Today's Gold and Silver News - May 17th

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Gold Slumps Below $1,800 to Lowest in Over 3 Months on Hawkish Fed Outlook

A new week hasn’t provided any relief for gold after one of its worst weeks in the last year has now pushed the price down below $1,800 an ounce for the first time since the start of February. 

Gold’s slump has been driven by concerns that the measures implemented by central banks will not be sufficient to tackle high escalation. The Federal Reserve is set to implement a series of interest rate hikes over the coming months, having already raised rates by the most considerable amount in over 20 years earlier this month.

This week brings the latest inflation data from the UK with the print likely to show that the pace at which consumer prices are rising is still not slowing down. Across the pond, the hope is that April’s US figure will represent the high point and that inflation will slow down from this point. 

However, markets remain very jittery with a huge amount of volatility last week set to continue into this week based on gold’s initial plunge in early Monday trading. Having now fallen through the psychologically important threshold of $1,800 an ounce and with the hawkish monetary policy more likely to strengthen than weaken, it is hard to see where gold can now find a short-term foothold. Read More

Silver Sinks Below $21 as Metal is Punished By Growth Concerns, Prospect of Rising Rates

Silver’s slide looks set to continue this week with the metal now trading below $21 an ounce having ended last week touching levels last seen in July 2020. 

Silver has found itself caught up in the broader sell-off on equities and on gold, punished for being an industrial metal at a time where growth forecasts are being trimmed and hammered for its lack of yield at a time of rising interest rates.

The turnaround in silver’s fortune has been pretty dramatic with the price falling from close to $26 an ounce in mid-April to below $21 an ounce barely a month later. On each occasion the price has fallen below a significant technical or psychological threshold, bullish investors will have hoped that the metal would find support to avert the slide. Yet for the short-term, silver is seemingly powerless to stem the bleeding of its price.

Yet once markets finally pause for breath after some extremely volatile days that have seen huge losses across a number of different asset classes, silver will surely represent a strong buying opportunity with the fundamental case that was supportive in April still true today. Read More

Gold price remains stuck at $1,800 as New York Fed reports -11.6 reading in Empire State Survey

The gold market remains under pressure but is holding support above $1,800 an ounce as it sees little bullish momentum following weaker than expected regional manufacturing data from the New York Region.

Monday, the New York Federal Reserve said that its Empire State manufacturing survey's general business conditions index dropped to a reading of -11.6 in May, down from April’s reading of 24.6. The data significantly missed expectations as consensus forecasts were looking for a reading of around 15.3.

The gold market is not seeing any major reaction to the latest disappointing economic data. June gold futures last traded at $1,805.40 an ounce, down 0.15% on the day.

The New York manufacturing sector has been fairly volatile in recent months but the broader picture shows growing weakness as activity has missed expectations four out of the last six months.

Economists have noted that the U.S. manufacturing sector continues to struggle as issues remain in the global supply chain. Problems have been exacerbated by Russia’s ongoing invasion of Ukraine. Read More

Short-covering in gold silver; bulls have more heavy lifting ahead

Gold and silver prices are higher, with silver sharply up, in midday U.S. trading Monday. Gold hit a nearly four-month low overnight. Short-covering by the shorter-term futures traders was featured on this first day of the trading week. A weaker U.S. dollar index, higher crude oil prices, and lower bond yields on this day also worked in favor of the metals markets bulls. However, the bulls need to put together some solid price-gain days to begin to repair recent chart damage. June gold futures were last up $4.70 at $1,813.10. July Comex silver futures were last up $0.479 at $21.48 an ounce.

Image Source: Kitco News

Technically, June gold futures prices hit a nearly four-month low early on today. A nine-week-old price downtrend is in place on the daily bar chart. Bears have the solid overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at Friday’s high of $1,827.60 and then at $1,850.00. First support is seen at $1,800.00 and then at today’s low of $1,785.00. Wyckoff's Market Rating: 3.0.

Image Source: Kitco News

July silver futures saw short covering featured. Prices hit a 22-month low Friday. 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 $21.625 and then at $22.00. Next support is seen at $21.00 and then at today’s low of $20.835. Wyckoff's Market Rating: 1.5. Read More

Recession is 'very high risk factor' as Fed's path is 'narrow' — former Goldman Sachs CEO Blankfein

A recession in the U.S. is "definitely a risk" as the Federal Reserve faces a narrow path ahead as it tightens rates to fight inflation, said former Goldman Sachs CEO Lloyd Blankfein.

Speaking to the CBS' 'Face the Nation,' Blankfein stated that a recession is "a very, very high risk factor," but "it's not baked in the cake."

He added that businesses and consumers need to be prepared for that possibility. "If I were running a big company, I would be very prepared for it," Blankfein said Sunday. "If I were a consumer, I'd be prepared for it."

The Fed has the right tools for its battle with inflation, but its actions will take time to filter through.

"There's a path. It's a narrow path," said Blankfein, who is now Goldman Sachs' senior chairman after retiring from the CEO position in 2018. "But I think the Fed has very powerful tools. It's hard to finely tune them, and it's hard to see the effects of them quickly enough to alter it, but I think they're responding well. [Recession] is definitely a risk." Read More

Gold faces new competition as real yields turn positive - USBWM

The gold market is finding some support at around $1,800 an ounce; however, according to one market strategist, the gold market faces some renewed competition through the rest of the year as the Federal Reserve raises interest rates aggressively.

In an interview with Kitco News, Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said that while inflation might have peaked, there are indications that core inflation will remain elevated through 2022, creating a challenging environment for the economy and financial markets.

In the current environment, Haworth said that real assets remain an attractive hedge against inflation and market volatility.

"We've seen significant multiple compression in the equity market already, and that to our mind means we have to look for ways to pull forward our cash flows, and real assets have been a key way for us to do that," he said.

However, Haworth added that he doesn't see gold as an attractive real asset. He said he sees gold continuing to struggle through 2022 as the Federal Reserve looks to raise interest rates to potentially 3% by December.

The U.S. central bank has signaled that it could raise interest rates by 50-basis points in the next two weeks, and markets are pricing the potential for a 50-basis point move at the next three meetings. Read More

Gold’s luster continues to fade as hedge funds liquidate bullish bets for fourth straight week

Hedge Funds continue to liquidate their bullish gold bets; however, the latest trade data from the Commodity Futures Trading Commission shows they are also hesitant to make any significant bearish bets.

"Sentiment is poor in precious metals, and elevated positioning analytics still argue for potential additional pain for gold bugs," said analysts at TD Securities.

According to some analysts, the data shows that bullish momentum in the U.S. dollar, coupled with the bond market selloff, is creating a challenging environment for the precious metal. At the same time, growing volatility in equity markets supports gold as a safe-haven asset.

For many analysts, the critical unknown factor for gold remains inflation. Market analysts have said that if inflation pressures have peaked, real yields, which just recently turned positive, could push higher, which will create some competition for gold.

"Ultimately, real interest rates will go higher, which is bad news for gold," he said. "I think it's only a matter of time before gold is trading comfortably below $1,800 an ounce. I expect that by year-end, gold prices could be below $1,700," said Chris Vecchio, senior market strategist at DailyFX.com, in a recent interview with Kitco News. Read More

Crypto bloodbath will spill over to stocks; Market crash isn't over yet - Ted Oakley

Markets have been crashing recently. The NYSE is down 11 percent and the NASDAQ fell 25 percent, year-to-date. Bitcoin fell 36 percent, year-to-date. 

But the pain is not over according to Ted Oakley, Founder of Oxbow Advisors. Oakley told David Lin, anchor, and producer for Kitco News, that most stocks and cryptocurrencies are overvalued. 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.