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Silver Finally Finds Respite as Price Rises From 2020 Lows Ahead of US Inflation Data
Silver is finally receiving some respite from traders after being punished by seemingly every macroeconomic and geopolitical indicator since the middle of May.
Having sunk from comfortably above $25 an ounce to just above $21 an ounce in less than a month, the price has perked back up to $21.60 an ounce in early Wednesday trading.
Today’s buying interest is a reflection of how undervalued silver has become, having sunk to levels not seen since July 2020. How far these initial gains can extend will likely be determined by the market’s reaction to the US inflation figure due out later today.
Expectations are that inflation in April will come in slightly lower than March’s figure but still above 8%, a very high level historically and well above the Federal Reserve’s 2% target.
In this inflationary environment, the Fed has been forced to implement a series of interest rate hikes and reduce its balance sheet, reducing the appeal of non-yield-bearing assets like silver.
Yet with the fundamental case for silver still strong, investors are starting to realize that silver still has an attractive investment case as a key material for the burgeoning solar energy sector, a potential hedge against inflation as well as a defensive asset to hold in case of any escalation of the war in Ukraine. In this context, a quick recovery back above $22 an ounce and onwards is highly possible. Read More
Gold Perks Up Ahead of Key US Inflation Data That Could Show Price Rises Have Peaked
Inflation is once again the focus of attention today with the release of the US’ April data.
The market is expecting the figure to be slightly lower than the previous month but remain at a historically high level, above 8%.
While any step lower will be welcomed with hopes that inflation in the US may have peaked, the pace consumer prices are rising remains far above the Federal Reserve’s target rate of 2% rate, forcing the US central bank to continue its series of hawkish measures to bring inflation down to more comfortable levels.
Despite this providing a negative outlook for gold, the price of the precious metal has perked up early on Wednesday to trade near $1,850 an ounce. In fact, equity indices are generally pointing upwards after a volatile few days of trading so far in May.
For both gold and equities, today’s gains are likely a reflection of both asset classes being oversold in recent days after a brutal end to last week and the start of this week in the markets.
The outlook for a series of interest rate hikes by the Federal Reserve, as well as the Bank of England and European Central Bank, over the coming months does cap how high gold can climb.
On the other side, any dips in gold’s price will attract buying interest from traders noting gold’s appeal as a hedge against inflation as well as a valued haven asset while the war in Ukraine continues. As such, gold is likely to remain within the $1,840-$1,870 an ounce range until a significant new factor emerges to outweigh the dominant drivers currently. Read More
Gold price unable to fund any bullish momentum as U.S. CPI rises 8.3% for the year
Gold prices are struggling to hold in positive territory, seeing little bullish momentum following a stronger-than-expected rise in U.S. consumer prices.
Wednesday, the U.S. Labor Department said its Consumer Price Index rose 0.3% in April, after a 1.2% rise in March. The data beat consensus forecasts as economists were forecasting a 02% rise.
The report said that headline inflation rose 8.3% for the year, coming in hotter than expected. Economists were looking for the data to show a sharp drop from March's peak with a rise of 8.1%. March inflation rose to 8.5%, its highest level in 40 years.
Meanwhile, core CPI, which strips out food and energy costs, increased 0.6% last month, up from a 0.3% increase in March. The data was also higher than expected. For the year, core CPI is up 6.2%.
The gold market is not seeing much reaction to the latest inflation data. The market is trying to find some support after falling through $1,850 an ounce on Tuesday, hitting a three-month low. June gold futures last traded at $1,843.20 an ounce, relatively unchanged on the day.
Gold is stuck in neutral following hotter than expected inflation data. U.S. CPI rose 8.3% for the year in April; economists were expecting to see 8.1%. June gold futures last traded at $1,839.50 an ounce, roughly unchanged on the day. Read More
Gold, silver supported by weaker USDX, solid rise in crude oil
Gold and silver prices are posting moderate gains near midday Wednesday, boosted by friendly outside markets that include a weaker U.S. dollar index and solid gains in crude oil prices. Another hot U.S. inflation report that is seen as problematic for consumers and the economy is also longer-term friendly for the metals markets. June gold futures were last up $10.50 at $1,851.40 and July Comex silver was last up $0.346 at $21.765 an ounce.
Image Source: Kitco News
Technically, June gold futures prices hit a three-month low early on 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 Tuesday’s high of $1,864.70 and then at $1,875.00. First support is seen at today’s low of $1,830.60 and then at $1,815.00. Wyckoff's Market Rating: 3.5.
July silver futures prices hit an eight-month low Tuesday. 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 $20.00. First resistance is seen at Tuesday’s high of $22.085 and then at this week’s high of $22.395. Next support is seen at $21.50 and then at this week’s low of $21.155. Wyckoff's Market Rating: 1.5. Read More
Federal Reserve has hit peak hawkishness and that is good for gold - WisdomTree
The gold market is trading relatively unchanged on the year after falling through critical support at $1,850 an ounce. However, despite the recent weakness, the precious metal has held up in the face of strong headwinds, according to Nitesh Shah, head of commodities and macroeconomic research at WisdomTree.
In a recent interview with Kitco News, Shah said that gold prices are still on a path back to $2,000 an ounce even as the Federal Reserve embarks on an aggressive tightening cycle. He added that his updated forecasting models point to gold pushing to $2,300 by the first quarter of 2023.
Although gold has struggled in the last few weeks, Shah said that he doesn't see the potential for a major route in the marketplace. He added that lower gold prices could attract renewed interest as investors worry that the Federal Reserve is on the cusp of making a policy mistake.
"Many smart investors are starting to wonder if central banks will throw the global economy into a recession to stamp out inflation," he said. "It may not be a base-case scenario, but there are material risks of a recession." Read More
Nothing can fix inflation now, ‘economic stupidity’ is underway by the Fed, Biden – Steve Hanke
The Consumer Price Index (CPI) was released by the Bureau of Labor Statistics on Wednesday, with April’s reading reported at 8.3%. This was slightly lower than March’s 8.5%, but still higher than the consensus estimates of 8.1%.
Steve Hanke, professor of Applied Economics at Johns Hopkins University told David Lin, anchor for Kitco News, that this modest month-over-month decline should not be interpreted as a normalization of consumer prices. Read More
Inflation remains hot with little chance of abating in the upcoming months
Today the Bureau of Labor Statistics (BLS) released the latest inflationary data vis-à-vis the Consumer Price Index for April 2022. As expected by many analysts the data revealed that inflationary pressures continue to run exceedingly hot. According to the report, the CPI “increased 0.3% in April on a seasonally adjusted basis after rising 1.2% in March,”. This takes the CPI year-over-year from 8.5% down to 8.3%.
There was extreme volatility preceding and immediately after the release of the April CPI report in both the dollar and gold.
Image Source: Kitco News
The chart above is a 30-minute candlestick chart of the dollar index. The arrow points to the candle which represents the release time. Beginning at 8:30 AM and concluding at 9:00 AM EDT. The candlestick before that representing 8:00 AM to 8:30 AM EDT shows that the dollar index traded at approximately 103.65 before the release of the report. The dollar index was trading at 103.67 when the BLS released the April CPI report and during the first half-hour after the release of the report traded to a high of 104.15 and closed during that period at 104. 065. Read More
Gold price on 'cusp' of $2k rally, here's how not to miss it – Bloomberg Intelligence
After a disappointing May start, gold could be on a cusp of a major breakout above $2,000 an ounce, according to Bloomberg Intelligence.
After falling 6.5% in the last month, gold is now near a bottom, with the $1,800 an ounce serving as a floor for prices, Bloomberg Intelligence senior commodity strategist Mike McGlone told Kitco News.
Investors have been reevaluating their risk-on positions as the Federal Reserve looks to tighten by 50-basis-points in June and June as it fights inflation.
"Gold is near a bottom and on the cusp of a pretty significant breakout — when it gets above $2,000 an ounce and never looks back," McGlone said. "One day, we're going to wake up, and gold is going to pop above $2,000 an ounce, which is resistance that will be converted into support, and never look back."
The $2,000 an ounce level has been a critical psychological resistance point for gold, which the precious metal failed to sustainably breach this year despite coming close in March.
Gold's main obstacles in the second quarter have been rising U.S. yields and a strong U.S. dollar. This is especially visible when gold's USD performance is compared to yen or euro. Read More
Gold trades marginally higher ahead of the European open
Gold (0.10%) trades marginally higher ahead of the European open and silver is down 0.69%. In the rest of the commodities complex, copper has fallen 1.72% and spot WTI is 1.28% in the red.
After the U.S. CPI data equities continued to trend lower. In the Asia Pac area, the Nikkei 225 (-1.77%), ASX (-1.75%), and Shanghai Composite (-0.08%) all suffered losses. Futures in Europe are indicating a negative cash open.
In FX markets, the antipodeans suffered losses again. AUD/USD was the biggest mover falling 0.60%. In the crypto space, BTC/USD had another tough session falling to $26,697 down nearly 8%.
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.
