummet as raw commodity sector pounded on Covid fears
Gold and silver prices are sharply down and hit two-month lows in midday U.S. trading Monday. Gold dropped below the psychologically important $1,900 level. The entire raw commodity sector was hit hard today by concerns regarding demand as Covid cases in China, the world’s second-largest economy, are spreading rapidly. Serious near-term technical damage was inflicted in gold and silver today, which has emboldened the chart-based bears. June gold futures were last down $38.20 at $1,896.10 and May Comex silver was last down $0.579 at $23.69 an ounce.
Image Source: Kitco News
Technically, June gold futures prices hit a two-month low today and a price downtrend has been started. Bulls have lost their overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,950.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,915.00 and then at $1,925.00. First support is seen at today’s low of $1,891.80 and then at $1,883.00. Wyckoff's Market Rating: 5.0
Image Source: Kitco News
May silver futures prices hit a nine-week low today and a price downtrend is in place now. The silver bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $24.00 and then at today’s high of $24.24. Next support is seen at today’s low of $23.42 and then at $23.00. Wyckoff's Market Rating: 4.0. Read More
Why did palladium price just plummet more than $250?
Palladium was swept up in a larger sell-off in the commodities space at the start of the week, plunging around $300 as commodities and U.S. stocks were dropped by investors.
The precious metal was the most volatile compared to the overall negative price action seen in gold, silver, and platinum on Monday. June Comex palladium futures were down 13% at one point and last traded at $2,129.00 after testing the daily low of $2,058 an ounce.
Analysts quickly pointed to fears over unprecedented China lockdowns of the capital as one of the main triggers dragging the commodity space down at the start of the week.
"Palladium is hyper-sensitive to China lockdowns due to the fact that they carry over to manufacturing data," RJO Futures senior market strategist Peter Mooses told Kitco News. The precious metal is widely used in catalytic converters by the car industry. Read More
Hedge funds increase their bearish bets on gold as Fed plans aggressive rate hikes
Gold's inability to break above $2,000 an ounce early last week prompted some hedge funds to ditch their bullish bets and add new short positions, according to some analysts looking at the latest trade data from the Commodity Futures Trading Commission.
Along with the technical selling pressure, some analysts note that aggressive monetary policy tightening expected from the Federal Reserve has pushed the U.S. dollar and bond yields to multi-year highs.
"The growing expectation that the U.S. Federal Reserve will lift rates by at least 50bps in May and likely another 50bps in June, in response to sky-high inflation and an above-potential economy, prompted money managers to aggressively cut gold length," commodity analysts at TD Securities. Read More
'Stocks about to fall sharply': S&P 500 ready to join the bear market - Morgan Stanley
April stock market sell-off will only accelerate as S&P 500 looks ready to join the bear market, according to Morgan Stanley.
Inflation and rising recession fears ahead of the aggressive central bank tightening have investors on the run and looking for safety.
All stocks inside the index are likely to see a steep downward decline, Morgan Stanley strategists in a note on Monday.
"With defensive stocks now expensive and offering little absolute upside, the S&P 500 appears ready to join the ongoing bear market," said Morgan Stanley strategists in a note on Monday. "The market has been so picked over at this point, it's not clear where the next rotation lies. In our experience, when that happens, it usually means the overall index is about to fall sharply with almost all stocks falling in unison." Read More
Gold and silver trade higher heading into the European open
Gold (0.24%) and silver (0.71%) have retraced slightly after both precious metals lost ground on Monday. Gold fell 1.64% while silver dropped 2.32%. In the rest of the commodities complex, copper is trading just under flat and spot WTI is 0.21% higher.
Stocks were mixed last night. The Nikkei 225 rose 0.41% but the ASX (2.08%) and Shanghai Composite (-1.66%) both fell. Futures in Europe are indicating a positive cash open.
In FX markets the U.S. dollar was slightly weaker overnight. The biggest mover was AUD/USD which rose 0.30%. In the crypto space, BTC/USD is 0.14% higher trading at $40,498.
News from ahead of the EU open: 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.
