Today's Gold and Silver News - June 21st

Image Source: Unsplash

Gold is finely poised ahead of key events this week

Gold is trading flat on Monday morning and the price of the yellow metal is struggling at a previous support zone. Today is a U.S. holiday so chances are action in the afternoon could be pretty slow but ECB President Lagarde is speaking later in the day (2 pm London time). Mid-week Fed Chair Powell testifies before the Senate and there could be a pick up in volatility as it seems the inflation rate will be on the agenda. The Fed recently reacted by increasing interest rates by 75 bps and some comments on the future path of monetary policy could be anticipated. 

On the 1-hour futures chart below, the market has made a few consecutive higher high and higher low waves but is edging towards the volume point of control (VPOC) line at $1851.6/oz. This is where most contracts have exchanged hands in the given time period on the chart. There is now a firm consolidation low at $1806/oz. The next area of support stands at the green line near $1831.3/oz. 

On the upside, the price has some strong support zones to break. The next point is just above the VPOC level at the black like ($1858.1/oz). Not only has this area been a resistance point on its own it has also been a pretty firm congestion area. There have been around nine significant price reactions at the price. Above that, the high on the chart of $1882.5/oz is the wave high for the bulls to beat. This is the main consolidation high and a break to lead to another bull market formation on the higher timeframes. Read More

Image Source: Kitco News

Newmont CEO sees new floor level for the gold price

Tom Palmer, the CEO of the world's largest gold miner Newmont, says the events of the last few years mean the floor for gold prices has lifted. There is also the fact that inflation means it could be more costly to get the yellow metal out of the ground.

Where they may have once fallen to US$1200/oz, Palmer thinks they will remain above US$1500-1600/oz, prices at which the major producers with the scale to keep costs low should be making bank despite rising supply chain and labor costs.

"I see no reason why you wouldn't, over the next year or two, see it around current levels, but more importantly sitting on top of a floor that has fundamentally moved given the events of the last couple of years," he said after delivering a keynote speech at the PDAC Convention in Toronto.

He added that small gold miners are struggling with rising supply chain and labor costs, consolidation in the sector makes sense.

Gold has been consolidating since late 2020 and there seems to be a consolidation low of $1678.1/oz and a high of $2075.14/oz. It appears that anything higher than $1500/oz pleases the Newmont CEO. The old 2011-12 consolidation now seems like a sticky zone and looks like it's providing some real support. Read More

Gold will shine bright as Bitcoin, cryptocurrencies collapse

The gold market is holding firm in relatively neutral territory, trading in a narrow range between $1,800 and $1,850 an ounce; however, some commodity analysts are optimistic that gold could see renewed investors' interest as sentiment in financial markets rapidly disintegrates.

Specifically, some analysts see gold finding new safe-haven demand as investors flee the cryptocurrency market.

In 2021, Bitcoin's rally to an all-time high of $65,000 an ounce took away some of gold's luster. Last year some analysts said that Bitcoin's rally reduced gold's market valuation by as much as $200. Many investors saw Bitcoin and other digital currencies as a better store of value than gold. However, sentiment is quickly shifting as Bitcoin dropped below $18,000 a token and Ethereum dropped below $900.

"I would argue this blow-up in cryptos reinforces the value of gold," said Kristina Hooper, Chief Investment Strategist at Invesco, in a recent interview with Kitco News, "There's really only one asset that historically has the qualities of being a hedge against inflation and geopolitical risk and it's not cryptos." Read More

Global gold supply to fall after 2022 - report

According to the data by the Department of Industry, Science, Energy, and Resources of the Government of Australia (DISER), global gold supply to increase by 2.7% to 4,791 tonnes in 2022 compared to 2021, and then fall after 2022.

In 2022, lower global gold scrap supply will be more than offset by higher gold mine production, the study found.

DISER said that lower gold prices and improving economic situations of many households are likely to discourage the sale of gold jewellery, adding that as a result, gold scrap supply is forecast to fall by 2.0% to 1,127 tonnes in 2022.

On the other hand, world gold mine production is forecast to increase by 3.7% to 3,692 tonnes in 2022, driven by increased production in Australia, Canada, the US, and Papua New Guinea (PNG).

According to the report, in Australia – the world's second-largest gold producer - a solid pipeline of projects is expected to bring the country's gold mine production to 305 tonnes in 2022. Production in Canada and the US is forecast to increase by 19% and 9.8% to 225 and 201 tonnes in 2022, respectively. Read More

These three analysts see lower gold prices by year-end

Global financial market uncertainty created by rising inflation pressures and geopolitical turmoil has helped the gold market withstand an aggressive rise in U.S. interest rates; however, according to three precious metals analysts, prices look to end the year lower as rising real yields ultimately dominate investors sentiment.

Last week a webinar hosted by the London Bullion Market Association, James Steel, Chief Precious Metals Analyst at HSBC Securities, Rhona O'Connell, Head of Europe and Asian Market Analysis at StoneX Financial Ltd, and Suki Cooper, Executive Director of Precious Metals Research Standard Chartered, presented their macroeconomic outlook for the gold market for the rest of 2022.

While prices have room to move higher in the near-term, the three market analysts were relatively pessimistic about gold as they see lower prices through the end of the year. Cooper said that she sees the gold price falling to $1,750 an ounce by the fourth quarter.

"We should start to see the impact of rising real rates on demand and eventually, we'll start to see event inflation coming down, and we'll see some of that longer-term interest in gold start to dissipate," she said. Read More

It's a good time to be a gold investor even as the Fed raises rates - Invesco's Hooper

Gold prices will remain well supported through the rest of the year as rising recession and stagflation fears dominates sentiment throughout financial markets, according to one market analyst.

In an interview with Kitco News, Kristina Hooper, Chief Investment Strategist at Invesco, said that gold was able to hold its ground after the Federal Reserve took the extraordinary step of raising interest rates by 75 basis points last week. This was the biggest rate hike in nearly 30 years. However, Hooper added that it shows just how worried the U.S. central bank is about inflation.

"Gold is holding its ground because the 75-basis point move was a massive red flag for many investors that the Federal Reserve is going to push the economy into a recession," she said.

Along with its unpreceded move, the U.S. central bank signaled that another 75 basis point move could come in July and that the Federal Funds Rate could push as high as 3.50% by the end of this year and hit 4% in 2023.

The Fed's hawkish stance is helping to drive up real yields, which is traditionally negative for gold, a nonyielding asset. However, Hooper noted that investor fear, as equity markets fall deeper into bear-market territory, is driving safe-haven demand for gold. Read More

Gold and silver trade marginally lower ahead of the European open

Gold (-0.14%) and silver (-0.08%) are both trading marginally lower heading into the European open. In the rest of the commodities complex, spot WTI (-0.38%) and copper (-0.28%) are both trading in the red. 

Risk sentiment overnight was pretty positive as the Nikkei 225 (1.84%) and ASX (1.41%) closed higher but the Shanghai Composite fell just over half a percent. In Europe, futures are indicating a positive open.

In FX markets, the biggest mover overnight was USD/CAD which fell 0.28%. In the crypto space, BTC/USD rose 2.57% to trade above $21k. 

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.