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Inflation will keep gold prices above $1,900 even as the Fed raises rates - Scotiabank
The gold market continues to struggle as prices trade below $1,900 an ounce, and the Federal Reserve's monetary policy decision next week will continue to weigh on the precious metal; however, one market strategist still sees solid support for the precious metal through the rest of the year.
In a report published Monday, Marc Desormeaux, senior economist at Scotiabank, said that despite gold's recent more than 5% drop from $2,000, he is increasing his forecast for the precious metal.
The Canadian bank now sees gold prices averaging the year around $1,900, up from the previous forecast of $1,800.
Although Desormeaux is relatively bullish on gold, he added that the precious metal could struggle in the near term ahead of the Federal Reserve's monetary policy decision.
Markets are expecting the U.S. central bank to raise interest rates by 50 basis points. At the same time, the central bank is also looking to start reducing its balance sheet by $95 billion. Read More
Silver prices to fall to $21 as Fed tightens rates to fight inflation - UBS
The Federal Reserve's imminent move to raise interest rates by 50 basis points next week continues to take its toll on the precious metals.
Silver has been a significant underperformer in the last two weeks as prices dropped below $26 an ounce. Silver is currently testing support just above $23 and is down 13% since April 18.
Looking ahead, analysts at UBS expect to see lower prices in the near-term. May silver futures last traded at $23.040 an ounce.
"Prospects of higher interest rates are likely to remain a headwind for the metal," said Dominic Schnider and Wayne Gordon, market strategists at UBS said the report. "A silver price whose upside is likely to be capped gives investors the opportunity to engage in more active strategies. In short, we like selling the price upside in silver for yield."
The Swiss investment bank is negative on silver as the Federal Reserve tries to get inflation under control by aggressively raising interest rates. They added that interest rates have room to move much higher through 2022. Read More
Gold bulls work to stabilize the market
Gold prices are trading near steady in midday action Thursday. The gold and silver bulls are trying to stop the recent price downdrafts that pushed prices to nine-week lows overnight. A strong U.S. dollar and rising bond yields have been hammering the two metals recently. June gold futures were last up $0.90 at $1,889.50 and May Comex silver was last down $0.36 at $23.10 an ounce.
Image Source: Kitco News
Technically, June gold futures prices hit a nine-week low early on today. A price downtrend line is in place on the daily bar chart. Bears have the slight overall near-term technical advantage and have momentum on their side. Bulls' next upside price objective is to produce a close above solid resistance at this week’s high of $1,935.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,900.00 and then at $1,915.00. First support is seen at today’s low of $1,870.90 and then at $1,850.00. Wyckoff's Market Rating: 4.5.
Image Souce: Kitco News
May silver futures prices hit another nine-week low early on today. A price downtrend line is in place on the daily bar chart. 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 $22.00. First resistance is seen at today’s high of $23.41 and then at Wednesday’s high of $23.765. Next support is seen at today’s low of $22.895 and then at $22.50. Wyckoff's Market Rating: 3.5. Read More
Food shortage is next, inflation to go to 'the moon,' gold will rebound - Todd Horwitz
"We are probably going to have a food shortage next year based on what's going on with Russia and Ukraine, because those two countries supply 30% of the wheat crop," predicted Todd 'Bubba' Horwitz, Chief Market Strategist at BubbaTrading.com. "Mother nature is not cooperating in the United States, following Australia and Brazil both having bad planting seasons. Inflation is going to the moon; we are only in the early stages of it."
Horwitz discussed inflation and the gold market with David Lin, Anchor at Kitco News. Read More
'We have a problem'; Bitcoin, gold, stocks will all crash soon, nothing will work warns economist - Alfonso Peccatiello
With rising interest rates, disrupted global supply chains, and aggregate demand expected to shrink, investors can expect risk assets like stocks and cryptos, as well as traditional safe-haven plays like gold to take a hit this year, said Alfonso Peccatiello, author of The Macro Compass.
"This is an environment where you have nowhere to hide. You can't buy stocks, you can't buy gold, you can't buy Bitcoin," Peccatiello told David Lin, anchor for Kitco News. Read More
Gold is an 'ideal' asset right now but why isn't the price higher? Fidelity weighs in
Even though gold seems like an "ideal" asset to own right now, why hasn't its price made "a big splash" yet? Here's what Fidelity International has to say about gold's latent reaction.
Gold failed to deliver a big rally of sustained trading above $2,000 an ounce this year. But all the precious metal might need is time, according to Fidelity International — the arm of Fidelity Investments.
When looking at what has kept gold prices down, Fidelity pointed to aggressive talk from the Federal Reserve.
"[Gold] has been hamstrung by expectations the U.S. Federal Reserve will now act quite aggressively to bring inflation under control," said Fidelity's investment writer Graham Smith. "The prospect of further U.S. interest rate hikes adds to the relative attractions of the dollar over real assets like gold that have no yield. Fewer dollars are then required to buy an ounce of gold, reducing its dollar price." Read More
Western and Eastern technical studies suggest a bullish reversal in gold has occurred
Gold traded to its lowest value in the last nine trading days with market forces taking the June 2022 futures contract to $1870.90 this morning. After opening at $1886.80, gold futures drifted lower and then recovered strongly. As of 4:30 PM EDT, the most active June 2022 gold contract is fixed at $1896.20 which is a net gain of $7.50. More importantly, if it finishes this Globex session at these levels it will be a strong indication that the support level at $1885 is active support. However, when we combine today's price range with Eastern and Western technical analysis a case can be made that a pivot or key reversal has resulted from today's price action.
Image Source: Kitco News
Chart #1 is a daily gold chart that we have used and published in which we highlighted the support level we had identified at $1885. This chart also clearly illustrates that the intraday low this morning moved just below gold's 100-day moving average. 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.
