‘Bears are in control’ of gold price: will next week’s Fed announcement be a shocker?

'Bears are in control' of gold price: will next week's Fed announcement be a shocker?

After falling $40 this week, gold bears are in control of the market with all eyes on what could be a hawkish Federal Reserve meeting next week, according to analysts.

Gold dropped to four-week lows on Thursday, falling from above $1,790 an ounce to $1,750 an ounce after much stronger U.S. retail numbers. This is big news ahead of the Fed's interest rate announcement on Wednesday because it could mean tapering sooner rather than later.

"Bears have control now. We had a complete flip in retail sales. This reinforces the idea that the Fed's hand is being forced to taper," RJO Futures senior market strategist Frank Cholly told Kitco News. "Right now, gold is in a new trading range. The short-term trend is down."

If the U.S. economic data continues to surprise on the upside, gold could be in store for another selloff. "We see yields starting to pick up, and the U.S. dollar is strong. This puts pressure on gold. We could see $1,720 next week. I don't think it will be hard to take another $30 out of the market," Cholly said.

Another problem for gold at the moment is the lack of interest from new buyers, said TD Securities head of global strategy Bart Melek.

"Traders are prepared to sell on any sort of suggestion that economic activity is better than expected because that gets them to believe the Fed will have no hesitancy to start tapering," Melek said.

Gold has also ignored its usual drivers and instead focused on macro data, noted Gainesville Coins precious metals expert Everett Millman.

"Gold is comfortable between $1,700-$1,800 an ounce range. Unless we get surprising data, I don't expect the precious metal to have an outrageous swing one way or the other," Millman told Kitco News. "The $1,740 level is support, and resistance is at $1,770-$1,800."

What to expect from the Fed

The focus is now on the Fed's statement on Wednesday, with markets paying close attention to any detail on the timing of bond-purchase tapping, said Millman. "The Fed has set the groundwork, and everyone is aware that tapping will happen soon. The central bank doesn't have to move on that at least until December," he said.

Going forward, the U.S. central bank will pay close attention to the U.S. inflation and employment data when updating the market on its future tapering plans.

"If the Fed does nothing on Wednesday but signals that it has a plan and will do something in December, that will be slightly good for gold. The gold market does want to see rates remain low," Millman added.

God is unlikely to fall much lower even if the Fed does announce something, Melek pointed out.

"I don't think we are at huge selloff risk here. There is still a belief that rates aren't really going up higher. We have a central bank in the U.S. that is focused on full employment and telling us that inflation is not a huge concern. To me, it suggests that taper is going to happen, but it won't be overly aggressive," he said. "Gazing into the FOMC meeting next week, we could see fairly strong hints. On the downside, $1,740 is still pretty decent support. We might cross over into the $1,730 level. But I don't see an outright rout."

The Fed will also be releasing its updated economic forecasts and the dot plot.

"New forecasts will show a slight growth downward revision with an upward inflation revision. The big story could be the Fed individual dot forecasts for interest rate increases. Currently, 7 out of 18 officials are going for 2022 as the starting point for increases, and we could conceivably see one or two more bring their forecast forward to 2022. We suspect the median stays at 2023 for now, but it will be a close call," said ING chief international economist James Knightley.

Data to watch

Other data to watch next week include Tuesday's building permits and housing starts, Wednesday's existing home sales, Thursday's Bank of England interest rate announcement and U.S. jobless claims, as well as Friday's new home sales.

On top of that, Fed Chair Jerome Powell will provide opening remarks at Friday's virtual Fed Listens event titled 'Perspectives on the Pandemic Recovery.'

Canada also goes to the polls on Monday after Prime Minister Justin Trudeau called a snap election in order to try to get a majority government

"Things do not appear to be going to plan with Trudeau's Liberal Party now neck-and-neck in opinion polls with the opposition Conservatives. This means that the New Democratic Party could hold the balance of power, which would imply a higher chance of increased taxes and spending," Knightley pointed out.

By Anna Golubova

For Kitco News

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David

Gold struggles as concerns about upcoming FOMC meeting mount

This has been an extremely difficult week for gold losing approximately $36. Gold futures basis the most active December 2021 contract opened on Monday at $1790 and is currently fixed at $1753.90. Today gold continued its decline, although only fractionally, declining $2.80 on the day.

Yesterday’s meltdown of $41 in gold was a partial result of dollar strength however, that was responsible for only a small component of the decline. The primary cause of yesterday’s tumble was a direct result of the U.S. Census Bureau’s monthly sales and food services report for August 2021. Analysts polled by various news sources had estimated that the report would show that retail sales had declined by a range of -0.8% to a decline of -1.8%. The actual numbers were the opposites of forecasts and predictions by economists.

The report showed that consumer spending increased last month by 0.7%, resulting in sales of $618.7 billion. A stronger indication of the robust retail sales in August can be seen if you strip out automobile and truck sales which would then result in consumer spending increasing by 1.8%. While the demand for automobiles and trucks was brisk it was supply limitations that those sales muted.

With the Federal Reserve set to begin their September FOMC meeting on Tuesday, September 21 the real question becomes how Federal Reserve members will interpret the recent data and their overall outlook of the economic recovery as it pertains to announcing when they will begin to taper their monthly asset purchases of $120 billion.

The data that they will be looking at is mixed. The jobs report for August came in exceedingly weak and well below expectations and forecasts by economists. Expectations for the U.S. Labor Department’s August jobs report were that 720,000 new jobs would be added to nonfarm payrolls. The actual report showed that only 235,000 new positions were added last month. Since the Federal Reserve has gone on record stating that maximum employment is their ultimate goal in their dual mandate which also includes keeping inflationary pressures around 2%. This should be the most important report when the Fed convenes next week to consider changes to their current monetary policy.

This week the Bureau of Labor Statistics released their current numbers on inflation, the CPI (Consumer Price Index). The report indicated an increase of 0.3% in August on a seasonally adjusted basis after rising 0.5% in July. This clearly illustrated that inflationary pressures have not abated significantly. The year-over-year inflationary rate did tick down from 5.4% to 5.3%. It must be noted that inflationary pressures above 5% are at their highest level since the recession of 2009.

The net result of all of the reports combined confirms that the U.S. economic outlook continues to contain an enormous amount of uncertainty. While the Delta variant of Covid 19 has begun to show declines in terms of daily cases reported in the United States. But there are still hotspots in the United States that are still rising at an alarming rate.

With a tepid August jobs report set against strong retail sales in August, Federal Reserve members have to face that economic growth is still coming in weaker than forecast but recovering nonetheless. This has put different Federal Reserve members divided as to when they will begin to taper their asset purchases. Chairman Powell did make a clear distinction between the timeline to initiate tapering and lift off of interest rate normalizations saying that the Federal Reserve has a different set of criteria for both of those components of their current extremely accommodative monetary policy.

According to MarketWatch, roughly half of the Federal Reserve’s 18 top officials support tapering “sooner than later.” However, “The other half of the Fed leadership have said they would like to see more data on the labor market before the threshold for tapering is met. They think it is still important to support demand in coming months as the economy regains its footing in the wake of the coronavirus.”

This puts Chairman Powell between a rock and a hard place to satisfy both the more hawkish and dovish top officials of the Federal Reserve. Even major analysts are divided on what they believe the Fed will announce next week regarding any guidance towards the onset of tapering. The only certainty that we know will emerge from next week’s FOMC meeting is an updated “dot plot,” which will include projected interest rates for 2024 for the first time.

Unmistakably this will be one of the most critical FOMC meetings this year in that it will give market participants a real glimpse further out in time than ever before.

By Gary Wagner

Contributing to kitco.com
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David

Price pressure on gold, silver, as charts turn more Bearish

Gold and silver prices are solidly lower in early U.S. trading Thursday. Gold prices hit a four-week low and silver a three-week low. The near-term chart postures for both metals have deteriorated this week, which is inviting the shorter-term futures traders to play the short side of the markets. October gold futures were last down $21.70 at $1,770.90. December Comex silver was last down $0.446 at $23.355 an ounce.

Global stock markets were mostly weaker in overnight trading. The U.S. stock indexes are pointed to modestly lower openings when the New York day session begins. Global shares saw some price pressure Thursday due in part to worries about an economic slowdown in China, the world’s second-largest economy. Reports coming out of China say giant property developer China Evergrande Group has serious debt problems that could be just the tip of the iceberg for China’s housing sector that plays a big role in China’s economic growth.

It’s a busy day for U.S. economic data, highlighted by the retail sales report for August, seen down 0.8% from July after a 1.1% drop seen in the July report. Retail sales the last few weeks have taken a hit due to the Covid variant that is still impacting much of the U.S.

The key outside markets today see the U.S. dollar index higher, which is also a negative for the metals markets. Nymex crude oil futures prices are near steady and trading around $72.50 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.307%.

Other U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, manufacturing and trade inventories and Treasury international capital data.

Technically, October gold futures bulls have lost their slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $1,836.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,785.00 and then at today’s high of $1,795.10. First support is seen at today’s low of $1,770.80 and then at $1,760.00. Wyckoff's Market Rating: 5.0.

The silver bears have the firm overall near-term technical advantage and gained more power today. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $24.50 an ounce. The next downside price objective for the bears is closing prices below solid support at the August low of $22.35. First resistance is seen at $24.00 and then at $24.345. Next support is seen at today’s low of $23.31 and then at $23.00. Wyckoff's Market Rating: 3.0.

By Jim Wyckoff

For Kitco News

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David

Gold fails to hold the key psychological level of $1,800

After yesterday's moderate upside move taking gold above $1,800, technical selling pressure resulted in gold breaking back below $1,800. Yesterday the Bureau of Labor Statistics released its inflationary report for August, indicating that the CPI (Consumer Price Index) increased by 0.3% last month. August’s rise in inflationary pressures came in under estimates by economists polled by the Wall Street Journal, who were expecting an increase of 0.4%. The Bureau of Labor Statistics report indicated that inflationary pressures are still prevalent and remain at an elevated level taking the CPI index to 5.3% over the last 12 months.

Today’s sell-off seems to have been the result of technical selling pressure. The fact that gold closed just under its 200-day moving average yesterday, which is the first level of technical resistance, and opened below that price point today was enough for short-term traders to take profit.

Reuters reported that David Meger, director of metals trading at High Ridge Futures, said, “There weren’t any particular headlines to prompt gold’s pullback and this was rather due to its “technical inability to trade up through the 200-day moving average on Tuesday.” Meger added that, “any good news is bad news for gold,” and if more positive economic data comes out, the Fed would be more willing to begin reducing asset purchases, and gold’s likely to move sideways heading into the FOMC meeting.”

Gold continues to be range bound and could continue to trade sideways until the conclusion of the Federal Reserve’s September FOMC meeting on the 22nd of the month. Market participants are waiting for more clarity in regards to the Federal Reserve’s timeline to begin tapering. Currently, it is believed that the Fed will not announce when tapering will begin until the November FOMC meeting. One unique component market participants will focus upon and glean insight from this month’s FOMC meeting is the release of a revised “dot plot,” which will include anticipated interest rates (Fed funds rates) up to the year 2024.

Given that we did see gold give back gains from yesterday’s move above $1,800, the risk to any major continuation of selling is limited. Analyst Ole Hansen of Saxo bank said, “Risk to the downside for gold is also limited since the slowdown in inflation thereby reduces the pace with which tapering can be carried out.”

The one thing that seems to be exceedingly clear is that traders and market participants are waiting for further information from the Federal Reserve when the FOMC meeting concludes exactly one week from today. Up until that point, we could see gold trade sideways and consolidate either just below or just above $1800 per ounce.

By Gary Wagner

Contributing to kitco.com

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Is it time to buy gold? WGC says September has high confidence level

The World Gold Council (WGC) rarely comments on when it is best to buy or sell gold, but its recent report highlighted September as one of the most opportune times to purchase the precious metal.

“September has been one of the strongest months historically for the price of gold, and this could present an opportunity for investors as we head into the fourth quarter of the year,” the WGC said in a report.

Gold has delivered positive returns during the month of September “with a confidence level” of nearly 90%, the WGC said, citing its analysis.

The two main drivers behind this momentum are strong physical demand and increased investment activity.

“[September’s price action ] is likely driven by a combination of two trends: a period of strong demand linked to the Indian wedding season and other festivals in October and early November, and higher global investment activity following typically quieter summer months. As such, investors have often used September as an opportune time to add gold to their portfolios,” the report said.

Specifically for this September, the WGC sees upside for gold, pointing to August’s lack of price action, aside from the flash crash at the beginning of the month.

“Real government bond yields via the US-10-year TIPS yield hit all-time lows in early August, which is normally a positive for gold as its opportunity cost improves. Despite the very strong correlation over recent years, we’ve seen the gold price lag this move at times, which appeared to be the case in August. This was likely a product of a stronger US dollar. We would not be surprised to see an uptick in the price of gold should real rates hold below -1%, particularly as month-end jobs data was weaker,” the report said.

Despite all the volatility, the precious metal wrapped up August down 0.6% on the month and down around 4% on the year.

“Global financial markets were relatively quiet during the month, which is common in August, with most stock markets drifting higher on lighter volumes,” the report said. “The slight fall in the gold price in August was primarily driven by momentum factors, led by ETF outflows and a reversal from the strong July gold return, as well as modestly higher rates. Countering their negative impact was follow-through from interest rate declines in July. Despite the August 9th flash crash, gold ended an otherwise uneventful month resiliently flat.”

One of the most popular questions on investors’ minds has been what caused the flash crash on August 9 when gold dropped 4% to below $1,700 an ounce in just 15 minutes.

The WGC looked into the matter, pointing to low liquidity and technical positioning as the main reasons behind the flash crash.

“This happened during a period where there is generally less liquidity in global markets across all assets. There were some technical components that could have created this quick sell-off. First, technicians highlighted the recent ‘death cross’ where the 50-day moving average fell below the 200-day moving average, which is considered bearish. Second, the quick sell-off likely initiated some stop-loss orders that were probably situated around the US$1,700 level, and this created a snowball effect causing additional selling,” the report noted.

Amidst all of this, institutional investors are eyeing gold this fall, especially with prominent voices such as John Paulson, president and portfolio manager at Paulson & Co, and Mark Mobius, founder of Mobius Capital Partners, highlighting gold as a store of value.

“The principle of gold as a store of value is one of our key messages for investing in gold; we have seen the purchasing power of fiat currencies decrease substantially over recent years, a trend that has continued from the last century,” the WGC said.

Inflation is the reason why gold is on the radar of big institutional players, according to the WGC, which said that higher price pressures are already hurting consumers.

“There are some clear less-talked about examples of inflation. ‘Shrinkflation,’ or the idea that you receive less of something for the same price (a nifty way around price increases) has become more common. So-called ‘hedonic adjustments,’ often in the context of electronics where the price of goods are adjusted down to reflect innovation – such as increased functionality or processing capacity – create a deflationary effect, despite the fact that the total amount spent by consumers may remain the same or potentially increase,” the report said. “While inflation may be transitory in the eyes of central banks, consumers – and investors – may feel differently. This could lead to increased allocations of real assets like real estate, TIPS, and commodities, like gold, which have performed well in higher inflationary environments.”

By Anna Golubova

For Kitco News

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

David

Is gold dead? Bitcoin price to hit levels we ‘cannot imagine’- Ronald-Peter Stoeferle

Is gold dead? Bitcoin price to hit levels we 'cannot imagine'- Ronald-Peter Stoeferle

Global financial markets have reached a "monetary tipping point", according to Ronald-Peter Stoeferle, managing partner of Incrementum AG.

After this tipping point, inflation will continue to climb up, real interest rates will remain in negative or near-zero percent territory, and monetary policy will become less impactful for the markets than fiscal policy; this will be an era of fiscal dominance.

Stoeferle told David Lin that "the sentiment [for gold] is already that negative that the price can go to new all-time highs within the next couple of months, so we are not so far away."

Severe pessimism in the gold industry is a good sign from a contrarian perspective, Stoeferle said.

On Bitcoin, he noted that the next phase of price appreciation has not even begun yet.

“I think if Bitcoin will be around in five to ten years, prices will go to regions that we cannot imagine at the moment. Because, if you really see it as a hedge against inflation, against those big monetary experiments going on, and if you compare it to the size of the real estate market to the bond market…I think there’s a lot of catch-up potential,” he said.

For Stoeferle’s gold price forecast, watch the video above. Follow David Lin on Twitter: @davidlin_TV.

By David Lin

For Kitco Newss

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David

Rally or selloff next week? Gold price is waiting for a catalyst and this could be it – analysts

Gold has once again failed to break above the $1,800 an ounce level, but one looming driver can take the precious metal out of its trading range, according to analysts.

Many experts in the space are warning investors of a possible sell-off in U.S. equities, and it just might be what gold needs this fall.

Goldman Sachs Group, Morgan Stanley, Citigroup Inc. and Bank of America Corp. are all getting nervous about the U.S. stock market, stating that the valuations are getting extreme.

Deutsche Bank AG joined the other banks late this week with a message that there is a risk of a market correction, citing stock valuations that have risen to around 21 times earnings.

Volatility in the equity space might be what gold needs right now, said Bloomberg Intelligence senior commodity strategist Mike McGlone. "A constricting gold-price cage and gravity pull around $1,800 an ounce is akin to patterns that previously emerged just prior to returning to a more enduring upward trajectory. Newcomer digital reserve asset Bitcoin may be hindering the old analog, but we see both ripe to resume advancing. Some wobble in equities may act as a catalyst," he said.

Even a bit of uneasiness in the U.S. equity market could be enough to get the precious metal going, McGlone added.

"Just some reversion in the steepest gold discount to the S&P 500 since 2005 may indicate a spark to break the metal out of its bull-market cage. The gold-to-S&P 500 ratio has dipped below the extreme from about three years ago that broke gold away from the gravity pull around $1,270 an ounce toward its record high of about $2,075 in 2020. About $1,800 is the lock-in price since July 2020," he said. "When equities eventually revert a bit, gold stands to be a primary beneficiary, as we see it."

In light of this potential market volatility and considering gold's current trading levels, it is unlikely for the precious metal to see more sell-offs, said BMO Capital Markets managing director of commodities research Colin Hamilton.

"This is still a very good gold price. Despite falling ~6.5% year to date, gold prices have steadied around $1,800/oz, amid China's slowing economic growth, ongoing Delta-related restrictions and, for now, the latest Jackson Hole speech and August's nonfarm payroll miss assuaging fears of an early Fed tapering," Hamilton said. "With negative real yields, high geopolitical tensions and potential for wider market volatility, we see the potential for a sharp correction in gold (a la 2013) as relatively low."

In the meantime, however, gold continues to suffer a series of disappointments, including this week's reversal from the $1,830 an ounce level, said MKS PAMP GROUP head of metals strategy Nicky Shiels.

"Gold has simply been a correlation trade to interest rates and FX trends; it's a casualty to the USD/rates' path of least resistance in both being higher into a Fed taper," noted Shiels. "Gold continues to be unable to capitalize on structural themes (threat of persistent/runaway inflation, risk of a Fed policy mistake, unstainable U.S. debt trajectory, Bigger Gov, Bidens (plummeting) approval rating and/or trust in U.S. gov, the need/role real assets play in portfolios etc)."

Many analysts remain neutral in the short term, pointing out that gold will remain range-bound unless it can rise above $1,830 an ounce or drop below $1,800 an ounce.

"Over the next week, gold is anchored around $1,800. The story is not in the one-week horizon but probably in the three-month horizon. In this period of time, growth expectations will decline, and inflation expectations will remain. And it will be a good environment for gold," said TD Securities commodity strategist Daniel Ghali.

There is a lid on the gold market right now, partly because of the Federal Reserve tapering expectations, said RJO Futures senior market strategist Frank Cholly.

"We are still range-bound. The market has not been able to move above $1,825-$1,830. Right now, the gold traders don't like the idea of Fed tapering sooner rather than later. At some point, the Fed will need to begin to normalize rates. But both the equity and the gold markets have become dependent on the Fed to be there. That is the floor under the market. When we start to pull back and taper, both markets are not going to like it at first," Cholly said.

Plus, every time the U.S. dollar index rises above 93, gold struggles, Cholly added. "If the market doesn't get below $1,780 or above $1,830, I am neutral," he said.

But once the market realizes that inflation is here to stay, gold will have another chance at $2,00 an ounce, Cholly stated. "I am in the camp that believes inflation is here for the long-term and that it will get to the point that it will run away before Fed can reign it in. And at some point, gold will realize that and start to move higher up. This is when we could see a secondary rally above $2,000," he said.

Data to watch

All eyes will be on the U.S. CPI numbers out on Tuesday and the U.S. retail figures scheduled to be released on Thursday.

Other key data sets will include Wednesday's NY Empire State manufacturing index along with industrial production and Thursday's jobless claims with the Philadelphia Fed manufacturing index.

By Anna Golubova

For Kitco News

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

David

The gold price is not going anywhere anytime soon

Stuck in a narrowing trend, gold prices are not expected to go anywhere soon as sentiment has turned decidedly neutral among Wall Street analysts with lackluster interest from retail investors, according to the latest results of the Kitco News Gold Survey.

Since mid-July, gold prices have tested resistance at $1,830 but have failed to hold the ground. The latest failed push higher and the drop below $1,800 ahead of the weekend have disappointed bullish investors and analysts.

"Gold just seems stuck in a $1,760-$1,840 trading range at the moment without much direction, and there isn't much in the way of news in the coming week that could potentially change that," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

This week 15 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 9, or 60%, called for gold prices to trade sideways. Meanwhile, bullish and bearish outlooks garnered three votes each or 20%.

Although retail investors are still bullish on gold, there is a distinct lack of interest in the marketplace. Participation in this week's survey fell to its lowest point since May 2019.

A total of 494 votes were cast in online polls. Of these, 274 respondents, or 55%, looked for gold to rise next week. Another 127, or 26%, said lower, while 93 voters, or 35%, were neutral.

Ole Hansen, head of commodity strategy at Saxo Bank, said that gold would continue to struggle as the U.S. dollar remains relatively strong. He added that the U.S. dollar remains the most substantial headwind against gold, with real bond yields still in deeply negative territory.

Although Hansen doesn't see gold prices going higher anytime soon, he added that in the current environment, he doesn't see gold prices falling much below $1,800 an ounce.

"The gold market has seen strong physical demand, but if prices are going to go higher, then we need to see paper investors and speculators come back to the market and they won't until they see price back above $1,830 an ounce with some momentum behind the move," he said.

David Madden, market analyst at Equiti Capital, said that he also expects gold to remain range-bound. He added that growing market uncertainty with equity markets at record valuations will keep a safe-haven bid in gold.

Marc Chandler, managing director at Bannockburn Global Forex, said that he is also bearish on gold as he sees more momentum for the U.S. dollar in the near term. He added that rising inflation is pushing interest rates higher and that is supporting the U.S. dollar.

However, some analysts are not ready to give up on gold just yet. Adam Button, chief currency strategist at Forexlive.com, said he is bullish on the precious metal as inflation continues to push higher.

"This week's price action was concerning, but I see it as a head fake," he said. "The main concerns are the duration of global supply bottlenecks and China's 'common prosperity' push."

Nicholas Frappell, global general manager at ABC Bullion, said that he is also bullish on gold as he sees supportive technical factors.

"The Daily Ichimoku Cloud top has been part of the technical resistance around US$1830, but the cloud top drops to US$1803-04 next week, allowing more scope for gold to trade above that level," he said.

By Neils Christensen

For Kitco News

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

David

Gold has modest recovery, closing at $1800 in New York

Gold regained a price above a key phycological level when it closed at $1800, up +0.4% in New York. As of 5:10 PM EDT gold futures basis, the most active December 2021 Comex contract was trading up $2.80 (+0.16%) and fixed at $1796.30. The precious metal traded to a high today of $1803.40 and a low of $1785.10. This is the first instance in the last three trading days in which gold has closed higher when compared to the previous day and traded to a higher low but a lower high. Silver futures basis the most active December contract traded fractionally higher, gaining approximately $0.03 (+0.12%) and is currently fixed at $24.085.

The modest recovery in gold and silver was largely a result of dollar weakness. The U.S. dollar index is currently fixed at 92.49 after factoring in today's decline of -0.17%, or 16 points. However, gold prices declined fractionally for those using other currencies, specifically the Euro, which had fractional gains after the European Central Bank announced that it would slow down its current pace of asset accumulation (Euro bonds).

According to Reuters, "Gold firmed on Thursday, lifted by a slight retreat in the dollar, but renewed bets that the U.S. Federal Reserve may start early tapering of economic support capped gains, with the European Central Bank also slowing its bond-buying."

Last Friday's jobs report for the month of August came in exceedingly below expectations (economists predicted that over 700,000 jobs would be added to August payrolls), CNN reported that only 235,000 jobs were added back to the economy last month. However, the U.S. weekly jobless claims came in near an 18-month low. This could persuade the Federal Reserve to announce tapering their asset purchases before the end of the year.

Ed Moya, a senior market analyst at foreign exchange brokerage Oanda, told Reuters that, "U.S. weekly jobless claims data came in at near 18-month lows, which cements the belief that a December (Fed) taper announcement was possible. … So, gold prices are going to consolidate around these levels." He added, "The increased likelihood that the ECB may start reducing stimulus at some point next year drove gold's initial decline back below $1,800 per ounce."

When the Federal Reserve meets on September 21 for the next FOMC (Federal Open Market Committee) meeting, they most certainly will take into account the weak jobs report from August and the current state of the Delta variant as it pertains to slowing down the economic recovery in the United States.

According to CNN, "Covid-19 cases have been on the rise in much of the U.S., and the rise in hospitalizations continues in hotspots throughout the country. Children now represent more than a quarter — or 26.8% — of weekly Covid-19 cases nationwide." Today it was reported that in the United States, there were 104,887 new confirmed cases, taking the daily average to 151,816. This recent surge in new cases prompted President Biden to address the nation, outlining a six-step plan to get the pandemic under control.

Because the pandemic is still impacting our economic recovery, it will be a major subject discussed during the next FOMC meeting.

By Gary Wagner

Contributing to kitco.com

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

David

Gold and silver are marginally higher heading into the Europen open

Gold and silver are heading into the European open marginally higher this morning. On Tuesday the yellow metal suffered heavily and dropped back through $1800/oz while silver also fell 1.50%. Looking at the rest of the commodities complex, copper is 0.21% higher and spot WTI is trading 0.70% in the black.

Risk sentiment overnight has been very mixed the Nikkei 225 closed 0.91% higher but the ASX (-0.36%) and Shanghai Composite (-0.01%) traded poorly. Futures in Europe are also mixed with the Dax looking positive while the FTSE is down.

In FX markets, the dollar index is 0.10% higher building on yesterday's gains and GBP/USD was the biggest mover falling 0.15%. In the crypto space, there has been a pretty big sell-off which took BTC/USD back through $50k to trade at $46,232.

Looking at the main stories from overnight, Fed's Bullard looks past NFP miss, reaffirms taper call. He said he is "looking for job gains to average out around 500k per month this year".

Crypto exchange Coinbase says US regulators to pursue legal action against it.

Japan's ruling party contender Kisida is planning a big monetary policy shift.

Magnitude 7.4 earthquake southern Mexico.

Heading into the EU session it is important to note that some gold miners lead the declines after the drop in the gold price.

The NHC say there is a 50% chance of a hurricane in Mexico within the next 48 hours.

Fed's Kaplan was reportedly a buyer and seller of stocks in 2020. According to a financial disclosure he made multiple trades valued at over $1mln each.

U.S. Democrat Senator Manchin has said he will only be backing around $1trl of Joe Biden's spending plans, according to press reports.

Looking ahead to the rest of the session highlights include EIA energy report, Fed Beige Book, DoE's, BoC rate decision. We could also hear from BoE's Ramsden, Broadbent, Tenreyro, Fed's Williams, and Kaplan.

By Rajan Dhall

For Kitco News

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