Bearish technicals limit buying interest in gold, silver

Gold and silver prices are modestly down in midday U.S. trading Wednesday, with gold notching a 3.5-month low overnight. A lack of markets-moving fundamental news at mid-week has traders focused more on the analytical charts for the precious metals, which are leaning bearish. August gold was last down $3.50 at $1,920.30 and July silver was down $0.095 at $22.865.

Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Japan Governor Kazuo Ueda took part in a panel discussion at an ECB forum on central banking that took place in Portugal today. The central bankers made no surprising comments that were significant markets-movers.

Asian and European stock markets were mixed overnight. U.S. stock indexes are mixed at midday. Risk aversion has eased at mid-week following the weekend insurrection in Russia that was quickly quelled. Quieter summertime trading ahead of the major U.S. Independence Day holiday next Tuesday seems to the feature at present.

  State Street Global Advisors sees healthy demand for gold and investors are getting younger

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are solidly up and trading around $69.50 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.731%.

Technically, August gold futures prices hit a 3.5-month low today. Bears have the overall near-term technical advantage. Prices are in a seven-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 $1,930.00 and then at this week’s high of $1,943.40. First support is seen at today’s low of 1,911.40 and then at $1,900.00. Wyckoff's Market Rating: 4.0.

July silver futures bears have the overall near-term technical advantage. A choppy, seven-week-old price downtrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at this week’s high of $23.15 and then at $23.50. Next support is seen at this week’s low of $22.435 and then at the June low of $22.14. Wyckoff's Market Rating: 4.0.

July N.Y. copper closed down 470 points at 372.35 cents today. Prices closed nearer the session low today and hit a three-week low. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.70 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 354.50 cents. First resistance is seen at today’s high of 278.10 cents and then at this week’s high of 383.60 cents. First support is seen at today’s low of 369.60 cents and then at 365.00 cents. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

U.S. durable goods beat expectations in May, gold price erases early-morning gains

The gold market erased its early-morning gains after the newly released data showed that orders for long-lasting U.S. factory goods were up 1.7% in May versus the expected decrease of 1%.

The monthly increase in durable goods orders was $4.9 billion and was largely driven by transportation equipment that was up for the third consecutive month, the U.S. Census Bureau said in the report.

The core durable goods section, which excludes the volatile transportation sector, was up 0.6% in May versus the expected drop of 0.1%. Excluding defense, new orders rose 3%.

The government’s durables report covers items with an expected life of at least three years, such as kitchen appliances, computers, furniture, autos, and airplanes. Economists carefully watch the data for signs of where the economy might be heading.

Despite the stronger-than-expected report, analysts still see weakness in investment to come.

“The wider evidence still suggests that business equipment investment has further to fall,” said Capital Economics deputy chief U.S. economist Andrew Hunter. “While the drag from higher rates on residential investment appears to be fading, we still think the hit to business investment has further to run.”

Following the release, gold declined, with upbeat economic data confirming the Federal Reserve's potential 25-basis-point rate increase in July. August Comex gold futures last traded at $1,933.70, down 0.01% on the day.

By

Anna Golubova

For Kitco News

Time to Buy Gold and Silver

David

Gold will rise with dollar as 'violent' global debt crisis unfolds, de-dollarization will take at least a decade – Brent Johnson

The dollar will gain strength relative to other currencies, along with gold, as a "violent" global debt crisis unfolds. That is according to Brent Johnson, Founder and CEO of Santiago Capital.

Johnson, who created the Dollar Milkshake Theory, said that "there is no alternative to the dollar" when it comes to international trade and debt agreements.

"I think that in that scenario [a global sovereign debt crisis], despite all the protestations to the contrary… the dollar will be seen as the cleanest dirty shirt," he told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "Investors and entities around the world will seek out dollars as a safe haven in that environment."

Johnson said that a global sovereign debt crisis is highly likely given "the growth of debt in the world," and the aftermath of a credit crunch.

He claimed that the combination of low global economic growth, high interest rates, significant debt burdens, and high inflation could trigger the crisis.

"Once a credit contraction takes place, then it can feed on itself, and you can get into a situation like we had in 2008," he suggested.

To find out when Johnson forecasts the global sovereign debt crisis taking place, watch the video above.

De-dollarization

The dollar's share in global reserves has fallen from 73 percent in 2001 to 58 percent today, according to the Royal Bank of Canada.

The trend toward de-dollarization is compounded by the BRICS alliance (Brazil, Russia, India, China, and South Africa), which is meeting in South Africa this August to unveil plans for a reserve asset to rival the dollar.

The Western response to Russia's invasion of Ukraine in 2022, which included banning Russia from the SWIFT international payments system, caused chills around the world. Many feared the "weaponization of the dollar," following these sanctions.

Although he agreed that there is a trend toward de-dollarization, Johnson forecast that it would take "at least" ten years for it to play out completely.

"I am not of the belief that the dollar gets inflated away and the dollar index falls versus foreign fiat currencies, and we go into a hyperinflation and the rest of the currencies stay strong," said Johnson.

He added that although foreign political leaders would seek to de-dollarize and negotiate bilateral trade agreements, there would be "pushback" from business leaders.

"Most of them [businessmen] want to be paid in dollars," he observed. "The dollar's purchasing power is better than the Brazilian real's purchasing power, or the Kenyan shilling's purchasing power, or the Turkish lira's."

Gold

As the dollar rises against other currencies, so will gold, according to Johnson.

"I think the dollar is going to get so strong that it wrecks the current [global monetary] system," Johnson predicted. "As the dollar rises, and the system comes under threat, and we have all this chaos and a new monetary system is proposed, gold will be trading at $5,000 or $8,000… Gold will go much higher as this chaos ensues."

To find out whether Johnson is adding more gold to his portfolio, watch the video above.

  Gold will reach $3k in market 'melt up' with S&P 500 up at least 36% by Q4 2023 – David Hunter

By

Cornelius Christian

For Kitco News

Time to Buy Gold and Silver

David

Will jobs and inflation data confirm the Fed's stance on two more rate hikes? This is what gold price is watching

Gold is seeing its worst week since February as the Federal Reserve's outlook of two more rate hikes weighs on the precious metal. But some analysts don't see the macro picture supporting that hawkish view.

The gold market is down around $40 on the week, with August Comex gold futures last trading at $1,931.30 an ounce.

Federal Reserve Chair Jerome Powell remained fully committed to two more rate hikes during his testimonies before the U.S. Congress this week. And the gold space started to price out potential rate cuts at the end of this year.

Other central banks also joined Powell's hawkish stance. The Bank of England surprised by raising its main interest rate to 5% from 4.5% Thursday. Norway's central bank hiked by 50 basis points. And the Swiss National Bank raised rates to 1.75% from 1.5%.

Analysts pointed out that this renewed global hawkish stance could make the U.S. dollar a more attractive safe haven asset than gold.

"Gold prices have come under pressure following the June central bank decisions," said Standard Chartered precious metals analyst Suki Cooper. "The market is now expecting additional hikes, and macro headwinds have arisen as the USD has also strengthened again."

Gold's technical positioning is not looking good

On top of the macro picture, gold's technical position is not looking great after prices fell below their 100-day moving average of around $1,940 an ounce.

"Gold falling below its 100-day moving average is a signal that we still have lower to go," Gainesville Coins precious metals expert Everett Millman told Kitco News. "Aside from macro drivers pushing momentum against gold, the technicals are deteriorating."

The new resistance level is $1,940 an ounce, and support is at $1,900 and then $1,880, Millman added.

A lot of long positions also got out as rate cuts now seem off the table, said Phoenix Futures and Options LLC president Kevin Grady. "Gold is waiting to see the language from the Fed that they will back off. That is when bulls will come in," Grady told Kitco News.

ETF outflows have accelerated in June, and tactical positioning scaled back, Cooper pointed out.

"While we continue to believe there is an appetite for gold, price action is typically less supportive during a seasonally slow period for consumption," she said. "Net fund length was at its lowest – with the deepest net short positioning since 2018 – in September 2022; positioning is still relatively elevated compared to nine months ago, but overall investor interest is at its lowest since 2018."

This highlights a shift in sentiment, with summer known to be a seasonally slower period for demand, according to analysts.

Some view gold as close to a bottom at current levels. "The $1,900 to the downside is an important level to watch," TD Securities senior commodity strategist Daniel Ghali told Kitco News.

 

Can the Fed's hawkish view last?

In the next few weeks, the gold market will carefully monitor whether the macro data, especially labor and inflation reports, support the Fed's view of two more rate hikes.

"We think the data won't corroborate Fed's expectations to hike rates further," Ghali said Friday. "We see a good chance that the Fed concluded the hiking cycle last May."

The data to pay close attention to include jobless claims and employment reports, he added. "We expect a recession in the fourth quarter. And gold can rally towards $2,100 by early next year," Ghali noted.

Once the data starts to deteriorate, the market will price in a higher likelihood of cuts over the next 12 months. And since gold is a forward-looking financial asset, new investor flows will come in, supporting higher prices, the analyst explained.

It is reasonable to expect a pause until further notice, with options of hiking or cutting both on the table depending on the economic data, Millman added. Two more rate hikes are not "etched in stone like Powell has us believe," he said.

Also, it is historically uncommon for the Fed to raise rates after a pause. "After a pause, there has always been a cut. Even when Paul Volcker was the head of the Fed," Millman said.

 

Next week's data

Tuesday: U.S. durable goods orders, CB consumer confidence, new home sales,

Thursday: U.S. GDP Q1, jobless claims, pending home sales

Friday: U.S. PCE price index

By

Anna Golubova

For Kitco News

Time to Buy Gold and Silver

David

If you think gold had a brutal selloff this week, just look at a silver chart

Gold prices this week had such a strong decline that they traded to a low not witnessed since the first week of March, declining by approximately $39 per ounce. Gold futures basis most active August contract opened at approximately $1969 on Tuesday and as of 5:25 PM EDT is fixed at $1930.30. This week’s price decline resulted in gold losing 1.96%.

The key factors that exerted extreme bearish pressure on both gold and silver were hawkish statements by the Federal Reserve, rate hikes by multiple central banks in Europe, and dollar strength.pic

Chairman Powell testified to the House and Senate’s Banking Committee this week and underscored the need for more rate hikes this year. Jerome Powell said that the majority of Federal Reserve officials believed that it was appropriate to continue to raise rates to address inflation.

On Wednesday, speaking before Congress he said that it was a “pretty good guess” that the central bank would hike rates twice more this year. Powell underscored the rationale for more rate hikes saying, “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go”.

This week the Bank of England raised its benchmark rate to 5%, the 13th straight increase by the BOE. Officials at the BOE warned that “further hikes might be needed”. The Bank of England’s Monetary Policy Committee (MPC) in a vote of seven to two voted in favor of a rate hike to reduce their country's Inflation. The BOE was not alone in its action with central banks in Norway, Switzerland, and Turkey also enacting rate hikes to slow their respective countries' inflationary pressures.

These factors also sparked a deep decline in silver resulting in a larger percentage decline than gold. Silver futures basis the most active July contract opened at approximately $24.25 on Tuesday and as of 5:25 PM is fixed at $22.45. The weekly price decline of $1.85 resulted in a percentage decrease of 7.42%. Silver’s selloff on a percentage basis was over 3 times greater than gold’s decline.

Gary S. Wagner

Time to Buy Gold and Silver

David

Gold breaks below recent lows as central banks worldwide raise rates

The Federal Reserve’s drumbeat signaling more rate hikes is loud enough to be heard on the other side of the world. In his second day of testimony to the House and Senate Chairman Powell is reiterating his message that a “strong majority” of Federal Reserve officials are strongly committed to raising rates twice for a total of 50 basis points by the end of the year. This would take the Fed’s benchmark Fed funds rate to a range of 5 ½% to 5 ¾%.

Today’s testimony to the Senate Banking Committee marks the third time Chairman Powell has underscored the Federal Reserve’s plan to implement two more rate hikes before the end of the year. He delivered this message during his press conference last week, to the House yesterday, and to the Senate today. When asked for a timeline when the Fed will raise rates again Powell responded by saying, at a “careful pace”.

He did however hedge this statement by adding that any further rate hike decisions will depend on how the economic data develops.

The resolute hawkish stance of the Federal Reserve has been heard overseas with multiple central banks following suit and raising their benchmark interest rates. The Bank of England raise its benchmark rate to 5%, the 13th straight increase by the BOE. Officials at the BOE warned that “further hikes might be needed”.

The Bank of England’s Monetary Policy Committee (MPC) in a vote of seven to two voted in favor of a rate hike. Inflation is running hotter in many parts of Europe than in the United States. A report on Wednesday revealed that the CPI in the U.K. came in above expectations. Economists were expecting the headline inflation (CPI) to ease to 8.4%. Wednesday's report revealed that inflation had come in hotter than expected at 8.7%.

The BOE was not alone in its action with central banks in Norway, Switzerland, and Turkey also enacted rate hikes to slow their respective countries' inflationary pressures.

The combination of Chairman Powell’s testimony and multiple central banks in Europe raising rates resulted in a strong decline in gold today. Gold futures traded to a low of $1922. As of 5:11 PM EDT, the most active August contract of gold futures is currently fixed at $1923.90 which is a decline of 1.08% or $21.

The strong decline of gold prices from its high of $2083 in May to current pricing can be directly tied to strong rate hikes in central banks worldwide with the Federal Reserve's strong restrictive monetary policy leading the way. That being said there is mild technical support for gold at $1906 and strong technical support at $1850 per ounce.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Powell's testimony helps take gold futures to the lowest value since March 17th

Chairman Powell testified before the House Financial Services Committee today. This is part of his semiannual report which will conclude tomorrow when he appears before the Senate Banking Committee. His opening statement was close to a word-for-word repeat of his opening statement at last week’s press conference. Most importantly, the chairman did little to convey any new information regarding upcoming rate hikes and inflation that was not said last week.

The key takeaway from last week’s press conference and today’s testimony was twofold. First, he and other Fed officials agree that there should be further interest rate hikes. Secondly, he expects rates to remain elevated throughout the remainder of this year.

Speaking before Congress he said that it was a “pretty good guess” that the central bank would hike rates twice more this year. Powell underscored the rationale for more rate hikes saying, “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go”.

Although the probability of a rate hike at the July FOMC meeting has declined slightly the CME’s FedWatch tool sees a 71.9% probability of ¼% rate hike at next month’s meeting.

A weaker U.S. dollar was not enough to support any increase in gold pricing today, rather gold futures traded to the lowest value since March 17. Gold futures traded to a low today of $1929.30. As of 5:37 PM EDT, the most active August contract is currently fixed at $1943.50 after factoring in a decline of $4.20 or 0.22%. The dollar lost 0.42% in value today taking the index to 101.695.

A similar decline occurred in the pricing of spot gold. According to the Kitco gold Index (KGX), dollar weakness added $8.10 of value and concurrently selling pressure resulted in a decline of $12. Spot gold is currently fixed at $1932.60 after factoring in today’s decline of $3.90.

Silver declined by 2.3% or $0.53 which took the most active July contract to $22.70. Just as silver has had a larger percentage gain when both gold and silver traded to higher pricing it has had a steeper percentage decline during price corrections.

Gary S. Wagner

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold, silver sink as USDX rallies, crude dips; Powell on deck

Gold and silver prices are solidly lower in midday U.S. trading Tuesday, feeling the pressure of a higher U.S. dollar index and lower crude oil prices on this day. August gold was last down $23.40 at $1,947.90 and July silver was down $0.891 at $23.235.

The marketplace awaits Fed Chair Jerome Powell’s latest thoughts. He will provide his semi-annual monetary policy report to Congress on Wednesday and Thursday. Powell is widely expected to repeat comments from his post-Fed meeting press conference, which had a hint of caution but still opened the door to higher rates down the road. The marketplace will be closely watching the testimony for any fresh clues on the timing of the rate increases. Should Powell strike a hawkish note, this could boost the U.S. dollar and U.S. Treasury yields. But if he is more downbeat and fails to provide fresh clues, this may weaken the greenback and lower yields.

Part of the U.S. dollar’s strength today can be attributed to a much-stronger-than-expected U.S. housing market report showing May housing starts up 21.7% and building permits up 5.2%.

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The S&P 500 and Nasdaq stock indexes are not far below last week’s 10-month highs.

In overnight news, China again slightly eased its monetary policy by lowering two key lending rates by 10 basis points. The rate reductions were deemed by China watchers as less than expected.

  Gold price is stuck in neutral, but that is its strength now

The key outside markets today see the U.S. dollar index solidly higher on a corrective bounce from recent selling pressure. Nymex crude oil prices are lower and trading around $70.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.711%.

Technically, the gold futures bulls and bears are on a level overall near-term technical playing field. However, the bears have re-established a price downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures 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 the overnight high of $1,971.80 and then at $1,987.80. First support is seen at the June low of $1,936.10 and then at $1,925.00. Wyckoff's Market Rating: 5.0

The silver bulls have lost their overall near-term technical advantage amid sideways and choppy trading. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at the June high of $24.62. The next downside price objective for the bears is closing prices below solid support at the May low of $22.785. First resistance is seen at $23.50 and then at $24.00. Next support is seen at $23.00 and then at the May low of $22.785. Wyckoff's Market Rating: 5.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold price is stuck in neutral, but that is its strength now

Although gold is struggling to attract bullish momentum, analysts note that its strength now relies on how much support is in the marketplace, even as speculative interest starts to drop.

In its latest trade data, Commodity Futures Trading Commission noted that speculative interest in the gold market dropped to its lowest level in three months as investors ditched their bullish bets and increased their bearish positioning.

The CFTC's disaggregated Commitments of Traders report for the week ending June 13 showed money managers dropped their speculative gross long positions in Comex gold futures by 10,473 contracts to 110,512. At the same time, short positions rose by 8,312 contracts to 35,869.

The gold market is now net long by 74,643 contracts, dropping to its lowest point since March 14. At the same time, the precious metal saw its biggest drop in gross bullish positioning since early February. During the survey period, gold prices traded in a tight range, with support around $1,950 and resistance around $1,980 an ounce

The decline in speculative positioning came after weeks of a relatively stable trading environment. According to some analysts, the shift in the gold market was not surprising as investors and hedge funds squared their positioning ahead of the Federal Reserve's monetary policy decision.

Last week the Federal Reserve left the interest rate unchanged but maintained its hawkish bias and signaled that it sees potentially two more rate hikes this year. The hawkish pause caused gold prices to drop to a three-month low, testing support at $1,930.

However, the gold market did not stay down for very long, as it was back in its previous $30 trading range before the end of the week. Analysts have noted that the price action shows there is still plenty of interest in gold; however, investors are being more tactical as they build a position.

"We have established that there is still a strong bid in the gold market," said Ole Hansen, head of commodity strategy at Saxo Bank, in a recent interview with Kitco News. "But we just don't have a trigger for a bigger rally to $2,000. I think we need to get back above $1,985ish before some bullish conviction returns to gold."

Commodity analysts at TD Securities said that gold remains supported as the market is starting to doubt the Federal Reserve's optimistic outlook on rate hikes. The analysts said that it's more likely the central bank's next move will be to cut rates.

"While gold initially traded lower, the market is looking past the Fed messaging and the yellow metal was little changed after the rate decision. But since the spread of members' dots is so wide, ranging from 3.625% – 5.875% for next year, the median estimate is not all that relevant as far as we are concerned and future rate decisions will very much be driven by inflation and economic data," the analysts said. "We suspect that data and inflation will weaken in the not-too-distant future, with the Fed likely lowering rates before hitting its inflation target. As such, we expect gold to do quite well in the months ahead.

In a comment on Twitter, Fred Hickey, creator of the High-Tech Strategist investment newsletter, noted that gold's net positioning has dropped 20% from the previous week; however, gold prices were virtually unchanged.

He added that the selling pressure comes at the start of gold's seasonal weak period, which he noted remains the perfect buying opportunity.

"Bears/computers tried to smash gold following Wed. FOMC, & extremely "hawkish" commentary & build-in of 2 more rate hikes, but then gold put in an impressive reversal to upside (even surprised me). Now mid-June – start of seasonally best time to buy gold (mid-June to early-July).

While investors are reluctant to take a bullish position in gold, hedge funds are starting to test the waters in the silver market for the second consecutive week.

The disaggregated report showed that money-managed speculative gross long positions in Comex silver futures rose by 1,442 contracts to 38,968. At the same time, short positions fell by 1,560 contracts to 25,971.

  The green hydrogen economy is real, but it might not define platinum's role in the global green energy transition

Silver's net length now stands at 12,997 contracts, up 30% from the previous week. During the survey period, silver prices continued to trade on either side of $24 an ounce.

According to some analysts, silver is outperforming gold in the near term as optimism picks up regarding the global economy. Last week the Federal Reserve increased its forecast for 2023 Gross Domestic Product; it now sees the economy growing 1% this year, up from the previous forecast of 0.4%.

Optimism over the global economy can be seen in base metals as copper sees a surge in short covering, pushing to a one-month high.

Copper's disaggregated report showed money-managed speculative gross long positions in Comex high-grade copper futures rose by 5,653 contracts to 48,023. At the same time, short positions fell by 12,224 contracts to 43,023.

After a month stuck in a net short position, the global copper market is now back in bullish territory with a speculative net long of 5,600 contracts.

During the survey period, copper prices pushed back above $3.80 per pound.

Although copper has seen a significant bounce off last month's lows, analysts at TD Securities said that the rally could be running out of momentum.

"We see risks that the rally in the red metal may now be running on fumes. After all, we see few risks of subsequent CTA buying activity until prices break the $8900/t mark, whereas discretionary traders are running out of dry-powder for short-covering," the analysts said. "Chinese officials appear to have little appetite for a large-scale stimulus package, suggesting that participants could be in for an unpleasant surprise. In turn, without a game-changing stimulus package announcement, the set-up for a consolidation in copper markets is firming."

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David