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Silver’s Slide Continues as Price Nears $22 Despite Strong Fundamental Case
Silver’s slide shows no sign of stalling with the price of the precious metal now barely above $22 an ounce, having been trading comfortably above $25 an ounce barely a fortnight ago.
Confirmation of the Federal Reserve implementing its biggest rate hike since 2000 as well as hawkish rhetoric and rate increases by other central banks in Europe has made silver a less attractive asset versus other haven assets such as bonds, whose returns will increase in line with central bank rate hikes. Read More
Inflation Fears Reemerge As Interest Rate Hike Expectations Keep Gold Under Pressure
Fears over inflation are dominating market sentiment after a dramatic counter reaction to the Federal Reserve’s decision to increase its benchmark rate by 50 basis points.
Initially, investors looked to have viewed the Fed’s action favorably with equities rising but this was followed yesterday by a sharp reversal amid concerns that this wouldn’t be enough to tackle rising prices.
The Fed’s increase was followed by the Bank of England increasing its rate for the fourth consecutive month with the European Central Bank now penciling in its first hike in July. While Fed Chair Jerome Powell mentioned in his comments that followed the rate decision that the bank is not “actively considering” increases of 75 basis points, further hikes of 50 basis points are highly likely in the coming months.
Gold is struggling to gain traction in this environment of rising interest rates and now looks set for a sustained period below $1,900 an ounce. While the bullish support of the ongoing war in Ukraine will limit how far gold declines, this is currently outweighed by the bearish driver of central banks tightening their monetary policymaking non-yield-bearing assets such as gold less attractive. Read More
Gold & Silver May Outlook - Monthly Review - 2022
Confirmation of the Federal Reserve’s interest rate hike, its most aggressive since 2000, has set the tone for investors in May. With inflation proving far from “transitory”, central banks in the US and Europe are being forced to adopt hawkish monetary policies to bring rising consumer prices back under control.
Although gold’s initial price reaction to the Fed’s 50 basis point increase saw the precious metal climb back above $1,900 an ounce, the medium-term outlook is far more challenging.
The Fed’s May hike was followed by the Bank of England implementing its fourth consecutive monthly hike, pushing the base rate to its highest level in 13 years. These increases are likely to be followed by further hikes by the Fed in both June and July while the European Central Bank is expected to finally increase its rate in July.
In this environment, the appeal of holding gold wanes as its lack of yield makes other interest-generating assets such as bonds more attractive to investors. Read More
The Metals, Money, and Markets Weekly: Pablum Powell punts on 4th and inches
Is the Fed at peak hawkishness? Rising sentiment in gold market says yes
The gold market is ending its third week in negative territory. Still, bullish sentiment has improved among Wall Street analysts and retail investors as the Federal Reserve lays out its monetary policy plan through the summer.
Gold's short-term outlook among Main Street investors has improved sharply following the U.S. central bank's highly anticipated monetary policy decision. Last week bullish sentiment among retail investors fell to its lowest level in eight months.
Although a strong U.S. dollar and rising bond yields present challenging headwinds for gold, many analysts have said that these markets could see a shift in momentum. While the U.S. central bank looks to raise interest rates by another 50 basis points at the next two meetings, Federal Reserve Chair Jerome Powell pushed back on market expectations of a bigger 75-basis point move.
"I think we have reached peak hawkishness with the Federal Reserve. Other central banks will have to step up with their tightening measure," said Philip Streible, chief market strategist at Blue Line Futures. "The U.S. dollar looks a little toppy as other central banks like the [Bank of Japan] and the [European Central Bank] can't ignore inflation for much longer."
Adrian Day, president of Adrian Day Asset Management, said that he also sees monetary policy pushing gold prices higher in the near term. Read More
Tech craters, bitcoin tumbles and gold doesn't look that bad
Gold is holding up relatively well compared to everything else, noted mining audiences manager Michael McCrae.
On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris after a tumultuous week for markets and metals.
On Wednesday the Fed announced a 50-basis point hike, the biggest in 22 years. The U.S. dollar and U.S. Treasury yields all soared this week, while there was carnage in the markets.
NASDAQ composite is down 22% year to date, while the S&P is down 13%.
Bitcoin is also down 23% since Dec. 31.
Gold hasn't been all that bad. The metal is still up about $80 on the year. Listen to the podcast
Putting gold's lackluster performance into perspective
The gold market saw another lackluster performance this week, as the price hit a brick wall at $1,900 an ounce. The selling pressure came as the U.S. dollar continued to trade near its highest level in 20 years, benefiting from the Federal Reserve's aggressive plans to raise interest rates.
Despite gold's disappointing performance, many analysts have noted that the market still remains reasonably healthy and is consolidating after a strong performance in the first quarter. The precious metal has faced some challenging hurdles in the last two months as Federal Reserve started to signal it would raise interest rates by 50-basis points.
The U.S. central bank met those expectations Wednesday, hiking the Fed Funds rate to between 0.75% and 1%. Although the Fed still expects to raise interest rates at the next two meetings aggressively, some analysts are starting to see a limit to the central bank's hawkish stance. Federal Reserve Chair Jerome Powell, even pushed back on expectations that the central bank could raise interest rates by 75 basis points in June.
Yes, interest rates will continue to move higher through the summer, but markets look for a top of around 3%. Many analysts have noted that this is still a positive environment for gold, as elevated inflation will keep real interest rates relatively low. Read More
Reversals across many markets, while gold remained resilient
This week the Federal Reserve addressed revisions to its current monetary policy in its attempt to reduce the current levels of inflation to an acceptable target. The statement released after the FOMC meeting, coupled with Chairman Powell’s press conference, resulted in extreme volatility in many financial sectors.
The release of the Federal Reserve’s FOMC statement, coupled with Chairman Powell’s press conference, resulted in a major rally in U.S. equities. The Standard & Poor’s 500 gained almost 3%, the largest daily gain in two years. Equities overall experienced the best Fed-day return since 2011. It significantly impacted gold, moving the precious yellow metal higher. Concurrently, the dollar had a significant decline losing almost 1%, and yields on U.S. Treasuries were also significantly declining.
However, it was gold that seemed to have price stability resulting in three consecutive days of higher pricing. As of 6 PM EDT gold futures basis, the most active June 2021 contract is currently up to $7.10 or 0.38% and fixed at $1882.80. Unquestionably this was a week that will be remembered for quite some time, considering the major price reversals on Wednesday and Thursday. Read More
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Silver will remain strong in a coming recession; U.S. dollar to remain global reserve currency – Jeff Christian
A recession is set to occur by 2024, but there is a silver lining for precious metals and the U.S. dollar.
That is according to Jeff Christian, managing partner at the CPM group.
Christian spoke to David Lin, anchor, and producer for Kitco News. Christian believes that a recession will likely occur by 2024, which will affect the silver market. Read More
Is the Fed facing a credibility problem and why is gold price the 'punching bag'?
Extreme volatility in the marketplace in reaction to the latest policy shift by the Federal Reserve has many risk-on assets in a downward spiral, but why is gold — a safe-haven asset — once again 'the punching bag'?
Gold failed to hold above the $1,900 an ounce level this week as markets had a very erratic reaction to the Fed raising rate by half-a-point Wednesday while ruling out a 75-bps hike at the June meeting. The precious metal is ending the week down 1.6%, with June Comex gold futures last trading at $1,883.30 an ounce.
The Fed had one of the most highly anticipated announcements this week, and markets showed it, with the Nasdaq reversing all immediate gains and plummeting 5% on Thursday in its worst one-day sell-off since June 2020.
The markets wonder if the Fed has made a mistake - making a recession in the U.S. inevitable, OANDA senior market analyst Edward Moya told Kitco News.
"Wall Street now believes that the Fed is on a set course of delivering half-a-point rate hikes over the next couple of meetings, and at then Jackson Hole, they'll have to decide whether to continue or change course," Moya said. "Many traders thought that the Fed needed to keep all options on the table to aggressively fight inflation. But the Fed is signaling they believe inflation is peaking. There is this fear that possibly the Fed made a mistake and might have to send the economy into a recession a lot sooner." Read More
Here's why gold is 'the most confusing' commodity right now
The latest comments from the Federal Reserve triggered a massive selloff across all risk assets. But why is gold still below the $1,900 level? Here's a look at Kitco's top three stories of the week: Read More
Gold and silver trade lower heading into the European open
Gold and silver move into the European session lower at the start of the week. Gold is trading 0.60% lower at $1871/oz and silver is down 0.80% at $22.15/oz. Elsewhere in the commodities complex, copper (-1%) and spot WTI (-1.26%) are both trading in the red.
In stock markets, the Nikkei 225 (-2.53%), ASX (-1.18%) and Shanghai Composite (-0.10%) all struggled overnight. Futures in Europe are indicating negative cash open too.
In FX, the dollar index continued its upward charge. The biggest losers were the antipodeans with AUD/USD falling over 1%. In the crypto space, BTC/USD fell over the weekend and starts the week trading at $33,481.
News from the weekend and 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.
