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Silver Price News: Silver Out of Favour For Now Even With Prospect of US Debt Default
Silver is enduring another of its phases where it falls out of favour among investors and now needs a significant spark to reignite its popularity.
Even the prospect of the US defaulting on its debt, which is getting ever more real the longer talks fail to reach an agreement, has failed to boost silver, which is often considered a safe haven asset in part due to its lack of counterparty risk.
One factor that will be holding back silver’s attempts to stall its slide, which has now seen the price head towards $23 an ounce, is a slight reappraisal of how certain the Federal Reserve is to have stopped its series of interest rate hikes. Given that this was the single biggest headwind for silver in the last year or so, any more hikes will reduce its appeal further. Read More
Gold Price News: Gold Holding Steady As Debt Talks Reach Impasse
The impasse on US debt ceiling talks has raised the prospect of the world’s largest economy defaulting and kept gold well supported at around $1,975 an ounce.
The fact that gold hasn’t managed to climb any higher given the potential seriousness of the economic consequences should no agreement be reached before the June deadline reflects a prevailing view that ultimately the markets believe some middle ground can be found in time. Also given how high gold is already trading, having challenged its record high earlier in the month, there is limited remaining upside potential for the precious metal. Read More
Gold dips as U.S. debt talks resume, FOMC minutes loom
Gold prices are weaker in midday U.S. trading Wednesday. Risk appetite up-ticked a bit today on reports the U.S. government debt-limit-extensions talks are set to resume, following a report Tuesday that the negotiations were at an impasse. Silver prices are lower. Trading today is more cautious ahead of this afternoon's release of the FOMC minutes. June gold was last down $2.50 at $1,972.10 and July silver was down $0.274 at $23.34.
Risk aversion was keener earlier today after a report Tuesday afternoon said President Biden and House Speaker McCarthy have not made much progress on the U.S. debt-ceiling extension discussions. However, Democrats and Republicans said they are resuming talks today, suggesting the situation is not dire yet.
In a rare development, traders and investors are shunning shorter-term U.S. Treasury bills (less than one-year maturities) over fears of a U.S. government default on that debt. This has caused high-grade U.S. corporate bonds to trade at a yield discount to U.S. Treasury bills. U.S. Treasury debt up to now had been considered the safest investment in the world.
Technically, June gold futures bulls have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at today's high of $1,987.90 and then at $2,000.00. First support is seen at the May low of $1,954.40 and then at $1,950.00. Wyckoff's Market Rating: 6.0.
Image Source: Kitco News
July silver futures prices were poised to close at a seven-week low close today. The silver bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Silver Bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today's high of $23.655 and then at $24.00. Next support is seen at this week's low of $23.235 and then at $23.00. Wyckoff's Market Rating: 4.0. Read More
Image Source: Kitco News
Gold price looks past FOMC meeting minutes that show a divided Fed
The gold market was largely unchanged following the release of the Federal Reserve’s May meeting minutes, which showed central bank officials split on whether more rate hikes were needed.
Fed officials said they would be data-dependent going forward. "Participants generally expressed uncertainty about how much more policy tightening may be appropriate," the minutes from May 2-3 meeting stated. "Many participants focused on the need to retain optionality after this meeting."
According to the minutes, "some" participants saw inflation decelerating as "unacceptably slow," which could warrant more rate hikes. At the same time, "several" participants noted that if the economy continued to slow as expected, more policy tightening might not be needed.
"In light of the prominent risks to the Committee's objectives with respect to both maximum employment and price stability, participants generally noted the importance of closely monitoring incoming information and its implications for the economic outlook," the minutes said.
Overall, participants "generally agreed" that due to monetary policy's lagged effects and tighter credit conditions after the banking sector turmoil, the need for more rate hikes "had become less certain." Read More
Inflation, de-dollarization and geopolitical tensions are 'inflaming each other': In Gold We Trust report released
Geopolitics, inflation, technology and de-dollarization all occurring at the same time are creating a flywheel effect that is leading to an imminent and fundamental change in global economies, wrote Ronald-Peter Stöferle, managing partner at Incrementum AG and author of In Gold We Trust report, which was released today.
The theme of this year's report was "showdown."
"In our opinion, the term showdown is an apt description of the current situation, in which economic, political and social developments are on the brink of a fundamental change of course," writes the report's authors. "The global pandemic, the inflation crisis, increasing political polarization, technological breakthroughs such as artificial intelligence – which, by the way, we used to create the cover of this In Gold We Trust report – but also the impending geopolitical realignment are changing our lives in ways that were unimaginable to many of us just a few years ago."
All these factors occurring at the same time have a compounding effect, write the authors.
"The current situation is...unique because we are not dealing with a singular showdown. Multiple escalations are occurring simultaneously and have the potential to further inflame each other." Read More
Vivek Ramaswamy: 'I would put the Fed back in its place', back the dollar with 'basket of commodities' including gold
The Federal Reserve should be reduced to a single mandate of price stability, and the dollar can be strengthened by tying it to a basket of commodities. That is according to 2024 Presidential hopeful Vivek Ramaswamy, who is currently running as a Republican Primary Candidate.
"I would put the Fed back in its place to have a single mandate, to focus on stabilizing the U.S. dollar as a unit of measurement, period, rather than trying to focus on multiple other mandates," Ramaswamy told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
The Federal Reserve currently has a dual mandate of both promoting price stability while ensuring full employment.
Ramaswamy's economic platform hinges on economic growth, which he claims relies upon a strong and stable U.S. dollar. He further said that to restore price stability, he would back the greenback with a basket of commodities. Read More
Extreme dollar strength and 1-month T-Bills yielding 5.59% move gold lower
Market participants are witnessing extreme dollar strength and exceedingly high yields in short-term Treasury Bills as continued uncertainty and angst surrounding negotiations to raise or suspend the debt ceiling are still at a stalemate. The US dollar has climbed higher for the last three consecutive weeks after trading to a low at the beginning of May at 101. The dollar gained 0.42% today with the dollar index currently fixed at 103.815. That is a net gain of almost 3% in May.
Image Source: Kitco News
Although salmon consistently swim upstream, gold has been fighting the currents of dollar strength and high yields and has been unable to gain any traction as a haven asset because no legislation has been forthcoming from negotiations. After hitting a high of $2085, just shy of the record high about a month ago gold prices have declined dramatically trading to a low today of $1958.40. Gold futures have traded below $1960 per ounce on four of the last five trading days.
The Federal Reserve released the minutes from the last FOMC meeting held in May. The minutes revealed that numerous Federal Reserve officials believed the most prudent path would not contain rate hikes in the near future. That being said, Fed officials were not unified in that belief. 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.
