Today's Gold and Silver News - May 26th

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Gold prices down but holding support at $1,850 as U.S. manufacturing data disappoints

The gold market is holding support above $1,850 an ounce; however, disappointing manufacturing data is not providing any new bullish momentum for the precious metal as prices remain in negative territory early in the session.

Wednesday, the Commerce Department said that U.S. durable-goods orders increased by 0.4% last month, following March's downwardly revised 0.6% increase. The data was weaker than expected; consensus expectations compiled by various news organizations called for durables to increase 0.6%.

Excluding transportation, new orders increased 0.3%, the government said. Core durable goods orders also missed expectations; economists were calling for an increase of 0.5%.

The gold market has seen little reaction to the weak data as it trades in negative territory. June gold futures last traded at $1,855 an ounce, down 0.56% on the day. Read More

The S&P 500 is headed lower, which is good for gold

After a one-day reprieve, the S&P 500 is once again seeing some intense selling pressure, and the gold market continues to benefit from the market volatility as prices hold above another critical resistance level at $1,850 an ounce.

As the broad-equity market index continues to struggle and flirt with bear-market territory, the chorus of negative sentiment among economists and market analysts grows. Many analysts are looking for significantly lower price prices through the end of the year.

In a recent report, market strategists at Société Générale warned investors that equities could be prone to bouts of rallies; however, they added that the S&P faces a heavy uphill battle.

The French bank also warned that the U.S. economy faces growing stagflation risks as inflation remains stubbornly high and weighs on growth expectations.

"The most important leading indicators support our conviction to stay in a "de-risking' mindset (long USD, U.S. 10y, curve flatteners, defensives) and focus on the tail risks, especially that of "stagflation," the analysts said in their latest report. Read More

Gold and silver struggle to reverse trend

Gold and silver failed to break out to new levels, keeping both in a downtrend. The footprints left by the price action are clear; gold and silver have a higher probability of going lower. There is no logical reason to be long the metals until the trend has turned.

When you are trading, you only care about the time frame you are trading. You must keep emotions and opinions out. All markets move based on price and the map left behind; it’s that simple.

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Losses are established on entry of a trade, which is correlated to the time frame you are trading. Gold and silver trade like every other market, going higher, lower, and trends. Eventually, gold, silver, and platinum will be higher. But until proven otherwise, the trend is down. Read More

Gold price still on pace to push above $2,000 as stagflation, recession risks rise - In Gold We Trust

While the gold market remains off its highs from the first quarter, it is still on track to end the year above $2,000 an ounce and push close to $5,000 an ounce by the end of the decade, according to the latest In Gold We Trust Report.

In its annual gold outlook, analysts at Incrementum AG remain bullish on gold as rising inflation threatens to push the global economy into a recession and create a stagflationary environment. The European investment firm issued a warning, saying that normalizing monetary policies worldwide is started to expose major issues in the global economy that were papered over by loose monetary policies and massive amounts of liquidity.

"Just as in 2018, when we warned of the inevitable consequences of the attempted turning of the monetary tides, we are now issuing another explicit warning. In addition to wolfish inflation, a bearish recession now looms," the analysts said in the report.

Incrementum pointed out that of the Federal Reserve's last 20 tightening cycles, only three have not ended in a recession.

"The Federal Reserve runs the risk of overestimating the impact of rate hikes and balance sheet reductions on containing inflation, just as it has underestimated the impact of rate cuts on boosting inflation," the report said.

With the threat of stagflation looming large, the analysts noted that most investors are inadequately positioned to protect their capital as the traditional 60/40 portfolio structure is expected to see negative returns for only the fifth time in 90 years. Read More

Gold, silver sell-off amid rebound in USDX, uptick in bond yields

Gold and silver prices are lower in midday U.S. trading Wednesday, with gold suffering solid losses. Corrective pullbacks from recent good price gains are featured at mid-week. A rebound in the U.S. dollar index and rising U.S. Treasury yields are negatives for the precious metals on this day. June gold futures were last down $22.30 at $1,843.10. July Comex silver futures were last down $0.228 at $21.84 an ounce.

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Technically, June gold futures saw a corrective pullback after recent good gains. A 2.5-month-old price downtrend 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 the May low of $1,785.00. First resistance is seen at $1,850.00 and then at this week’s high of $1,869.10. First support is seen at today’s low of $1,838.70 and then at $1,830.00. Wyckoff's Market Rating: 3.0.

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July silver futures see a 2.5-month-old price downtrend in place on the daily bar chart. The silver bears have the firm 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 May low of $20.42. First resistance is seen at $22.00 and then at this week’s high of $22.215. Next support is seen at this week’s low of $21.645 and then at $21.50. Wyckoff's Market Rating: 2.5. Read More

Gold price holding $1,850 as Federal Reserve commits to price stability as inflation erodes real income

Inflation well above the Federal Reserve's long-term 2% target continues to impact economic activity, and the central bank reiterated its stance for further aggressive monetary policy action, according to the minutes of the May monetary policy meeting.

According to some economists, the latest minutes do little to shed any new light on the future path of monetary policy. The gold market appears to be taking the hawkish stance in stride as it tries to hold support around $1,850 an ounce.

According to the minutes, the Committee continues to see upside risk for inflation and a growing threat to the economy. The members said it would be appropriate to raise interest rates by 50 basis points at the next couple of meetings. 

"Various participants remarked on the hardship caused by elevated inflation and heightened inflation uncertainty—including by eroding American families' real incomes and wealth and by making it more difficult for businesses to make production and investment plans," the minutes said. "All participants reaffirmed their strong commitment and determination to take the measures necessary to restore price stability. To this end, participants agreed that the Committee should expeditiously move the stance of monetary policy toward a neutral posture, through both increases in the target range for the federal funds rate and reductions in the size of the Federal Reserve's balance sheet." Read More

Fed Minutes; did investors get ‘the whole truth and nothing but the truth’

For the first time in a couple of years, Chairman Powell and other members of the Federal Reserve met in person rather than virtually at the FOMC meeting last month. Today the minutes from that meeting were released. It begins with an address to the American people from Chairman Powell:

“Inflation is much too high, and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down. We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses. The economy and the country have been through a lot over the past two years and have proved resilient. It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.”

Yes, he acknowledged the obvious, inflation is extremely hot and persistent. But he also said that the Federal Reserve has the necessary “tools” to accomplish that. Really? Many analysts including myself adamantly believe that this statement is incorrect. It lacks an acknowledgment of the limitations to impact and resolve the underlying cause of high inflation the supply chain issues and bottlenecks simply by raising rates.

Inflation will remain high and persistent as long as global supply chain issues continue. Raising rates has no impact on that problem. The supply chain bottlenecks must unravel through a natural process. Add to that now more events recently have elevated the issue. 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.