Today's Gold and Silver News - July 8th

Image Source: Unsplash

Gold is 'undeservedly' cheap relative to equities as inflation sticks around - Felder Report

Expectations that the Federal Reserve will continue to aggressively raise interest rates at the end of the month have sent the gold market plunging lower, with prices testing long-term support at $1,730 an ounce.

However, one market analyst is warning that the Fed’s fight against inflation could prove futile and be good for gold prices.

In a report published Tuesday, Jesse Felder, creator of the Felder Report, said that markets anticipate that inflation pressures will quickly ease through the rest of the year. However, he added that historically inflation pressure could take longer than expected to cool.

He added that in this environment, gold continues to shine brighter than equity markets.

"If inflation proves more durable than markets currently discount, the recent volatility may be merely prelude to a more significant repricing across a number of asset classes," he said in his latest report.

"In fact, the level of CPI today already suggests that gold, relative to equities, maybe just about as undeservedly cheap as it was a half-century ago, the last time inflation really became a problem. And if inflation remains elevated, gold prices could have a terrific amount of upside ahead, especially relative to stock prices," he added. Read More

'Gold hasn't changed, the price of gold has changed'; What the gold price reveals about the macro-economy - Axel Merk

Tuesday, gold shaved $50 off its market value, falling to nearly $1,760. The 2 percent fall in price reveals that the "perception of the macro environment" has changed, and that "speculators" have sold some of their holdings, suggested Axel Merk, CIO, and Founder of Merk Investments.

"Gold hasn't changed, the price of gold has changed," he said. "Policymakers don't have many good options, so we might be in for some pain. In the short-term, people are selling everything."

Merk spoke with David Lin, Anchor and Producer at Kitco News. Read More

Gold, silver see tepid short covering in bear markets

Gold and silver prices are slightly higher in midday U.S. trading Thursday, on mild short covering in the futures markets and corrective bounces after gold hit an 8.5-month low and silver a two-year low on Wednesday. However, it is disappointing to the gold and silver bulls that their metals’ prices did not react more to the upside with today’s big rebound in crude oil prices. Rising U.S. Treasury yields today also squelched the metals market bulls. August gold futures were last up $2.60 at $1,739.00. September Comex silver futures were last up $0.041 at $19.20 an ounce.

Global stock markets were mostly up overnight. U.S. stock indexes are pointed toward higher at midday. The marketplace quickly digested Wednesday afternoon’s release of the minutes of the last FOMC meeting. The marketplaces sees a 96% chance the Federal Reserve will raise its key Fed funds rate by 75 basis points at its next FOMC meeting.

Technically, August gold futures saw prices hit an 8.5-month low Wednesday. Bears have the solid overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at $1,750.00 and then at Wednesday’s high of $1,771.50. First support is seen at this week’s low of $1,730.70 and then at $1,715.00. Wyckoff's Market Rating: 1.5.

Image Source: Kitco News

September silver futures prices hit a two-year low Wednesday. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the May low of $20.525 an ounce. The next downside price objective for the bears is closing prices below solid support at $18.00. First resistance is seen at $19.50 and then at $19.85. Next support is seen at $19.00 and then at this week’s low of $18.705. Wyckoff's Market Rating: 1.0. Read More

Image Source: Kitco News

Gold faces a difficult second half but it’s not hopeless - World Gold Council

Gold's neutral price action in the first half of the year made it one of the best-performing assets in financial markets. While there is still strong support for the precious metal, the World Gold Council warned investors that gold faces some complex challenges in the second half of the year.

Gold is already off to a rough start after dropping 4% and testing long-term support at $1,730 an ounce at the start of the week. The precious metal has attracted some bargain hunting but remains below critical psychological levels. August gold futures last traded at $1,744.10 an ounce, up 0.44% on the day.

In its latest report, the WGC said that gold remains caught in a tug of war between aggressive central bank tightening and rising inflation pressures, equity market volatility, and geopolitical uncertainty.

So far, investors are reacting more to the Federal Reserve's commitment to aggressively raise interest rates to cool down inflation; however, analysts at the WGC said there are still reasons for gold investors to remain optimistic that the market can withstand these headwinds.

"While most market participants still expect significant policy rate increases, some analysts argue that central banks may not tighten monetary policy as much as expected. Their reasons include potential economic slowdowns that may result in contractions, but also in some cases a switch from supply constraints to supply surpluses in non-commodity consumer sectors," the analysts said. Read More

Gold price could see '2000 flashback' as most commodities reverse in second half of 2022 – Bloomberg Intelligence

Despite gold kicking off the second half of the year with a drop below $1,800 an ounce, Bloomberg Intelligence sees the precious metal moving higher versus broader commodities, which are at risk of a reversal.

Crude oil is the commodity facing the biggest reversion risk in the second half of 2022, while gold is among the few that could benefit and see the $2,000 an ounce levels again, according to Bloomberg Intelligence senior commodity strategist Mike McGlone.

"The great reversion of 2022 may gain momentum in 2H, and crude oil seems a top candidate to drop. We see 2H risks tilted toward accelerating retracement in the Bloomberg Commodity Index, with gold potentially a primary standout," McGlone said in his mid-year outlook.

Bloomberg Intelligence looked at whether gold got too cold while commodities got too hot during the year's first half. And after looking at all the data, McGlone noted gold is trend ready while the rest of the commodity market will be coming down from its peaks.

"Gold's moribund performance is clearly different from past high-velocity commodity rallies. But the metal looks poised to come out ahead … Juxtaposed on the chart is gold hovering around its 100-week mean for almost a year. Our take: Gold is trend ready, while broad commodities risk reversion to their historic mean," McGlone wrote. "The last similar period of sluggish gold vs. strong commodities was in 2000 as the internet bubble burst and the precious metal jumped into an extended bull market." Read More

Has gold found a bottom or is it a momentary lull of selling pressure?

For the time in the last seven trading sessions, gold closed above its daily opening price and higher than the previous day’s closing price. However, there was no strong upside move, no higher high than the previous day, and no clear indication that the recent selling pressure has concluded. Rather it seems that market participants are waiting to see what the next two key reports will indicate about inflation and jobs.

The first key report will occur tomorrow when the U.S. Labor Department will release the nonfarm payroll jobs report for June. This will be followed next week by the latest inflationary numbers when the BEA will release the CPI (Consumer Price Index) for last month. Market participants are anticipating the certainty that the Federal Reserve will raise interest rates once again this month.

However, the current debate revolves around whether or not the fed will implement another 75 basis point rate hike as they did in June, or soften their aggressive stance by only raising rates by 50 basis points. The key takeaway is that regardless of what the jobs and inflation report reveal the Federal Reserve will continue to batten down the hatches as they have since March.

According to the CME’s FedWatch tool, there is no debate. This is because the FedWatch tool is predicting that there is a 93.9% probability that the Fed will continue its aggressive stance to fight inflation with back-to-back rate hikes of ¾%. Read More

Lower oil prices don't bode well for gold, but outlook remains uncertain

The oil market has managed to push back above $100 an ounce, and according to some analysts, that will be good news for gold investors.

The oil market has recently seen significant volatility, with prices falling nearly 13% and briefly falling to a two-month low of around $95 a barrel this week. At the same time, the gold market saw solid selling pressure, with prices falling 4% in two days as prices fell to nearly a one-year low and tested long-term support at $1,730 an ounce.

Most analysts note that the gold market is mostly at the mercy of the U.S. dollar, which is in an extraordinary uptrend pushing to another 20-year high above 100 points; along with the strong U.S. dollar, weak oil prices aren't helping gold attract new bullish momentum.

The drop in oil prices has helped to temporarily cool some fears that inflation pressures will continue to spiral out of control, which is a negative for the gold market.

Looking forward, analysts have no clear consensus on where oil prices will go. One factor that could determine the future for gold and oil is whether the U.S. and the global economy fall into a recession. A recession would weigh on oil prices and the entire commodity complex, which could weigh on gold. Read More

Gold and silver are trading higher ahead of the European open

Gold (0.14%) and silver (0.03%) are both trading slightly higher ahead of the European open. In the rest of the commodities space, copper is down 1.40% but spot WTI is 0.39% in the black. 

Risk sentiment was mixed overnight. The Nikkei 225 (0.10%) and ASX (0.45%) pushed higher while the Shanghai Composite (-0.15%) fell. Futures in Europe are indicating a negative cash open.

In FX markets, USD/CAD (0.23%) and USD/JPY (0.23%) were the biggest movers overnight. In the crypto space, BTC/USD pushed higher to hit $21,177.

News from 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.