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Gold & Silver August Outlook - Monthly Review - 2022
Gold enters August on an optimistic note with the rhetoric surrounding the Federal Reserve’s latest interest rate decision pointing toward a less aggressive rate hike trajectory in the following months by the US central bank.
Gold investors will be hoping that the gold price continues the path it was plotting out at the end of July, that after a challenging month in which the precious metal dropped more than $100 an ounce, it is recovering some of those losses with it trading around $1,760 an ounce.
Markets are now entering a tipping point where the actions of central banks across the world to tame inflation, namely increasing interest rates, are showing tentative signs of cooling down the pace of consumer price increases yet this is now needing to be balanced against the looming threat of recession, with both the US and the UK potentially already in that negative situation.
Gold finds itself right in the middle of this economic balancing act. The threat of rising interest rates and indeed the implementation of these hikes have been the principal drag on the price of gold in the last few months. On the face of it, the market reaction to the Fed’s latest large hike, a second consecutive increase of 75 basis points, looks to be overdone.
Silver investors finally have some good news to cheer with the price climbing back above $20 an ounce to recover back to the level it was at the end of June. The key question: is this the start of a silver surge?
Certainly, the fundamental outlook remains very supportive for silver with the metal a key component in the energy transition, used both in photovoltaics for solar energy and in batteries for electric vehicles such as Tesla and BYD. Indeed, silver is set for a record year of demand, according to the Silver Institute.
However, both those statements have been true throughout the year and this didn’t stop silver’s price from plunging from above $26 an ounce to below $19 an ounce in a matter of weeks.
The big change, and the cause of silver’s price plunge from April onwards, has been the implementation of a series of interest rate hikes by the Federal Reserve allied to the knock-on impact that has had in sending the dollar, which silver is priced in, to record levels.
With the Fed still in the middle of its hike cycle, with another increase expected in August, silver’s potential path upward has plenty of obstacles in front of it. Yet with silver having shown where the potential bottom in its price is, now could be a timely opportunity for the brave investor to buy into silver’s recovery story. Read More
JPMorgan; the wolf is guarding the golden goose
Extensive exposés by Bloomberg and Reuters News covering the current trial of JPMorgan Chase & Co.’s gold traders revealed shocking details of how deep the rabbit hole went, and how massive the fraud was. It seems that for well over a decade the Wolf (JPMorgan) guarded the golden goose.
The U.S. Justice Department has brought charges against three former JPMorgan employees charging them with conspiracy and racketeering charges for manipulating futures trading of precious metals between 2008 and 2016.
The U.S. Justice Department alleged that a deliberate plan to manipulate and profit from futures trading of gold, silver, platinum, and palladium was spearheaded by Michael Nowak, “the boss”.
According to Reuters, “The bank's former global precious metals desk head Michael Nowak, precious metals trader Gregg Smith and salesperson Jeffrey Ruffo are accused of conspiring to defraud market participants via a manipulative trading tactic known as spoofing.”
The trial has run its course and the jury has now gone into deliberation to reach a verdict. Read More
The U.S. economy could 'collapse' following a debt crisis; Bitcoin and crypto may help rebuild afterwards - Max Borders
According to the St. Louis Federal Reserve, the U.S. debt-to-GDP ratio is 125 percent. Research by economists Ken Rogoff and Carmen Reinhart suggests that a debt-to-GDP ratio in excess of 90 percent causes slower economic growth and may trigger a public debt crisis.
Max Borders, Executive Director of Social Evolution, is worried about more than. Speaking with Michelle Makori, Anchor and Producer at Kitco News, he said the U.S. economy could experience a total "collapse," due to its unsustainable debt levels.
He said that preppers, people who prepare for extreme collapse by stockpiling food, guns, and other essential supplies, are admirable.
"I am more and more, every day, starting to admire the preppers," he told Makori at the FreedomFest 2022 conference in Las Vegas. "The one thing that I see that portends an awful state of affairs is that the greatest economic power in the world's debt stands at [125 percent] of GDP." Read More
Falling mine production is key to gold and silver's long-term bull market - CME's Norland
The gold market is testing resistance at $1,800 an ounce, trading at a fresh four-week high. Gold prices have pushed higher on the back of falling bond yields and growing recession fears, but one market analyst said that investors should also pay attention to the supply side of the market.
In a report published Tuesday, Erik Norland, executive director and senior economist at CME Group, said that falling mine supply in gold and silver should provide long-term support for prices as demand remains robust.
He noted that between 2016 and 2021, mining production in gold fell 7%. At the same time, the silver mine supply has dropped 8.5%.
"A reduction in new supplies may be part of the reason why precious metals prices rose over the last five years," he said in the report.
Although investment demand can drive price volatility in the short term, Norland said it isn't enough to support long-term bull markets.
"Movements in gold and silver prices are more often attributed exclusively to demand-side factors," he said. "Our analysis suggests, however, that demand-side and supply-side factors combined to produce the decades-long bull and bear market and that neither side of the demand-supply equation was solely responsible for gold and silvers' price movements." Read More
Gold gets slight safe-haven bid as risk aversion up-ticks
Gold prices are modestly up in midday U.S. trading Tuesday and hit a nearly four-week high earlier, as some safe-haven demand is featured amid keener risk aversion in the marketplace today. October gold futures were last up $4.80 at $1,782.60. September Comex silver futures were last down $0.152 at $20.215 an ounce.
Technically, October gold futures prices hit a nearly four-week high early on today. 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 a fledgling price uptrend is now 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 $1,720.00. First resistance is seen at today’s high of $1,794.80 and then at $1,800.00. First support is seen at this week’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 bears have the overall near-term technical advantage. However, a price downtrend has been negated to suggest 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 this week’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
Zimbabwe sells 1,500 gold coins in its fight against inflation, plans to release 2,000 more
Zimbabwe saw strong demand for its gold coins released to tame inflation by providing a store of value to the country's plunging currency and giving the population an alternative to the U.S. dollar.
The country's central bank sold 1,500 gold coins after launching the program on July 25, Bloomberg quoted Governor John Mangudya as saying on Monday.
And now, Zimbabwe is planning to make 2,000 more gold coins available to the public.
The central bank is selling one troy ounce 22-carat gold coins called 'Mosi-Oa-Tunya.' The name means "Smoke that Thunders," referencing Victoria falls.
Each gold coin has a serial number and can be purchased with local currency, the U.S. dollar, and other foreign currencies.
The price is set based on the international price of gold and production costs. As of Monday, each gold coin was going for $1,841, according to the central bank's website.
The owners of the gold coins can convert them into cash or trade them whenever needed. The gold coins could also be used for transactional purposes and as a security for loans.
The goal of the gold coins is to lower the demand for U.S. dollars following the collapse of the Zimbabwe dollar. Surging inflation and currency devaluation have made things difficult for Zimbabwe's population. The country's annual inflation was nearly 192% in June. Read More
Dollar gains erase fractional increases in gold
Gold is always greatly influenced by dollar strength or weakness. Because gold is paired against the U.S. currency, the dollar is always a major component of price changes. Today extreme dollar strength was the dominant driving force that caused a modest decline in gold pricing.
The dollar has had a trading range of 1.27% from the daily low to the daily high. The dollar index opened at 105.25 today and within the first 4 hours traded to its low of 104.92. As of 4:40 PM EDT, the dollar is trading just off its high of 106.20, currently fixed at 106.19 after factoring in today’s gain of 0.854 points or 0.81%.
Gold futures are trading modestly lower today with the most active December Comex contract currently fixed at $1776.20 after factoring in today’s decline of $11.50 or 0.46%. Since the percentage decline in gold is less than the percentage gain in the U.S. dollar it is evident that there is fractional buying with dollar strength overtaking any potential gains.
Gold briefly broke above $1800 trading to a high of $1805 today. However, these gains were short-lived and gold retreated below $1800 and is currently just $0.20 above the low of $1776. In the case of gold, its 50-day moving average is defining the first level of resistance at $1795.20. The next level of resistance occurs at $1800 with major resistance at $1831.30 the 61.8% Fibonacci retracement. Read More
Image Source: Kitco News
Gold price takes a step back after Fed speak
The gold market's price action is taking a breather following hawkish commentary from the Federal Reserve speakers, with prices pulling further away from the $1,800 an ounce target.
The gold price jumped to a daily high of $1,805 an ounce Tuesday morning, led by increased geopolitical tensions as House Speaker Nancy Pelosi landed in Taiwan amid China's threats of "serious consequences" for her visit.
However, gold gave back all of its daily gains following aggressive rhetoric from the Fed, with December Comex gold futures last trading at $1,777.10, down $10 on the day.
"Gold pared gains after Wall Street became optimistic that tensions between the two world's largest economies would get out-of-hand," said OANDA's senior maker analyst Edward Moya. "A strong dollar is also weighing on gold as the greenback's pullback over the past couple weeks appears to be over."
Chicago Fed President Charles Evans said Tuesday that the U.S. central bank would likely keep using oversized rate hikes until it sees inflation coming down. Evans added that he is not ruling out a 50-basis-point hike in September. Read More
Gold is trading higher leading into the European open
After closing lower yesterday gold is up half a percent leading into the European open. Silver is currently trading flat. Elsewhere in the commodities complex, copper is 1.05% higher and spot WTI is 0.30% in the black.
Risk sentiment was mixed overnight. The Nikkei 225 (0.53%) closed higher but the ASX (-0.32%) and Shanghai Composite (-0.72%) struggled. Futures in Europe are indicating a positive cash open.
In FX markets, the biggest movers overnight were AUD/USD and NZD/USD which both claimed 0.15% in a pretty lacklustre session. Bitcoin is flat at $22,997.
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.
