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Fed signals fastest tightening since 2006; markets see more
Federal Reserve policymakers on Wednesday signaled much faster interest rates hikes this year than they had expected just a few months ago, getting them to about 1.9% by the end of the year as they try to tamp down soaring inflation.
Markets swiftly priced in their agreement, and then some, with trading in contracts tied to the Fed's target policy rate pricing in a rate of 1.93% by the end of 2022.
The last time the Fed raised rates as quickly as policymakers now expect was in 2004-2006.
Back then, they lifted rates by a quarter of a percentage point at every meeting; since then they have gone much slower when tightening policy, amid weaker recoveries and sleepier inflation.
Now, with inflation by the Fed's preferred inflation gauge running at three times its 2% goal, policymakers are "acutely" aware of the need to stabilize prices and committed to doing so, Fed Chair Jerome Powell said Wednesday. Read More
Markets don't always cooperate, gold and platinum struggle
First, gold reversed to trade on the short side and now platinum, if we were trading it. However, the lack of liquidity prevents our group from trading it -- but it would be a short. Suddenly, gold and platinum have turned ugly and are lower again this morning.
Silver is getting dangerously close to reversing as well. Although we like the precious metals and still have expectations of higher prices, we don’t expect that now. In the Futures and paper arena, we are short while still holding physical metals.
Image Source: Kitco News
Remember, short-term trends are just that, short-term. Using the paper metals markets, we are short and remain until our algorithm reverses back to the long side. It will take a solid rally to turn these back to bullish; for now, look for $1,900 gold to be support. Read More
Momentary calm in metals
The monetary metals continue to trade sideways this morning; gold will likely continue to oscillate between $1915-$1925 until today's 2 p.m. EST FOMC meeting. Although metals may bounce from short-term oversold conditions, traders would likely do well to be suspicious of knee-jerk moves.
Furthermore, although a bounce in metals may be sustained for a few days while oversold conditions are worked off, the risk is that metals put in a lower high compared to last week. Such an occurrence may signal that the metals complex is in for a longer, drawn-out consolidation in what may develop as an "ABC" technical pattern. Should gold fail to hold recent support today, the door to $1890 swings wide open. Read More
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Fed in focus: gold price gets pulled closer to $1,900, here's what to expect next
The extremely volatile commodity sector continues to weigh on gold as markets shift their focus to the Federal Reserve's expected 25 basis rate hike on Wednesday.
At one point, gold lost $50 on Tuesday as oil prices and other raw commodities tumbled. Oil fell below $100, with West Texas Intermediate crude futures and Brent down about 5% on the day and last trading at $97.39 and $101.24 per barrel, respectively.
"It seems the gold market is a victim of the abandon widespread commodity appreciation trade. Gold prices are trying to find a floor and eventually will stabilize even if oil prices continue to slide," said OANDA senior market analyst Edward Moya.
In the meantime, the U.S. equity market climbed higher on a rebound in risk sentiment, and gold was pulled closer to the $1,900 an ounce level. April Comex gold futures were last at $1,918.90, down 2.14% on the day. Read More
Gold price remains down following disappointing U.S. retail sales numbers
Disappointing economic data, as U.S. consumers spent less than expected last month, continues to have little impact on the gold market as prices see continued selling pressure.
U.S. retail sales rose 0.3% last month, down from January's revised rise of 4.9%, according to the latest data from the U.S. Commerce Department, released Wednesday; the data missed expectations as economists were forecasting a 0.4% rise.
For the year, headline retail sales are up 17.6%.
Meanwhile, core retail sales, which strips out auto sales, increased 0.2% last month, down from January's reading of 3.3%. Economists were expecting to see a 0.9% increase. Read More
Now is the time to be overweight gold - NDR's Tim Hayes
Safe-haven demand for gold has started to dry up even as Russia's war with Ukraine continues. However, even as prices have dropped well below $2,000 an ounce, the fundamental backdrop remains in place, according to one market strategist.
In a recent interview with Kitco News, Tim Hayes, chief global investment strategist at Ned Davis Research, said now is the time to be overweight gold as volatility and uncertainty dominate markets.
He added that the conflict in Eastern Europe had created some short-term safe-haven demand for gold. However, geopolitical uncertainty will continue to drive inflation higher for the foreseeable future.
"I would say, you want to hold 10% to 15% in gold until we get into an environment where interest rates will become more threatened gold, which is not the case yet," he said. Read More
Gold lower, shows little price reaction to FOMC statement
Gold and silver prices are lower in afternoon U.S. trading Wednesday. Trader/investor risk appetite is keener at mid-week on some positive news reports on the Russia-Ukraine war front that includes a potential 15-point peace plan. However, reports also say Ukraine has rejected the plan as it presently stands. Also, a recent big drop in crude oil prices is bearish for the metals markets. April gold futures were last down $2.80 at $1,927.10 and May Comex silver was last down $0.028 at $24.145 an ounce.
Image Source: Kitco News
Technically, April gold futures prices hit a two-week low today. Bulls still have the overall near-term technical advantage but are fading. A V-Top reversal pattern has formed on the daily bar chart and a six-week-old uptrend on the daily bar chart has been negated. Recent price action strongly suggests a major market top is in place. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today’s high of $1,928.70 and then at $1,950.00. First support is seen at $1,900.00 and then at $1,882.50. Wyckoff's Market Rating: 6.0. Read More
Gold price to average $2k in 2022, with potential to hit $2.5k after Q1 price action, says MKS PAMP
After seeing $200 moves since the start of the year, gold has the potential to hit $2,500 an ounce and average $2,000 an ounce in 2022, according to the updated outlook from MKS PAMP.
The war in Ukraine and sanctions against Russia have dramatically changed the geopolitical situation for the yeat.
"One must make a few assumptions about Ukraine's war. We do not think that it will be fully resolved during 2022 and therefore current precious metals prices will be quite different vs. our original forecasts earlier this year," said MKS PAMP head of metals strategy Nicky Shiels.
The big change to the outlook comes from the increased recession risk, especially in light of the upcoming Federal Reserve's rate hikes and slower economic growth.
"The upcoming Fed rate hikes aimed at countering energy-induced price inflation bring forward recession risk much quicker than the markets previously believed. The view from some Central Banks (especially the ECB) of putting inflation concerns ahead of war concerns is worrying, as is the threat of additional sanctions from the West on Russia or countries (especially China) for implicitly supporting Russia," Shiels wrote. Read More
Jim Rogers: Only a matter of time before China takes Taiwan, markets due for landslide crash
The markets, in particular equities, are still due for one more push upward before the bull rally ends for good, according to investor, and best-selling author Jim Rogers.
Rogers told Michelle Makori, Editor-In-Chief of Kitco News that markets are currently pricing in an eventual de-escalation of the conflict in Ukraine. Read More
Gold price down but not out as Federal Reserve starts tightening cycle and lowers 2022 growth forecast and raises inflation expectations
The gold market remains under selling pressure but has pushed off its session lows as the Federal Reserve starts a new tightening cycle even as it lowers its growth forecasts and raises its inflation outlook.
As expected, the Federal Reserve raised interest rates by 25 basis points, increasing the range to between 0.25 and 0.50%.
Gold prices were testing support just above $1,900 an ounce and have cut some of its losses in initial reaction as the U.S. treads a delicate course within a sea on instability, created by Russia’s war with Ukraine.
“The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity,” the Federal Reserve said in its monetary policy statement. Read More
LIFTOFF – Fed announces first rate hike since 2018
The Federal Reserve concluded its March Federal Open Market Committee (FOMC) meeting today with the anticipated initiation of “liftoff”, or interest rate normalization by raising the Fed Funds rate by ¼%. While today’s rate hike fell within expectations of analysts and market participants there were pronounced changes in the overall demeanor of the Fed’s monetary policy.
Image Source: Kitco News
While gold prices fluctuated throughout the release of the Federal Reserve’s revised monetary policy statement, it held its ground and performed rather well. Considering that the Fed announced a dramatic and substantial increase in interest rates this year to combat the current level of inflation at a 40-year high, gold prices did not retreat dramatically.
Gold traded to a low this morning exactly at the 61.8% Fibonacci retracement which is currently fixed at $1895.20. However gold trading below $1900 per ounce was short-lived at best with a quick recovery as Chairman Powell spoke. Before the press conference gold had moved back up above $1900 to $1902. During and following Powell’s press conference gold traded off of the lows of the day and for a brief moment traded positive on the day approximately one hour after the conclusion of Powell’s press conference. However, as of 4:54 PM EDT gold futures basis, the most active April 2022 Comex contract is currently fixed at $1925.20 reflecting a decline today of $4.00 or - 0.20%. Read More
Hawkish Powell: U.S. economy 'can handle' six more rate hikes
Federal Reserve Chair Jerome Powell sounded quite hawkish as the U.S. central bank raised rates by 25 basis points for the first time since 2018 and projected six more rate hikes in 2022.
The more aggressive tone was clear when Powell said that the U.S. economy "can handle" tighter monetary policy as the U.S. central bank focuses on its fight against high inflation.
And with more rate hikes right around the corner, the fed's funds rate would potentially rise to 1.9% by the end of 2022 and then climb to 2.8% by the end of 2023, Powell stated.
"The FOMC acutely feels [the need] to restore price stability," and it is prepared to use all of its tools, Powell noted at the press conference that followed the Fed's interest rate decision on Wednesday. Read More
Gold moves higher heading into the European open
After rising 0.47% on Wednesday gold is another 0.21% higher leading into Thursday's session. Silver is also 0.16% higher trading at $25.13/oz. In the rest of the commodities complex, copper is 0.29% higher and spot WTI has moved 2.56% into the black.
Risk sentiment was good overnight as the Nikkei 225 (3.46%), ASX (1.05%), and Shanghai Composite (1.40%) all closed higher. Futures in Europe are also pointing towards a positive cash open.
In FX markets, GBP, AUD, and NZD all moved 0.30% higher against the greenback. In the crypto space, BTC/USD is 0.60% lower on the day. 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.
