Today's Gold and Silver News - May 27th

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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

Gold price remains below $1,850 as U.S. GDP contracts 1.5% in Q1

The gold market remains under pressure, seeing no major buying momentum as the U.S. economy lost more ground than expected in the first quarter.

Thursday, Commerce Department said in its preliminary reading that U.S. Q1 GDP fell 1.5% versus markets' expectation of a contraction of 1.3%. This is the second estimate of U.S. GDP; the initial assessment showed the economy contracting by 1.4%.

The gold market is not seeing much reaction to the disappointing economic data. June gold futures last traded at $1,842.10 an ounce, down 0.23% on the day. Market analysts have said that gold prices need to hold gains above $1,850 an ounce to start attracting consistent buying interest.

Economists have noted that trade imbalances continue to weigh on economic growth. According to the report, net trade cut 3.23% from first-quarter GDP, roughly unchanged from the initial estimate.

"The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased," the report said. Read More

Gold prices push into positive territory as U.S. pending home sales drop 3.9% in April

The U.S. housing market continues to see significantly slowing momentum as the number of consumers who are starting the process of buying a home fell dramatically in April, according to the latest report from the National Association of Realtors (NAR).

Thursday, the association said that its Pending Home Sales Index fell to 99.3 in April, down 3.9% from March. Economists were expecting to see a 1.9% decline.

Economists pay close attention to the pending home sales numbers because the index is seen as a forward-looking barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.

The report noted that this is the sixth consecutive month of declining activity in the U.S. housing market. Economists note that consumers are being hit with rising home prices and mortgage rates, pricing many first-time homebuyers out of the market.

"The escalating mortgage rates have bumped up the cost of purchasing a home by more than 25% from a year ago, while steeper home prices are adding another 15% to that figure," said Lawrence Yun, NAR's chief economist.

The gold market is starting to see some new bullish momentum as the latest housing market data is the latest in disappointing news Thursday morning. Ahead of this report, data showed that the U.S. economy contracted 1.5% in the first quarter, slowing more than expected. Read More

Gold, silver near steady amid conflicting daily inputs

Gold and silver prices are not trading too far from unchanged in midday action Thursday. Bearish for the metals is a stabilization of the U.S. stock indexes this week, after hitting 12-month lows last week. Rising bond yields at midday are also a negative for the metals. However, sharply higher crude oil prices and a weaker U.S. dollar index are working in favor of the metals market bulls on this day. June gold futures were last down $1.50 at $1,844.80.July Comex silver futures were last up $0.065 at $21.93 an ounce.

The metals showed no significant or lasting reaction to a weaker-than-expected revision to U.S. first-quarter GPD today, which came in down 1.5%, year-on-year.

Image Source: Kitco News

Technically, June gold futures see a 2.5-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 the May low of $1,785.00. First resistance is seen at today’s high of $1,852.80 and then at this week’s high of $1,869.10. First support is seen at today’s low of $1,836.30 and then at $1,830.00. Wyckoff's Market Rating: 3.0.

Image Source: Kitco News

July silver futures also 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 this week’s high of $22.215 and then at $22.50. 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 remains an important stabilizing asset as stagflation threat grows - Axel Merk

The Federal Reserve has reaffirmed its commitment to stabilizing consumer prices as inflation erodes personal wealth and threatens the economy.

However, In a recent interview with Kitco News, Axel Merk, President and Chief Investment Officer of Merk Investments, said that the economic outlook could get a lot messier as the U.S. central bank faces a difficult battle in its fight against inflation.

Although gold prices have dropped below $2,000 and have struggled to attract new bullish momentum, Merk said that the precious metal remains an important investment tool. It continues to do its jobs as a defensive asset and hedge against inflation.

"Gold is always that asset that you're happy that you had yesterday. But you have no idea why you would have it for tomorrow," he said.

Merk’s comments come as gold prices try to hold critical support around $1,850 an ounce. June gold futures last traded at $1,847.60 an ounce, roughly unchanged on the day.

While gold's recent price action has been disappointing after a solid first-quarter performance, Merk noted that it continues to outperform equity markets. Read More

Gold prices are good for miners, including juniors; Huge profits can be made - Dan Wilton

Gold prices are up over the past two years and this is good for miners, despite rising costs.

That's according to Dan Wilton, CEO of First Mining Gold Corp. Wilton spoke with David Lin, Anchor and Producer at Kitco News.

First Mining Gold (TSE: FF) is a gold developer focused on gold mining projects in Ontario and Quebec. The company's Springpole Project is expected to have 3.8 million ounces of gold.

Wilton said that in the medium-term, gold has performed well.

"We're entering this inflationary phase and you've seen the gold price actually, you know, up from where it was in 2019 at the $1300 [per ounce] level," he said. "You know, now [gold is at] $1800 [and has] tested $2,000, $2,100, a couple of times." 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.