Gold and silver move up ahead of the European cash open

Gold and silver move up ahead of the European cash open

– After a bit of a choppy session yesterday gold is trading 0.36% higher leading into the European open on Wednesday. Silver has also moved into the black and trades 0.40% up at $23.73/oz. Looking at the rest of the commodities complex, copper (0.13%) and spot WTI (0.42%) are both trading higher too.

In terms of risk sentiment, the Nikkei 225 (0.59%) and Shanghai Composite (0.76%) had a much-needed pullback but the ASX still fell around -0.12%. Futures in Europe are pointing toward a positive open.

In FX markets, it was a pretty lackluster session overnight but the dollar index slipped 0.07% after some recent strength and the biggest mover was AUD/USD which rose 0.14%. BTC/USD has risen 1.58% overnight to trade at $45,339.

Looking at some of the news stories from overnight, RBNZ kept its official cash rate at 0.25% vs market expectations of a move to 0.50%.

UK July CPI +2.0% vs +2.2% y/y expected.

Australia Q2 wage price index +0.4% q/q vs +0.6% expected.

China reports 6 new local coronavirus cases vs 17 a day earlier.

Fed's Kashkari said, "I believe these will be short-lived high inflation readings". He also added that he thinks the end of this year or early next year are reasonable timelines for taper.

BHP is set to leave the FTSE 100 index after unveiling plans to scrap the dual listing of its shares in London and Sydney.

Looking ahead to the rest of the session highlights include EZ & Canadian CPI, U.S. building permits, weekly DoE's and the FOMC meeting minutes.

 

By Rajan Dhall

For Kitco News

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David

Gold stocks have highest cash flow ever, so why are prices down?

Gold stocks have highest cash flow ever, so why are prices down? Michael Gentile

– The gold mining sector is demonstrating excellent fundamentals, representing a complete disconnect between intrinsic value and market value, said Michael Gentile, strategic investor.

"The industry has never been better fundamentally at a time when the least amount of investors ever have interest in the sector," Gentile told David Lin, anchor for Kitco News.

Gentile cited the highest free cash flow the sector has seen in forty years, as well as the highest inflation-adjusted cash flow yield of any equity sector right now as being reasons for the gold stocks' undervaluation.

"The free cash flow yield of the gold sector, if you look at a 40-year chart from the 1970s to today, there's never been a time when the free cash flow yield of the gold sector has been higher," he said.

For Gentile's views on mergers and acquisitions in the gold sector, watch the video above. Follow David Lin on Twitter: @davidlin_TV.

By David Lin

For Kitco News

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David

Gold continues to rally now just $19 shy of $1800

Gold continues to rally now just $19 shy of $1800

In yesterday's opening letter, we talked about the potential for gold to stage a corrective upside rally based upon our current Elliott wave count using daily charts. Today we saw another 29 dollars taking gold prices substantially higher. As of 5:34 PM EST, Gold futures basis the most active December 2021. Comex contract is currently fixed at $1781.50, after factoring in today's net gain of $29.70.

Today's continuation to the upside is a result of dollar weakness, as well as data released by the University of Michigan consumer sentiment index, which fell to 70.2 in August. This is the lowest level since the most difficult period of the pandemic in April 2020. In July, the consumer sentiment index was at 81.2.

According to Brian Lundin, editor of the gold newsletter and reported by MarketWatch, "Gold futures had become "oversold" following sharp losses last Friday and on Monday. The rebound in prices seen since then is "largely due to investor recognition that the crash was simply short-term market manipulation and no real reflection on the supply/demand dynamics for the metal." He also told MarketWatch that, "the market has also seen "growing concerns over the delta variant and the economic repercussions from its spread, as evidenced by the dramatic fall in consumer sentiment" reported Friday. It's all contributing to a general view that gold is undervalued at these levels."

Unquestionably gold pricing has been more volatile than we have seen in recent months as a result of two opposing forces. The strength of the global economic rebound which is occurring concurrently with a rebound of the infection rates of the delta variant of the Covid 19 virus. Add to that the current uncertainty as to when the Federal Reserve will begin to taper and return to a pre-pandemic monetary policy in terms of asset accumulations. Currently the belief is interest rates will remain between zero and 25 basis points most likely until the beginning of 2023. However, many analysts believe that the Federal Reserve will begin to taper its quantitative easing monetary policy early next year. While not much is expected to come out of the Jackson Hole Economic Symposium scheduled to begin on the 26th of this month. However, it is widely believed that real timelines for the beginning of tapering will be presented at one of the two remaining FOMC meetings this year.

According to Jeff Klearman, portfolio manager at Granite shares, Most of the move higher more recently for gold this week is due to increasing inflation concerns in light of the Fed "maintaining its ultra-accommodative monetary policy in the belief current high inflation is transitory,"

speaking to MarketWatch, he said that, "Extremely low and negative real yields, reflecting expectations of continued accommodative monetary policy, support gold prices because they eliminate the opportunity cost of holding gold while increasing gold's safe-haven desirability due to possible upside."

Unquestionably this has been one of the greatest tests of the global economy's ability to recover from a severe and devastating pandemic. There has never been a time in history when central banks worldwide provided such a tremendous amount of capital to support the economies of their countries. Only time will tell what repercussions the increased expenditures and mounting debt will have on the global economy.
 

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Could we see gold enter a corrective upside bounce?

Could we see gold enter a corrective upside bounce?

Although multiple factors will influence the price of a stock or commodity, there are three primary essentials that market participants continue to focus upon because they provide insightful information.

First and foremost are fundamental events. In the case of equities events such as earning reports, share prices versus forward earnings, and forward guidance are critical components of the necessary information the astute investor uses to guide his or her investments. For the financial market, participants use economic indicators to gain insight to gauge the overall state of the economy. Some of the most important indicators are GDP (gross domestic product), employment figures, consumer spending, inflation, and interest rates.

The second essential method to the use of technical indicators such as moving averages, candlesticks, retracements, Bollinger bands…

The third method used by an investor is market sentiment. Investopedia says “Market sentiment refers to the overall attitude of investors toward a particular security or financial market. It is the feeling or tone of a market, or its crowd psychology, as revealed through the activity and price movement of the securities traded in that market. In broad terms, rising prices indicate bullish market sentiment, while falling prices indicate bearish market sentiment.”

It was the “crowd psychology” that market technician R.N Elliott attempted to mathematically quantify when he created “the wave principle” in 1938. His theory relies on the assumption that price changes occur in a cycle that is repeated and can be identified through pattern recognition. This technique is used whether a market is in a bullish or bearish trend. Simply put, the theory expounds that the trend of a stock or commodity will unfold as a total of eight waves. The first five waves will move in the prevailing trend is called the impulse phase. This will be followed by a corrective phase (typically three waves) that will move in the opposite direction of the current trend.

In the case of gold, our current technical studies indicate that a bullish cycle concluded at the beginning of March 2020 after completing an A, B, C correction. The first part of the bearish cycle or bearish Elliott wave count began as a corrective upside move (A, B, C) taking gold from $1670 to $1920 in June 2020. What would follow is an impulse phase which is composed of five waves with waves 1,3,5 moving in the primary trend, and to counter waves in the opposite direction of the primary trend, waves 2 and 4.

Our studies indicate that the major drop that occurred following the release of last month’s jobs report completed the fifth and final wave of the impulse phase. If correct, that would mean we are about to enter a corrective period in gold which could take pricing higher.

There are two major caveats to the Elliott wave principle, first, it is not accepted by many prominent market analysts. Many analysts use and implement this theory as a key component used to forecast markets, and many analysts remain skeptical and favor a more traditional technical approach to market forecasting.

Secondly, it is a technical study that is both an art and science in that there is room for interpretation. This technical study is not as black-and-white as a moving average or a stochastic indicator which have defined parameters that will allow all market technicians to obtain the same conclusions.

That being said, after working with this technique for over 25 years and combining it with Fibonacci ratios and Japanese candlestick pattern recognition I found it to be an extremely insightful tool in my technical toolbox.

For those who would like more information, simply use this link.

Wishing you as always, good trading,

By Gary Wagner

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold sees mild price pullback from Wednesday’s good gains Gold prices are modestly weaker in early U.S. trading Thursday, on a normal downside correction from the solid gains posted Wednesday. Importantly, the gold and silver bulls appear to have stabiliz

Gold sees mild price pullback from Wednesday's good gains

Gold prices are modestly weaker in early U.S. trading Thursday, on a normal downside correction from the solid gains posted Wednesday. Importantly, the gold and silver bulls appear to have stabilized their markets following recent selling pressure. October gold futures were last down $3.20 at $1,748.00 and September Comex silver was last down $0.148 at $23.345 an ounce.

Global stock markets were mixed overnight, with European indexes firmer and at or near record highs and Asian shares a bit weaker. The U.S. stock indexes are pointed to slightly higher openings when the New York day session begins and are at or near their record highs. The summertime doldrums are presently the feature in the marketplace—not surprising for mid-August, when families are taking vacations just before school starts and as most of Europe is on holiday.

The U.S. gets another inflation reading today, as the producer price index for July is due out. The PPI is seen up 0.6% from June after rising by 1.0% in June from May.

The key outside markets today see the U.S. dollar index slightly up after hitting a 4.5-month high Wednesday. Nymex crude oil futures prices are a bit weaker and trading around $69.00 a barrel. The OPEC oil cartel said the new Delta Covid variant will likely dent global crude oil demand growth in 2021 and 2022. The International Energy Agency today also cut world oil demand growth in 2021, by 100,000 barrels per day, to 5.3 million barrels per day. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.351%.

Other U.S. economic data due for release Thursday includes the weekly jobless claims report.

Technically, October gold futures bears have the overall near-term technical advantage amid the recent steep downdraft in prices. 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 this week’s spike low of $1,676.40. First resistance is seen at the overnight high of $1,757.20 and then at this week’s high of $1,763.00. First support is seen at $1,736.90 and then at Wednesday’s low of $1,724.30. Wyckoff's Market Rating: 3.5

The silver bears have the solid overall near-term technical advantage. Prices are in an 11-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at this week’s low of $22.295. First resistance is seen at Tuesday’s high of $23.675 and then at $24.00. Next support is seen at Wednesday’ low of $23.19 and then at $23.00. Wyckoff's Market Rating: 2.5.
 

By Jim Wyckoff

For Kitco News

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David

Gold price rises as inflation looks to have peaked

Gold price rises as inflation looks to have peaked

The gold market is holding on to gains near session highs as inflation pressures look to have peaked, meeting economist expectations.

Wednesday The U.S. Labor Department said its U.S. Consumer Price Index rose 0.5% in July, after a 0.9% rise in June. The data was in line with consensus forecasts. For the year, the report said that headline inflation rose 5.4%.

Meanwhile, core CPI, which strips out food and energy costs, increased 0.3% last month, down from June’s 0.9% increase. The rise in inflation was weaker than expected. Economists were expecting to see an increase of 0.4%. For the year, core CPI is up 4.3%, the report said.

At first blush the weaker price pressure should be negative for gold, which is seen as an inflation hedge; however, the yellow metal is adding to its morning gains trading near session highs in initial reaction. December gold futures last traded at $1,746.60 an ounce, up 0.86% on the day.

Some markets analysts have said that although inflation pressures are weak, it gives the Federal Reserve room to maintain its ultra-accommodative monetary policies, which is supportive for the precious metal.

Adam Button, chief currency strategist at Forexlive.com said that the U.S. dollar is losing some ground as the latest data reduces some expectation of Fed tightening.

“If inflation falls back down to target without the Fed hiking rates, why would they need to hike rates?” he said.

Avery Shenfeld, senior economist at CIBC, said that although inflation “has seen the mountaintop,” investors should expect to see a sharp decent anytime soon.

“Looking ahead, a stabilizing in oil prices and a likely drop in used car prices at some point will help cool the headline inflation rate, but production bottlenecks and shipping delays remain as upside threats in upcoming months,” he said. “But the more important issue for the Fed is that solid wage gains this year, ample consumer purchasing power, and tighter labour markets come 2022, could keep core inflation from descending enough to achieve the roughly 2% core PCE price pace that it has penciled in for next year.”

Rising gasoline prices helped to contribute to a strong rise in energy prices. The report said that the energy index rose 1.6% with the gasoline index rising 2.4%.

By Neils Christensen

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold, silver see upside price corrections after recent steep slide

Gold, silver see upside price corrections after recent steep slide

Gold and silver prices are moderately higher in early U.S. trading Tuesday, on normal upside price corrections after the sharp losses suffered last Friday and on Monday. The precious metals bulls appear to have stabilized their markets—at least for now. October gold futures were last up $7.40 at $1,731.80 and September Comex silver was last up $0.166 at $23.435 an ounce.

(By the way, I was on vacation last week—leading a Jeeping expedition across the U.S. Continental Divide high in the Rocky Mountains. It was a great adventure. I know I have a good job at Kitco when I really did not mind coming back to work this week to serve you, my valued Kitco reader!—Jim)

Global stock markets were mixed but mostly firmer overnight. The U.S. stock indexes are pointed mixed to weaker openings when the New York day session begins. Markets are quieter Tuesday morning, amid the summertime doldrums, when much of Europe is on holiday and many North American traders and investors are taking family vacations. Traders will be closely parsing speeches by a couple of Federal Reserve officials today, Loretta Mester and Charles Evans, looking for clues on the timing and direction of U.S. monetary policy—especially after last Friday's much-stronger-than-expected U.S. jobs report. Separately, reports this week say the Biden Administration generally supports appointing Fed Chairman Jerome Powell to a second term.

Germany's close watched ZEW consumer sentiment survey showed a drop for the third straight month, and to the lowest level since last November, as a rise in Covid infection rates raises concerns over a possible tightening of pandemic curbs. The ZEW economic expectations index fell to 40.4 in August from 63.3 in July, with the institute's president warning of "increasing risks" to the German economy. The index of current conditions improved to 29.3 in August from 21.9 in July.

The key outside markets today see the U.S. dollar index firmer and hitting a three-week high overnight. Nymex crude oil futures prices are higher on a corrective bounce from recent strong selling pressure and trading around $67.50 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.316%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store sales reports, the NFIB small business index, and preliminary productivity and costs.

Technically, October gold futures bears have the overall near-term technical advantage amid the recent steep downdraft in prices. 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 this week's spike low of $1,676.40. First resistance is seen at $1,750.00 and then at this week's high of $1,763.00. First support is seen at $1,725.00 and then at $1,700.00. Wyckoff's Market Rating: 3.5

The silver bears have the solid overall near-term technical advantage. Prices are in an 11-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at this week's low of $22.295. First resistance is seen at the overnight high of $23.675 and then at $24.00. Next support is seen at $23.00 and then at $22.75. Wyckoff's Market Rating: 2.5.
 

By Jim Wyckoff

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold price well off its lows – Twitterverse sees drop below $1,700 as a buying opportunity

Gold price well off its lows – Twitterverse sees drop below $1,700 as a buying opportunity

The price action in the gold market has turned from bad to worst as the precious metal dropped to a new low for the year at the start of the Asian trading session.

However, some analysts see the price action as a major buying opportunity as they expect central banks will be slow to tighten monetary policy.

December gold futures lost nearly $100 as Asian markets started to open up. Although the precious metal is well off its lows, it is still seeing some selling pressure. December gold futures last traded at $1,742.40 an ounce, down 1.17% on the day.

Since Friday morning, gold prices have lost $76, one of their biggest losses since markets were first roiled by the COVID-19 pandemic in early 2020. Better-than-expected employment data sparked the latest selloff in gold.

Friday, the U.S. Labor Department said that 943,000 jobs were created in July, handily beating consensus expectations of 870,000 jobs. At the same time, the unemployment rate fell to 5.4%, down from 5.9% in June. Wages also rose more than expected in July.

After gold's drop below initial support at $1,790 an ounce, many analysts said that gold could test major support at $1,690 an ounce. However, many weren't expecting that target to be reached by Sunday.

Some analysts have said that Sunday's major selloff was due to a massive sell order executed in a low volume environment.

"I think the idea that interest rates might have bottomed is causing some to want to dump their inflation bets in metals, which has led in Sunday evening thin trade to a washout," said Ira Epstein, director of Ira Epstein Division of Linn and Associates, in a note Sunday evening. "It looks like a firm doing a blowout of trade due to margin along with very thin trade volume is behind this."

According to comments on Twitter, many analysts see gold's drop as a significant buying opportunity.

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Already down $50, but August could still be ‘terrific’ month for gold

Already down $50, but August could still be 'terrific' month for gold

Just one week into August, and gold is already down more than $50. But can the last month of the summer still prove to be a "terrific" one for the precious metal?

Here's a look at Kitco's top three stories of the week:

3. August could be a "terrific" month for gold and a "tough" month for the S&P 500, says CNBC's Jim Cramer

2. Ray Dalio opts for gold versus bitcoin: 'If you put a gun to my head and said I can only have one, I would choose gold'

1. How much gold & silver is actually in Tokyo 2020 Olympic medals?
 

By Anna Golubova

For Kitco News

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David

Both gold and silver sustained major technical chart damage in trading yesterday

Both gold and silver sustained major technical chart damage in trading yesterday

Immediately following the release of the U.S. Labor Department’s nonfarm payroll jobs report, we saw both gold and silver sell off sharply. Initial estimates by economists polled by Dow Jones were forecasting that July’s additional jobs would total above 800,000 individuals. While the vast majority believed that we would see a major uptick in the number of new jobs added last month, there were quite a few analysts that had the contrary approach believing that the actual numbers would come in well under expectation. Unquestionably, the majority of economists polled by Dow Jones were spot on in their forecast.

The net result of today’s selloff took gold pricing to the worst daily weekly slide over the last seven weeks. Aided by dollar strength and 10-year U.S. Treasury. Today’s extremely strong jobs report month certainly diminished the demand for precious metals and safe-haven assets as a whole.

Gold prices had been in a slow and methodical decline although trading in a narrow range it undoubtedly had a bias to the downside today’s action topped even the tepid declines witnessed this week in both gold and silver. The U.S. Labor Department reported that new jobs added in July showed a re-economy in recovery with an additional 943,000 nonfarm payroll jobs added last month. This came in well above expectations as analysts had predicted that 845,000 jobs would be the total number of jobs added last month. Economists also called for a downtick in the unemployment rate from 5.9% to an estimated 5.7%. Economists underestimated the actual number indicating that the unemployment rate had dropped to 5.4%.

With a solid indication that the U.S. economy is improving dramatically even though there are major issues such as a recent surge in the Delta variant of the Covid-19 virus which has plagued certain states in the country. This coupled with recent surges in inflationary pressure also could be highly supportive of the precious metal with one major caveat, that the Federal Reserve is not 100% correct in believing the vast majority of these recent inflationary pressures are transitory and will subside over time. While it is logical to understand while supply chain bottlenecks and many businesses lacking the proper staffing to fully operate their businesses, there are items such as energy and to a great degree food costs that could most certainly last longer than the Federal Reserve anticipates. In an interview with Kitco news Anna Golubova, RJO Futures senior commodities broker Daniel Pavilonis said that “This job number is bullish for the U.S. dollar and is pushing rates higher, which has an inverse reaction for

gold.”

This will certainly cause many precious metal analysts to rethink their current assessment and models as to the future price of gold. If the next jobs report is as robust as July’s report came in we could expect a real potential for the Federal Reserve to revamp and modify not only their timeline for tapering but their timeline for normalizing interest rates.

However, this could have an unexpected effect. If the Federal Reserve begins to taper much sooner than expected, and or raises rates in a timeline much more rapid than they have recently stated it could cause dynamic pressure on U.S. equities taking them lower and possibly even being the impetus that would cause the major indices would experience one of the first deep corrections in years. A correction is when an index or stock loses 10% of the value from the most recent highs. This could create a new incentive for market participants to reevaluate adding safe-haven assets to their portfolios to protect their capital.
 

By Gary Wagner

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David