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Gold Makes Tentative Gains After Failing to Escape Brutal Week on Equity Markets
Gold is showing tentative signs of regaining some ground after a punishing week on equity markets that, unusually, has seen the ultimate haven asset pulled down too to be trading at levels last seen in early February.
Indeed so far in early Friday trading, the bulk of equity and commodity markets are trading a little higher as investors view that this week’s losses may be an overreaction and taking advantage of lower levels to buy undervalued stocks.
While the latest US inflation data did come in above market expectation, crucially it was lower than the previous month, giving hope that the worst of fast-rising consumer prices in the world’s largest economy may now be behind us. If this is confirmed over the coming months, then the Federal Reserve will be able to keep interest rate rises to 50 basis points, rather than 75 basis points or higher, providing markets with a clear trajectory to trade around.
Gold’s role within this environment of hawkish central bank policies contrasted by global equity indices nearing bear market territory presents a clear resistance and support factor on either side of the equation. As such, gold’s current trading level below $1,830 an ounce looks too cheap yet any gains are likely to be capped with a series of rate hikes diminishing gold’s appeal as a non-yield bearing asset. Read More
Silver Investors Cling on to Hopes Price Has Found its Bottom After Punishing Month
Silver’s brief recovery earlier in the week proved fleeting with the price plunging again yesterday to below $21 an ounce to the lowest level since July 2020.
So far in early Friday trading, silver is making tentative gains in line with small corrections seen on equity markets after a series of huge drops over the course of the week that has left the S&P 500 Index on the cusp of a bear market.
As has been stated numerous times in this commentary, the fundamental case for silver remains strong with industrial demand likely to remain strong for the foreseeable future as countries seek to decarbonize their economies and increase solar energy output, which relies on silver for the photovoltaic cells.
Yet this bullish demand outlook has been overwhelmed by macroeconomic concerns where sustained inflation has forced central banks to adopt hawkish policies as they try and prevent this from escalating into recession. Silver has found itself continually punished for about a month now but for a brave investor willing to look over the horizon, these low levels surely present a buying opportunity. 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. Read More
U.S. dollar could dominate gold price through the summer - analysts
Gold prices continue to trade near a three-month low attracting little investor interest even as inflation pressures remain elevated.
Many commodity analysts have said that gold is struggling as it faces off against significant bullish momentum in the U.S. dollar, which continues to trade near its highest levels in 20-years. The U.S. dollar index last traded at 104.50 points, up 0.41% on the day.
Meanwhile, June gold futures last traded at $1,840.60 an ounce, down 0.71% on the day.
Gold could continue to face strong heads winds as some currency analysts don't expect the trend in the U.S. dollar to change at least before the summer.
Bipan Rai, North America head of FX strategy at CIBC Capital Market, said several factors have aligned to support the U.S. dollar for the next few months.
"The USD will likely remain on solid ground in the coming months. That's primarily because there doesn't appear to be any let-up in the way longend rates are moving, and the macro liquidity picture continues to point to a 'risk off'backdrop," he said in a report Thursday. "The Fed is already quite hawkish, and the USD will find support against other currencies where policy settings are slower to adapt, or are outright divergent." Read More
Gold, silver punished by strong USDX that hits 20-year high
Gold and silver prices are sharply lower in midday U.S. trading Thursday, pressured in part by a very strong U.S. dollar index that today scored a 20-year high. Bearish charts are also keeping the technically based bears active on the sell-side in the futures markets. June gold futures were last down $19.20 at $1,834.50. July Comex silver futures hit a 22-month low today and were last down $0.70 at $20.87 an ounce.
Image Source: Kitco News
Technically, June gold futures see a two-month-old price downtrend 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 $1,858.80 and then at $1,864.70. First support is seen at this week’s low of $1,830.60 and then at $1,815.00. Wyckoff's Market Rating: 3.0.
Image Source: Kitco News
July silver futures prices closed nearer the session low and hit a 22-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 $22.50 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at today’s high of $21.625 and then at $22.00. Next support is seen at today’s low of $20.705 and then at $20.50. Wyckoff's Market Rating: 1.0. Read More
Fed Chair Powell confirmed for 2nd term as Fed focuses on its inflation battle
The U.S. Senate confirmed Federal Reserve Chair Jerome Powell's second term in an 80-19 vote as the U.S. central bank steps up its fight against high inflation.
The vote showed broad support for Powell after the Federal Reserve decided to raise rates by 50-basis-points in May, the steepest hike since 2000.
Even though Powell was confirmed just now, he has been heading the U.S. central bank in a temporary capacity since February.
Following the latest interest rate decision, in which the Fed also laid out its plans for balance sheet reduction starting June 1, markets have been reeling.
One of the investors' significant concerns is whether the Fed can walk the tight rope of fighting inflation with rate hikes without triggering a recession. And this has triggered a significant shift in risk sentiment. Read More
Gold price is in a 'danger zone' as prices drop another $30
The gold market is in a "danger zone" as prices move closer to $1,800 an ounce, according to analysts.
Another spike in the U.S. dollar trigged a drop in gold Thursday, with June Comex gold futures touching a low of $1,820.40 an ounce and last trading at $1,822.30, down 1.7% on the day. In the meantime, the U.S. dollar index soared to a fresh 20-year high, last at 104.80.
Gold has solid support at the $1,800 an ounce level, but a break below could lead to a steeper selloff.
"The dollar has firmly put gold in the danger zone and a break of the $1,800 level could lead to further technical selling," OANDA senior market analyst Edward Moya. "Gold can't attract any attention until this move in the dollar ends."
Gold's struggle after below the $1,900 an ounce level has coincided with a selloff in the U.S. stock market. Investors have been transitioning to risk-off sentiment on fears around the Federal Reserve's ability to fight inflation without triggering a recession.
"Right now, Treasury yields and the stock market are both declining, which should suggest we are getting close to a capitulation with this de-risking moment on Wall Street. If gold breaks below the $1,800 level, technical selling could support a drop towards $1,750," Moya added. Read More
Silver is trading higher leading into the European open
Gold is trading flat heading into the European open while silver has risen 0.59%. In the rest of the commodities complex, both copper (0.96%) and spot WTI (0.24%) trade higher.
In stock markets, risk sentiment improved overnight. The Nikkei 225 (2.64%), ASX (1.93%), and Shanghai Composite (0.78%) all moved higher overnight. Futures in Europe are also indicating a positive cash open
In FX markets the biggest mover was AUD/USD which retraced back up around 0.40%. In the crypto space, BTC/USD moved about 5% higher after some heavy recent price action.
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.
