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Silver Reinforces View That Bottom Has Been Reached as Price Holds Above $20
Silver is holding above $20 an ounce, reinforcing hope among holders of the precious metal that the price did indeed reach its bottom in July and that August can bring further upsides.
The decisions by central banks will be a key determinant of how much further silver can recover with the Reserve Bank of Australia and the Bank of England both expected to announce increases of 50 basis points to their benchmark rates later this week.
While these two banks don’t carry the same sway as the Federal Reserve in terms of the price reaction they have on markets, investors will still be interested to hear the bankers' view on the state of their respective economies and how much further they feel they will need to raise rates.
Given that it was this change to a more aggressive monetary policy that sparked silver’s slump in price from mid-April onwards, these rate decisions will still be a source of worry for holders of the metal.
The hope that silver and indeed the broader market is clinging to is that inflation is peaking and will track lower over the coming months and with the global economy still in a very fragile state, central bankers will reduce their path of aggression in the coming months to avoid tipping their economies into recession.
How right this hypothesis proves will be the key in determining whether silver’s strong fundamental story can be heard or whether it is once again overwhelmed by hawkish monetary policies. Read More
Gold Starts August By Holding Around $1,760 as Markets Digest Fed’s Future Intentions
Gold is starting a new week holding around $1,760 an ounce as the markets assess the true state of the economy as well as the likely future action of central banks across the world.
Later this week brings the latest interest rate decision by the Bank of England and while this is likely to have less material impact on the gold price than that of the Federal Reserve, it will still be an important indicator of how aggressive central banks feel they need to be to bring inflation back to its 2% target.
Recent comments from Fed officials hint at the market’s initial reaction to the Fed’s rate hike last week that focused on rhetoric that supposedly pointed to a less aggressive strategy by the US central bank going forward, may be misguided. A large portion of markets' recent bounce, which gold has also been a beneficiary of, has been predicated on future Fed rate hikes being smaller with fewer of them required. If this proves a false dawn then a fresh slide of both equities, particularly growth stocks, and gold can be expected.
For now at least, gold is holding on to the recovery it made at the end of last week awaiting the next set of data, such as this week’s US jobs figures, to provide insight on the health of the US and indeed global economy. Read More
Gold prices holding steady following stronger-than-expected ISM manufacturing report
The gold market continues to trade near session highs and is seeing little price movement following stronger-than-expected activity in the U.S. manufacturing sector, according to the latest data from the from Institute for Supply Management (ISM).
Monday, the ISM said its Manufacturing Purchasing Managers Index, fell to 52.8% in July, down from June’s reading of 53%. The data was better than expected as economists were looking for a drop to 52.3%.
Readings above 50% in such diffusion indexes are seen as a sign of economic growth and vice-versa. The farther an indicator is above or below 50%, the greater or smaller the rate of change.
The gold market is seeing little reaction to the latest economic data as markets continue to digest last week’s Federal Reserve monetary policy decision and comments from Fed Chair Jerome Powell. Gold has pushed solidly higher as investors expect the U.S. central bank to slow the pace of rate hikes after the summer.
December gold futures last traded at $1,787.10 an ounce, up 0.30% on the day.
Although activity last month was stronger than expected the report said that the pace has dropped to its lowest level since June 2020. Read More
Modest gains for gold, silver as chart postures improving
Gold and silver prices are firmer in midday U.S. trading Monday, with gold notching a three-week high and silver a four-week high overnight. Short covering from futures traders is featured in both metals, with cash market traders also doing some perceived bargain-basement buying after gold prices hit a 15-month low and silver a two-year low in July. Some technical buying is also featured to start the month of August, as the near-term charts are looking a bit friendlier for gold and silver. October gold futures were last up $4.40 at $1,776.00. September Comex silver futures were last up $0.113 at $20.305 an ounce.
Global stock markets were mostly higher overnight. U.S. stock indexes are slightly up at midday. The U.S. indexes posted a very good month of July and are in near-term price uptrends on the daily bar charts, amid better trader and investor risk appetite in the marketplace.
Technically, October gold futures prices hit a three-week high early on today. Short covering and bargain hunting were featured. The gold futures bears still have the overall near-term technical advantage. However, recent gains have negated a price downtrend on the daily bar chart and last Friday’s bullish weekly high close is another clue that a market bottom is in place. Bulls’ next upside price objective is to produce a close above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at today’s high of $1,781.80 and then at $1,790.00. First support is seen at today’s low of $1,764.10 and then at $1,750.00. Wyckoff's Market Rating: 3.0.
Image Source: Kitco News
September silver futures prices hit a four-week high today. September silver futures bears have the overall near-term technical advantage. However, a price downtrend has been negated and last Friday’s bullish weekly high close are clues that a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $21.50. The next downside price objective for the bears is closing prices below solid support at $19.00. First resistance is seen at today’s high of $20.51 and then at $20.75. Next support is seen at $20.00 and then at last Friday’s low of $19.825. Wyckoff's Market Rating: 3.0. Read More
Image Source: Kitco News
"This is the worst environment for gold," but it is still worth holding precious metals and commodities - Will Rhind
Gold is currently trading near $1,735 and is down 6 percent year-to-date.
This is one of the "worst environments for gold," said Will Rhind, CEO and Founder of GraniteShares.
"You have a surging U.S. dollar… coupled with a FOMC who are raising rates faster than most, if not all, major developed economies in the world," he said.
However, he stressed that gold had performed well against other assets.
"In terms of being a viable competitor to gold, [equity markets] are down, the bond market's down," said Rhind. "Commodities have been one of the best places this year."
He added that cryptocurrencies "have disappeared from the competitive landscape."
Rhind spoke with David Lin, Anchor and Producer at Kitco News. Read More
Expect 4% inflation by 2023 as the Fed hikes rates; These assets are recession-proof - Peter Berezin
The Federal Reserve hiked its key interest rate by 75 bps on Wednesday, and Chairman Jerome Powell did not rule out even more aggressive rate hikes in the future. Powell also said that the U.S. economy is not currently in a recession, mainly due to strong employment figures.
"I think [Powell] is right," said Peter Berezin, Chief Global Strategist at BCA Research. "And if you look at consumers, they're still spending, despite the fact real wages are shrinking. Now it's quite likely that inflation will come down over the next twelve months. Maybe it doesn't go from 9 to 2 percent, but it would probably go from 9 to at least 4 percent."
Berezin spoke with David Lin, Anchor and Producer at Kitco News. Read More
JPMorgan dominates gold market as jury deliberates spoofing charges
After a three-week trial, a jury continues to deliberate on the most significant court case impacting the precious metals market in history.
Michael Nowak, the head of JPMorgan Chase's precious metals desk, and gold trader Gregg Smith and Jeffrey Ruffo, an executive director specializing in hedge fund sales, have been accused of manipulating and rigging gold and silver prices for eight years between 2008 and 2016.
Nowak and Smith face charges of racketeering conspiracy as well as conspiring to commit price manipulation, wire fraud, commodities fraud and spoofing; Ruffo has been charged with racketeering and conspiracy. All three men face years in prison if they are found guilty.
"For years, executives at one of the world's largest banks conspired to manipulate the markets for precious metals," said Matthew Sullivan, an attorney in the US Department of Justice, during his closing arguments Thursday. "All three worked together toward the same goal: earning profits for the precious-metals desk by spoofing."
However, the defence team argued in their closing statement Friday that Nowak's spoofing orders were legitimate and were executed about 25% of the time, "making him the worst spoofer in the world." Read More
Gold is seeing a Fed-induced short squeeze, can it last
Sentiment is quickly shifting in gold and silver as hedge funds continue to increase their bearish bets ahead of the Federal Reserve's monetary policy decision last week, according to data from the Commodity Futures Trading Commission.
While the latest Commitment of Traders' reports shows a slight increase in bearish sentiment in gold and silver, some analysts note that the data is backward looking as prices have recovered, trading at a three-week high.
Analysts note that gold is seeing a relief rally as investors and traders expected the Federal Reserve to be much more hawkish last week. Analysts said that although the U.S. central bank is maintaining its aggressive tightening posture, there has been a slight shift in its stance.
Federal Reserve Chair Jerome Powell said that the central bank would be appropriate to slow the pace of rate hikes as the economy starts to react to its aggressive monetary policy.
"After the behemoth liquidations seen of late, and with Fedspeak seeing the market move away from pricing a 100bp hike, long positioning in the yellow metal quickly bounced back after prices breached the $1700/oz level. Furthermore, with the Fed raising rates 75bp, and Chair Powell noting the Fed could slow the pace of its hike at future meetings, gold bugs have received further respite as the resulting short covering has seen prices surge to end the week," said commodity analysts at TD Securities.
The CFTC disaggregated Commitments of Traders report for the week ending July 19 showed money managers increased their speculative gross long positions in Comex gold futures by 1,160 contracts to 92,216. At the same time, short positions rose at a faster clip, by 1,515 contracts to 111,309. Read More
Gold pushes higher ahead of the European open
Gold is trading 0.24% higher overnight but silver is down 0.33%. Elsewhere in the commodities complex, copper has lost 0.56% of its value and spot WTI has risen 0.48%.
Risk sentiment was pretty weak as the Nikkei 225 (-1.42%) and Shanghai Composite (-2.03%) fell but the ASX managed to trade 0.07% higher. Futures in Europe are indicating it will be a weak open.
In FX markets, AUD/USD was the biggest mover overnight falling 1.04% after the rate decision. In the crypto space, BTC/USD fell 1.57% to trade at $22,910.
News from 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.
