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Gold ETF holdings are just 1% off of 2020 highs, but market is slowing - WGC
After a robust first-quarter start, investment demand for gold-backed exchange-traded funds started to cool last month as investors began to position themselves for the Federal Reserve's aggressive monetary policy tightening, according to the latest data provided by the World Gold Council.
In a report published Friday, the WGC said that 43 tonnes of gold flowed into the paper ETF market in April. The inflows lifted total global holdings to 3,869 tonnes, valued at $238 billion. Total holdings are just 1% below the all-time high of 3,922t in November 2020.
"While this is 77% lower than the previous month, which was the strongest since February 2016, it is the fourth consecutive month of inflows, maintaining the momentum of flight-to-quality flows we have witnessed this year," the analysts said. "Gold faced pressure during the month as yields rose sharply – U.S. 10-year real yields briefly turned positive for the first time since 2020 – in response to progressively more hawkish central bank rhetoric, while the U.S. dollar strengthening significantly."
Despite the healthy investment demand, gold prices ended last month down 2%. Read More
Gold and silver could get ugly
Markets are constantly bringing new challenges, or so it appears. The bottom line: the patterns continue to repeat from different levels. At the end of the day, all charts are the same, patterns repeat, and all big moves must start in the shortest time frame.
Gold and silver are no different; today, the patterns look ugly, bringing $1,800 in play for gold and $21 for silver. Obviously, that pattern can change, but until further notice, the trend is lower. The correct side of the trading market is short. Miners have been getting crushed, which are all bearish signs. Check out the technical analysis
Gold price holding support above $1,850 after New York Fed president said he sees inflation falling back to 2% by 2024
The gold market continues to hold solid support above $1,850 an ounce and saw little movement following a relatively optimistic outlook from New York Federal Reserve President John Williams.
According to some economists, Williams at the NABE/Bundesbank International Economic Symposium in Germany set the tone for what will be a busy day for U.S. central bank speakers. Tuesday afternoon Federal Reserve Governor Christopher Waller will be speaking at the Economic Club of Minnesota and Federal Reserve Bank of Cleveland President Loretta Mester will participate in a panel discussion at the Financial Markets Conference, in Florida.
Williams said that despite significant economic challenges worldwide, the Federal Reserve has the right tools to bring down inflation and keep the economy on a stable footing.
"Although the task is difficult, it is not insurmountable. We have the tools to return balance to the economy and restore price stability, and we are committed to using them," he said in his opening remarks. Read More
Gold, silver sink to multi-month lows amid falling oil, bearish charts
Gold and silver prices are lower in midday U.S. Trading Tuesday, with gold notching a three-month low and silver an eight-month low. Bearish outside markets today that saw a higher U.S. dollar index and lower crude oil prices helped to pressure the precious metals markets. Fully negative near-term technical charts are also fueling the bearish short-term speculative traders. The safe-haven metals have also been punished recently by rising bond yields. The bulls remain perplexed that their metals are ignoring a wobbly U.S. stock market and elevated risk aversion in the overall marketplace due to a major war and rising inflation. June gold futures were last down $13.10 at $1,845.30 and July Comex silver was last down $0.205 at $21.61 an ounce.
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Technically, June gold futures prices hit a three-month low today. A two-month-old price downtrend line is in place on the daily bar chart. Bears have the firm overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at today’s high of $1,864.70 and then at $1,875.00. First support is seen at $1,835.00 and then at $1,825.00. Wyckoff's Market Rating: 3.5.
July silver futures prices hit an eight-month low today. A steep price downtrend is in place on the daily bar chart. 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 $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $20.00. First resistance is seen at today’s high of $22.085 and then at this week’s high of $22.395. Next support is seen at $21.25 and then at $21.00. Wyckoff's Market Rating: 1.5. Read More
Gold is a 'good hiding place' for investors as S&P 500 falls nearly 16% this year - Franklin Templeton
The gold market has fallen through initial support at $1,850 an ounce; however, one portfolio manager said that the precious metal remains an attractive safe-haven asset as market volatility grows.
In a telephone interview with Kitco News, Steve Land, vice president, and portfolio manager of Franklin Templeton's Franklin Gold and Precious Metals Fund, said that although gold has struggled to attract any consistent bullish momentum, it continues to outperform equity markets.
Since the start of the year, the S&P 500 has fallen 16% as the index drops to 4,000 points Tuesday. Meanwhile, even with Tuesday's selling pressure, gold prices are roughly neutral for the year. June gold futures last traded at $1,836.70 an ounce, down more than 1% on the day.
"The big headwind had been the strong U.S. dollar. When you consider that, I think gold has actually been performing reasonably well," he said. "Gold's role in times of crisis and uncertainty is to maintain and preserve value, which it is doing."
Land said that although gold's performance has been disappointing in recent weeks, he sees the price action as a consolidation phase following a strong first-quarter performance. He added that investors will continue to see gold as a vital diversification tool and inflation hedge. Read More
Investors wait for tomorrow’s CPI inflation report for April
Traders and investors are waiting for the release tomorrow of the Consumer Price Index inflation report that will be released right before New York markets open. The CPI will probably be one of the most important economic reports to be released by the government this month. Not only will the CPI be an integral component that will shape and influence market sentiment of individual investors, but it will also help to guide the Federal Reserve’s monetary policy at next month’s FOMC meeting.
Both gold and silver pricing have been in a defined corrective mode since the middle of April. Gold futures traded to a high of $2003 on April 18 and have been losing value for the last four consecutive weeks including this week which is still far from over. Gold futures basis the most active June 2022 contract opened at approximately $1884 and as of 5:06 PM, EDT is currently fixed at $1837.20 after factoring in today’s price decline of $21.40 or 1.15%. Gold has declined 2.49% in the last two trading days.
Image Source: Kitco News
Inflation is a double-edged sword for gold
Typically, upticks in inflationary pressure create bullish undertones for gold prices as it is regarded as an excellent hedge against inflation. However, the current scenario which is a more aggressive Federal Reserve in regards to raising interest rates leads to rising yields in U.S. Treasuries and a strong dollar. Both dollar strength and rising yields have the opposite effect on gold prices creating strong bearish market sentiment as higher Treasury yields reduce investor's attraction to gold as it is a non-interest yielding asset and because gold is paired against the dollar, there is a 100% negative correlation between increased value in the dollar and gold pricing. The net result is that rising inflation took gold prices to $2078 during March (one edge of the sword) and then to its current pricing at $1835 (The other edge of the sword). The drop from $2078 to gold’s current price is a decline of 11.59%. Truly inflationary pressure is a double-edged sword for gold. Read More
Gold's bearish momentum is fading, prices to hit $2,050 after moving past this level – ANZ
Despite being down 1% on the day, gold's downside is limited as $1,800 an ounce serves as a solid price floor for the precious metal, according to Australia and New Zealand Banking Group (ANZ).
Gold's environment remains challenging in the short term as soaring U.S. Treasury yields and a strong U.S. dollar are key obstacles to higher prices. But gold does not have far to fall before it finds its bottom.
"We see the short-term key support level being USD1,850/oz. Should it break below this, prices could easily retreat to USD1,800/oz," said ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari. "Aggressive monetary tightening, rising yields and a stronger dollar are key drags for the gold prices."
The concern in the short term is market volatility triggered by fears that the Federal Reserve won't be able to control inflation, leading to aggressive hikes and recession talk. ANZ is pricing in half-a-point rate hikes in June and July, with the terminal rate rising to 3.75% by mid-2023.
"The spread between the fed funds rate and CPI is at its widest, suggesting the Fed is struggling to contain inflation. Concerns about global economic growth, fuelled by to sustained inflation and heightened geopolitical risks, should protect the gold price somewhat. We expect gold to remain supported at USD1,850/oz, with upside potential of USD1,950/oz," Hynes and Kumari said this week. "We expect downside risks to be limited after the price hits USD1,850/oz." Read More
Gold and silver trade higher heading into the European open
Gold (0.33%) and silver (1.95%) are positive leading into the European open. Elsewhere in the commodities complex, spot WTI is up 3.41% and copper (1.26%) is also in positive territory.
Risk sentiment in the Asia Pac area was positive overnight. The Nikkei 225 (0.18%), ASX (0.19%) and Shanghai Composite (0.93%) all moved higher. In Europe, the futures markets are indicating a positive cash open.
In FX markets, the U.S. dollar was weaker across the board. The biggest mover overnight was AUD/USD which rose 0.39%. In the crypto space, BTC/USD rose 0.85% to trade at $31,269.
News from overnight: 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.
