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Gold: Slow price action is not Bad price action
After touching $1,915 yesterday intraday, gold reversed and stayed in its support range. Until proven otherwise, with a close or breakdown below $1,915 with conviction, the probability continues to favor a move back to $1,950 onto $1,965. Silver bulls will be looking at $25.50 resistance in parallel to the levels in gold. Platinum continues to trade over $1,000 and should form a base between there and $1,035 before making another run at $1,065. Read More
Image Source: Kitco News
The gold price is looking at higher levels
After a slow Asian session and a slow start in Europe gold has pushed higher and is now trading half a percent in the black. The yellow metal has managed to shrug off come Fed comments where Mester said she could be looking for a 50bps hike vs the 25bps that some analysts had been expecting.
Looking closer at the 4-hour chart below, the price has now consolidated into the small triangle formation marked in red. If there is a bullish break the black horizontal line at $1951/oz is the one to crack. Beyond that, there are two more levels to watch. The red zone could be the resistance for a head and shoulder s pattern. Then the all-time high beckons for the bulls. Check out the technical analysis
Gold price holding solid gains as U.S. new home sales fall 2% in February
The gold market is holding on to solid gains but weaker economic data is having little impact on the precious metal as U.S. consumers bought fewer homes than expected last month.
Wednesday, Commerce Department said that new home sales in February dropped seasonally adjusted annual rate of 772,000, down 2% from January's revised sales rate of 788000.
The drop in new home sales was missed consensus forecasts. Economists were looking for a sales rate of around 809,000. Read More
How 'Gold' replaced 'Google' in FANG
Commodities are shoving aside technology, said Francisco Blanch, global commodities head at Bank of America.
Blanch's interview with Bloomberg was published early this week. He talked about how the pandemic and the Russia-Ukraine conflict was impacting commodity markets, mostly oil.
Blanch previously had oil hitting $120 a barrel before the conflict due to a post-Covid demand recovery. Russia is a major oil exporter.
"What the Ukraine crisis has done has lifted the entire expectation by $25 to $35 a barrel, so we have a $150 a barrel target for the summer," said Blanch, adding that the average for the year should be $110.
Blanch said oil prices could spike even higher depending upon how far Russian sanctions go, seeing $200 plus as his "ugly scenario." He notes that oil is the backbone of the economy, which is a major input for travel, industry, and agriculture.
Blanch referenced the acronym "FANG" referring to technology stocks Meta (FB) (formerly Facebook), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOG). Technology stock performed strongly during the beginning of the pandemic, but commodities are now the focus. Read More
Gold price to end the year at $2,200 as stagflation fears take hold, says UOB
When it comes to the gold price action, stagflation fears outweigh the expectations of a more aggressive Federal Reserve, said Singapore's United Overseas Bank (UOB). The bank's latest outlook on the precious metal also comes with new price projections for the year.
The key drivers for gold will continue to be inflation fears, slower economic growth, and increased demand for safe-havens.
"This mounting stagflation fear, coupled with strong safe haven in-flows, have now taken over as the dominant drivers for gold price, muting the negative impact from the anticipated rate hikes from the U.S. Federal Reserve," said UOB head of markets strategy Heng Koon How.
Two weeks ago, gold made a run for record highs, testing the $2,070 an ounce area. The move came after the U.S. announced additional sanctions against Russia, including an oil import ban.
"Amidst the ongoing rally in energy and commodities prices since the onset of Russia's invasion of Ukraine, there is a mounting stagflation fear amongst global investors," Heng said. Read More
Fed officials nod to big rate hikes to fight 'inflation, inflation, inflation'
Federal Reserve policymakers on Wednesday signaled they stand ready to take more aggressive action to bring down unacceptably high inflation, including a possible half-percentage-point interest rate hike at the next policy meeting in May.
"I have everything on the table right now. If we need to do 50 (basis points), 50 is what we'll do, " San Francisco Fed President Mary Daly said at an event organized by Bloomberg. "With the labor market so strong, inflation, inflation, inflation is top of everyone's mind."
Daly has often been more cautious than her colleagues about policy tightening, and her openness to a bigger-than-usual rate hike at the May 3-4 meeting shows a rising sense of urgency that swift and concerted action is needed to stop inflation, running at three times the Fed's 2% target, from getting entrenched.
Accelerating inflation "has necessitated, I think, all of us to think more about how fast they're going to have to go in order to keep inflation under control," St. Louis Fed President Bullard told the Mid-Size Bank Coalition of America. "We have to think bigger, maybe, than we thought about in the past." Read More
Gold, silver gain as crude continues to climb
Gold and silver prices are moderately higher near midday Wednesday, lifted in part by sharp gains in crude oil prices and a lower U.S. stock market at mid-week. April gold futures were last up $9.90 at $1,931.30 and May Comex silver was last up $0.211 at $25.11 an ounce.
Image Source: Kitco News
Technically, April gold futures bulls have the overall near-term technical advantage. However, a bearish pennant pattern has formed on the daily bar chart. 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 $1,882.50. First resistance is seen at this week's high of $1,941.80 and then at $1,950.00. First support is seen at this week's low of $1,909.80 and then at $1,900.00. Wyckoff's Market Rating: 6.5. Read More
Gold's bull market has legs to run higher compared to 2011 - Perth Mint
While gold has fallen from its recent highs above $2,000 an ounce, the precious metal has held critical support in an elevated consolidation range. And even though gold could see more volatility in the near term, Jordan Eliseo, manager for listed products and investment research at the Perth Mint, said the market remains healthy.
In a commentary published Tuesday, Eliseo acknowledged fears that gold could see similar price action to 2011 when prices first hit a record high. He noted that gold's initial record set nearly 11 years ago ended a 10-year bull market as prices fell 45% from their highs.
However, Eliseo noted several differences between gold's latest push above $2,000 and 2011. A significant difference between now and then is that market is not as oversold, he said.
Eliseo noted that gold is only about 7% above its 200-day moving average. In 2011, the price was 27% above its 200-day moving average.
"Gold was clearly overbought in 2011 and due for a meaningful correction, which it subsequently endured," he said. Read More
Market sentiment for gold shifts focus again to geopolitical tensions and rising inflation
Yesterday’s market sentiment was an underlying explanation of why gold traded lower on the day. Market participants focused upon Chairman Powell’s speech on Monday, where he opened the door for larger rate hikes (1/2% rather than ¼%) at one or more of the six remaining FOMC meetings.
In a speech Powell gave at the National Association for Business Economics, he said, “We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so.”
Oddly, market participants did not react strongly to Powell’s statements until yesterday. Gold futures basis the April contract lost $13, and the candle that formed out of that day contained a lower high and a lower low than the previous day. Using only market sentiment to base market decisions is almost always unreliable when used alone.
Inflation is still running hot; Russia is brutally destroying Ukraine, and yields on U.S. treasuries continue to rise. Intrinsically market sentiment is based on emotions, and its sentiment changed from Monday to Tuesday. Read More
Gold price posts double-digit gains as markets worry about the yield curve inverting
As the Federal Reserve kicks off its aggressive tightening cycle to get inflation under control, investors worry about the state of the U.S. economy and what the bond market is saying. And the gold price is reacting.
One of the most popular gauges into the state of the U.S. economy is the yield curve, which looks to be moving closer to inverting following a volatile week in the bond market, which is repricing Fed expectations, including a 50-basis-point hike in May.
The relationship analysts pay close attention to is the 2-year and 10-year Treasury yields.
"Shorter-dated debt is especially bearing the brunt of the Fed's more hawkish stance, with the year-to-date surge on 2-year Treasury yields now rising to 145 basis points. This would make for the worst quarter since 1984. Yields on 10-year Treasuries have also hit the psychologically important 2.40% level for the first time since 2019, as the spread between the 2-year and 10-year has whittled down to a mere 20 basis points or so, its flattest since the onset of the pandemic in 2020," Exinity Group chief market analyst Han Tan said on Wednesday. Read More
Gold is marginally higher heading into the European open
Gold is trading marginally higher heading into the European open at $1942.03/oz. Silver however is trading just under flat at $25/oz. In the rest of the commodities complex, copper (0.20%) and spot WTI (0.40%) are both trading in the black.
Risk sentiment was mixed overnight as the ASX (0.12%) and Nikkei 225 (0.25%) closed higher but the Shanghai Composite fell 0.63%. Futures in Europe are pointing to a slightly positive cash open.
In FX markets, USD/JPY moved another leg higher to reach 121.63. Both AUD/USD and NZD/USD fell 0.30% overnight. In the crypto space, BTC/USD moved half a percent higher. 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.
