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Commodities at risk of reversing massive gains with 'wild run' similar to 2008, gold price to take on $2k - Bloomberg Intelligence
The commodity market is at risk of a reversal that will be a volatile ride similar to 2008, according to Bloomberg Intelligence. In this scenario, gold looks like one of the best options, with the ability to breach $2,000 once markets identify the end of the Federal Reserve rate-hike cycle.
"Commodities are at increasing risk this year of a wild ride akin to 2008, a development that may shine on gold," Bloomberg Intelligence senior commodity strategist Mike McGlone said in his May outlook report. "Commodities climbed 50% in the past 10 years and the Producer Price Index is up 30%. Gains are likely to recede as the world faces a potential recession and the Fed tightens the reins … Rate hikes should coincide with peak inflation."
In this outlook, the gold market looks solid. The precious metal can breach the critical psychological level of $2,000 an ounce once markets identify the end of the Fed's hiking cycle.
"Federal Reserve jawboning amid global GDP downgrades and a declining stock market isn't good for prices of copper and other industrial metals, and the endgame appears tilted favorably to gold. When fed funds futures start anticipating a rate-hike cycle end, the precious metal should breach $2,000- an-ounce resistance," McGlone stated.
The last time gold bottomed, which was in 2015, the move coincided with the markets anticipating the end of the rate-hike cycle. And this is what is likely to happen in 2022, according to the report.
Gold's price base is now around $1,800, with key resistance at $2,000 an ounce. And it is just a matter of time before gold trades above that resistance target, the senior strategist noted. Read More
Gold remains on track as Federal Reserve lays out path for 50-bps rate hikes - State Street's Milling-Stanley
According to one gold strategist, the precious metal still has nothing to fear from the Federal Reserve even after the central bank raised interest rates by 50-basis points and signaled further aggressive moves at the next two meetings.
In a telephone interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that he expects gold prices to continue to trade in a range between $1,800 and $2,000 an ounce for the rest of the year even as the Federal Reserve continues to fight inflation with aggressively tighter monetary policies.
Although the U.S. central bank has signaled it could raise interest rates by 50 basis points at the next two meetings, Federal Reserve Chair Jerome Powell pushed back on the idea that it could raise interest rates by 75 basis points. The market has had to adjust some of its hawkish expectations, which helped gold prices briefly push above $1,900 an ounce.
"Mr. Powell has provided the market with excellent forward guidance to avoid market shocks and surprises," Milling-Stanley said. "He has delivered on the job of a Fed Chair at this particular meeting."
Although gold hit some fairly strong resistance at $1,900, Milling-Stanley said that the market remains in solid shape. Helping to support gold through the new tightening cycle is the growing volatility in equity markets. Read More
Gold firmer but loses altitude as USDX, bond yields spike up
Gold prices are posting modest gains in midday U.S. trading Thursday but the bulls are fading fast after solid early gains have been erased. The precious metals markets are being buffeted today by strong gains in the U.S. dollar index and a big spike up in U.S. Treasury yields. June gold futures were last up $5.70 at $1,874.30 and May Comex silver was last down $0.037 at $22.33 an ounce.
Traders Thursday were still digesting the Federal Reserve's move Wednesday afternoon to raise its key interest rate, the Fed funds rate, by 0.5%, which was expected by the marketplace
Image Source: Kitco News
Technically, June gold futures see a downtrend in place on the daily bar chart. Bears have the overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at last week’s high of $1,935.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at $1,900.00 and then at today’s high of $1,910.70. First support is seen at Wednesday’s low of $1,861.10 and then at this week’s low of $1,849.70. Wyckoff's Market Rating: 4.0.
May silver futures see a steep price downtrend 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 $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.445. First resistance is seen at $23.00 and then at today’s high of $23.245. Next support is seen at Wednesday’s low of $22.135 and then at this week’s low of $22.12. Wyckoff's Market Rating: 2.5. Read More
Bitcoin price plummets, gold gives up gains, and stocks plunge in post-Fed trading
The post-Fed rally quickly vanished just a day after the markets breathed a sigh of relief that the Federal Reserve was not looking at an oversized 75-basis-point hike for the June meeting.
The U.S. 10-year Treasury yields surged to 3.09%, reaching the highest level since 2018, and the U.S. dollar index soared to 103.84 Thursday, coming close to fresh 20-year highs.
In response, gold gave up almost all daily gains, and bitcoin plummeted by 7%. At the time of writing, June Comex gold futures were trading at $1,875.00, up 0.33% on the day, after breaching the $1,900 an ounce level earlier in the session. Bitcoin was last at $36,960, down more than $2,700 on the day.
Stocks saw a selloff across the board, with the Dow dropping 3.4%, the S&P 500 plunging 4% and the Nasdaq declining 5.2%. Read More
The Fed's dilemma is 'as great as any since the 1970s' — Bridgewater's Dalio
The Federal Reserve is trying to battle inflation while not triggering a recession. But the longer the current environment lasts, the more difficult it will be for the U.S. central bank to achieve its goals, according to the world's largest hedge fund Bridgewater Associates.
"Central bankers face a challenging policy dilemma with a collection of uncertainties and risks as great as any since the 1970s," said Bridgewater's founder Ray Dalio and Co-CIOs Bob Prince and Greg Jensen.
The inflation problem is still very uncertain. But what has become clear is that the money and credit dynamics are more like the 1970s. And that is mixed in with remaining COVID-related challenges and geopolitical concerns in the form of Russia's invasion of Ukraine.
"There is an extreme asymmetry between the ability to tighten and the ability to ease," Dalio, Prince and Jensen said in their April update. "MP3 [Monetary Policy 3] is no longer available until either economic growth or inflation is much lower, because the high level of inflation is producing political problems. You wouldn't want to accidentally tighten too much." Read More
Gold shows resilience in light of dollar strength as investors bid gold prices higher
Amidst today’s chaos and a complete reversal in U.S. equities and extreme dollar strength, gold exhibited price resilience. As of 4:20 PM, EDT gold futures basis most active June contract is fixed at $1878.80, up $10.00 or +0.54%. However, today’s price gains are a little deceiving because gold futures closed in New York at $1871 and did not factor in gains that occurred after the close.
Image Source: Kitco News
After yesterday's FOMC meeting concluded gold futures gained value and was trading at approximately $1883 by 6 PM EDT. So, while gold futures are currently up $10 when compared to yesterday’s close of $1868.80 in New York, it does not reflect the price gains that occurred immediately after.
That being said, another factor that muddies today’s gains in gold was extreme dollar strength and its effect on gold pricing. Gold futures are trading up 0.48% and concurrently, the dollar has gained almost a full percentage point in trading today. The dollar index is currently fixed at 103.585, up 0.99 points or 0.97%. This means that because dollar strength was much greater than today’s gains in gold there was strong bullish market sentiment for the precious yellow metal bidding prices higher. Those gains were greatly muted by dollar strength. Read More
Gold price is manipulated by the Fed, suspects mining tycoon Frank Giustra, but suppression can't last forever
The gold price has been “manipulated” by central bank authorities, in particular, the Federal Reserve for decades in a broader scheme to maintain U.S. dollar supremacy in the global monetary system, said mining and movie mogul Frank Giustra.
Giustra, who is the CEO of Fiore Group and also the founder of Lionsgate Entertainment, had in the past said that the price of gold was “managed” by central banks and bullion banks. Now, he is doubling down and saying that the price is “outright manipulated.” 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.
