Gold exhibits extreme gains as traders digest the complex events of March

Gold as a haven asset has been the recipient of the financial uncertainty that has unfolded this month. Gold futures hit a low of $1814 on March 8 and traded to its highest yearly value on Monday when April futures traded to an intraday high of $2015. Although gold pricing wasn't able to sustain attempts to close above $2000 it remains solidly within reach.

As of 5:22 PM EST, the most active April contract is fixed at $1981 after factoring in a decline today of $14.90 or 0.75%. Gold traded to an intraday high of $2006.50 and a low of $1977.70. The demand for gold-based investments has magnified intensely resulting in a $200 range from the lows of March 8 to the highs witnessed this week.

Even with one week remaining in March 2023, this month has been pivotal in terms of the major events that have unfolded. These events will most certainly shape the direction and strength of the financial markets throughout this year.

Not since 2008 have we seen a global banking crisis of this magnitude. In the space of 10 short days, we saw the collapse of multiple United States banks including Silicon Valley Bank, Signature Bank of New York, and Silverton. In addition, Chairman Powell mentioned up to six banks that could require assistance to remain solvent at the FOMC press conference this week.

America's top banks ponied up a $30 billion rescue deal over a 10-day period in conjunction with the steps by the US treasury, the FDIC, and the US Federal Reserve to attempt to cauterize the economic calamity in the banking system in hopes that these recent failures will not lead to a contagion of more banks. However, we don't know if the steps taken by government entities and private sector banks will be enough to contain the damage.

Concurrently, the world watched as Switzerland's second-largest bank, Credit Suisse collapsed and was acquired by UBS. The acquisition of Credit Suisse by UBS allowed the collapsed bank to mirror the more flexible hybrid work model of USB which embraces the theme of adapting and innovating to remain current to meet the diversified needs of its clients and employees.

This week the Federal Reserve concluded its March FOMC meeting and as expected raised its terminal rate by ¼%. What was unexpected was a defined timeline before the Federal Reserve concluded the aggressive rate hikes. While Chairman Powell stated that they most likely will raise rates one more time by ¼% in May, and the rate implemented by the Fed will likely be held with no rate cuts this year. The chairman emphatically stated that "rate cuts are not in our base case" during the Q&A section of his press conference.

Collectively the global bank failures and the possibility of contagion and a pronounced change in the monetary policy of the Federal Reserve in which we are closer to the end of rate hikes have been the defining forces that moved gold prices roughly $200 higher this month.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold, silver rally amid less-hawkish Fed, weaker USDX

Gold and silver prices solidly higher in midday U.S. trading Thursday, boosted in the wake of the Federal Reserve raising its main interest rate by a quarter-point, but also suggesting rates will not continue to rise. A depreciating U.S. dollar on the foreign exchange market is also working in favor of the metals market bulls late this week. April gold was last up $47.70 at $1,996.90 and May silver was up $0.509 at $23.30.

While the Federal Reserve’s FOMC meeting produced a mostly expected quarter-point rate hike, Fed Chair Powell at his press conference leaned a bit more dovish than he had been in recent months. That boosted the precious metals and briefly rallied the U.S. stock indexes. However, what rattled the U.S. stock market late in the session Wednesday was comments from U.S. Treasury Secretary Yellen at a Senate hearing that the federal government has no plans to protect all bank deposits that are not FDIC-insured.

Global stock markets were mixed overnight. U.S. stock indexes are sharply higher at midday.

  Consumers cash in on unwanted gold as its price soars amid a spreading bank crisis

The key outside markets today see the U.S. dollar index weaker and at a seven-week low. Nymex crude oil futures prices are near steady and trading around $71.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.45%.

Technically, April gold futures bulls have the solid overall near-term technical advantage. Prices are in a fledgling uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $2,014.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,922.30. First resistance is seen at $2,000.00 and then at $2,014.90. First support is seen at today’s low of $1,967.30 and then at $1,950.00. Wyckoff's Market Rating: 8.0

May silver futures prices hit a seven-week high today. The silver bulls have the firm overall near-term technical advantage. Prices are in a steep, fledgling uptrend 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 $22.00. First resistance is seen at $23.50 and then at $23.75. Next support is seen at $23.00 and then at $22.50. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 795 points at 412.35 cents today. Prices closed near the session high and hit a three-week high today. The copper bulls have gained the overall near-term technical advantage. A two-month-old downtrend on the daily bar chart has been negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 435.90 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 382.20 cents. First resistance is seen at 415.00 cents and then at 420.00 cents. First support is seen at 405.00 cents and then at 400.00 cents. Wyckoff's Market Rating: 6.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold futures surge $32 higher after the Fed signals a pause in hikes is imminent

The rally in gold spot and futures returns after a small two-day correction. On Monday of this week, gold hit a new high value at $2015 per ounce. It was approximately one year ago to the day that gold futures traded above $2000 per ounce. Gold traded to a high of $2077 in March 2022. What followed was a multi-month correction that began a conclusion in September through November of last year. On November 3 a triple bottom was identified, the multi-month correction concluded, and a multi-month rally began.

As of 6 o’clock EST p.m. gold futures basis, the most active April contract has just opened up overseas in Australia. It is currently fixed at $1972.10 which is an increase of $22.50 based on the closing price in New York.

Market participants United States are now followed by overseas traders digesting what the Federal Reserve said and did after today’s FOMC meeting. As expected, they did raise their fed funds rate by ¼%. However, for the first time since they began their rate hikes they announced a pivot. That pivot is not rate cuts but rather that rate hikes will be paused with possibly one more rate hike of ¼% in May. They also confirmed that they would continue to keep this terminal rate elevated throughout 2023, a position they have maintained for quite some time.

While many investors had hoped to hear something about a rate cut the Federal Reserve made it clear that that is not something on the table right now and we can expect to see elevated interest rates throughout the remainder of the year. The pivot was that the Federal Reserve announced that they would not continue aggressive rate hikes and that a pause of rate hikes is imminent and soon.

It was this news that took gold prices higher and move the dollar lower. Currently, the dollar is down by 0.66% with the dollar index fixed at 102.195.

However, this FOMC meeting had a quite different tone than expected in that they announced a pause for the first since it began an aggressive period of rate hikes in March 2022 taking the Fed funds rate from near to its current rate which is 4 ¾% to 5.00%.

According to the CME’s FedWatch tool, there is a 38.8% probability that they will pause the rate hikes in May and a 61.2% probability that they will enact their last rate hike in this cycle of ¼% which would take their terminal rate to 5.00% to 5.1/4%.

Today’s announcement by Chairman Powell that a pause in rate hikes is imminent was solid news for the precious metals and disruptive for US equities and the dollar which traded lower.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold prices decline after reaching $2000 yesterday as banking fears ease

Yesterday gold futures surged to the highest value of 2023, however after trading to a high of $2014 gold basis is most active April 2023 contract closed well below the intraday high. The high achieved yesterday was not only unsustainable on Monday but led to a deep price decline today. Gold futures are currently trading off by 1.98% or $39.20 taking the most active contract to $1943.60. The decline of $39 today can be attributed to market sentiment shifting regarding the banking crisis as fears diminished amongst traders, gold prices also eased ahead of Wednesday's rate hike decision by the Federal Reserve.

The Fed began its today FOMC meeting today which will conclude tomorrow. According to the CME's FedWatch tool, there is an 87.1% probability that the Federal Reserve will raise rates by 25-bps or ¼%, with a 12.9% probability that the Federal Reserve will pause and announce that they are not raising rates higher this month.

On Friday gold futures closed at $1972 in New York trading, however during the remainder of Globex trading which ends at 6:00 PM EST on Friday gold traded above $1990. This was a net gain of approximately $70 on the day. This was followed by yesterday's new record yearly high at $2014. However, the Japanese candlestick that formed yesterday contained a very small real body (the price between the open and closing price), with exaggerated upper and lower wicks (the vertical lines above and below the real body of a Japanese candlestick).

This type of Japanese candlestick is called a "doji" or a star when it gaps above the real body of the Japanese candlestick that occurs before it. If there is a gap between formed after the star it creates a Japanese candlestick pattern labeled as a "Three River Evening Star".

The "Three River Evening Star" is a Japanese candlestick pattern composed of three candles. The criteria for proper identification of this pattern occurs only when a stock or commodity is in an uptrend. This reversal pattern begins with a long green candle (a candle that closes above its opening price), followed by a star that gaps away from the green body, and the third day is a long red candlestick that must gap below the body of the star. The pattern can reveal a potential top or key reversal from bullish market sentiment to bearish market sentiment.

By

Gary Wagner

Time to Buy Gold and Silver

David

Gold hits 12-mo. high, falls back a bit on profit taking

Gold and silver prices are slightly up in midday U.S. trading Monday, with gold notching a 12-month high of $2,014.90 overnight, basis April Comex futures, and silver a six-week high. Some normal profit-taking pressure and chart consolidation are seen on the price pullbacks from the overnight highs. Still, safe-haven demand for the metals is present in a shaky general marketplace amid the U.S. and European banking crisis. The technical charts are also bullish for gold and silver, which continues to invite chart-based speculators to the long sides. April gold was last up $1.70 at $1,975.30 and May silver was up $0.108 at $22.565.

Global stock markets were mixed to lower overnight. U.S. stock indexes are higher near midday. Banking stocks across the globe dropped Monday. Risk aversion is again keener early this week. The Swiss banking firm UBS acquired Credit Suisse over the weekend to try to stabilize the European banking system, following the collapse of two big U.S. banks in early March. The move did little to boost trader and investor confidence. "There is a general sentiment that is trending increasingly negative," said one market analyst. Said noted investor Mark Grant on CNBC when asked about the banking crisis: "It's going to get worse. It's going to be messy."

Now focus is on the Federal Reserve's FOMC meeting that begins Tuesday and concludes Wednesday afternoon. There is still some debate in the marketplace regarding whether the Fed will raise its main interest rate by 25 basis points or stand pat amid the U.S. and European banking crisis. Most market watchers, however, are leaning toward a 0.25% rate increase. The 0.5% rate hike by the European Central Bank last week makes a 0.25% increase by the FOMC more likely.

  Once $2,000 breaks, gold is off to the races – Willem Middelkoop

The key outside markets today see the U.S. dollar index lower. Nymex crude oil futures prices are lower, hit a 15-month low and are trading around $66.25 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.4%.

There was no major U.S. economic data released Monday.

Technically, April gold futures prices hit a 12-month high early on today. Bulls have the solid overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at the all-time high of $2,078.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $2,000 and then at today's high of $2,014.90. First support is seen at today's low of $1,970.00 and then at $1,950.00. Wyckoff's Market Rating: 8.5

May silver futures bulls have the overall near-term technical advantage. Prices are in a fledgling uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.50. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at today's high of $22.855 and then at $23.00. Next support is seen at today's low of $22.35 and then at $22.00. Wyckoff's Market Rating: 6.5.

May N.Y. copper closed up 565 points at 394.90 cents today. Prices closed near the session high and scored a bullish outside day up. The copper bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the March high of 417.25 cents. The next downside price objective for the bears is closing prices below solid technical support at 372.00 cents. First resistance is seen at today's high of 396.10 cents and then at 400.00 cents. First support is seen at today's low of 385.50 cents and then at the March low of 382.20 cents. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

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Time to Buy Gold and Silver

David

Gold surges to $1982.8 as investors rethink the banking crisis and accommodative Fed

Gold futures surged to the highest value of 2023 taking out the former high of $1976 achieved in February. As of 4:09 PM EST, the most active April contract of gold futures is up $58.10 or 3.02% and fixed at $1981.10. Although dollar weakness contributed to today’s dramatic ascent it was only a small factor in a much larger picture. Considering that gold futures had a net gain of over 3% and the dollar softened by 0.52%, roughly 5/6 of today’s gains in gold are directly attributable to market participants bidding the precious yellow metal higher.

Next Tuesday, the Federal Reserve will hold its second Open Market Committee meeting of the year. This will be followed by an FOMC statement and press conference by Chairman Jerome Powell on the following day March 22.

However, this FOMC meeting will be quite different in that there is an additional major component that must be factored into their decision that they will announce next Wednesday, March 22. Not only will the Federal Reserve continue to be laser-focused on reducing inflation which remains sticky or persistent in many sectors, but now they need to factor in a banking crisis that was first reported last week.

On March 10, 2023, reports began to surface about the Silicon Valley Bank failing after a bank run by depositors challenging the solvency and leading to an inevitable bankruptcy announcement today. The SVB was unique in that its primary business was funding venture capitalists and start-up tech companies. To raise the capital they liquidated a major portion of their assets on their balance sheet at a loss of $1.8 billion.

Immediately the FDIC and banking regulators stepped in to guarantee that depositors' money would become available. Then yesterday 11 major US banks created a $30 billion fund held at the first Republic Bank to create a backstop to keep banks like SVB and signature Bank of New York solvent. Federal banking regulators applauded the support of this large bank group because it validates the resilience of the banking system in the United States.

This brings us to next week’s FOMC meeting. It is anticipated that the Federal Reserve will approve a ¼% rate hike with the banking crisis ultimately backstopping the opinion that the Federal Reserve would step up its rate hikes with a ½% rate hike next week. Although it has been rumored that the Fed might pause many analysts believe that the Fed needs to continue to raise rates even with the banking crisis to maintain its credibility.

Gary S. Wagner

Time to Buy Gold and Silver

David

Today’s CPI report revealed that inflation continues to be troublesome and elevated in some sectors, with a fractional decline overall from 0.5% in January to 0.4% last month. Headline inflation continues to slowly dissipate from 6.4% year-over-year in January to 6% in February. Core inflation also remains elevated coming in at 5.5% year-over-year compared to 5.6% in January. Housing which includes mortgages and rentals composed the largest category and accounted for more than 70% of last month’s increase in the CPI.

The repercussions of today’s CPI report are that the Federal Reserve is likely to raise their terminal rate by ¼% at the next FOMC meeting (March 21 – 22). According to the CME’s FedWatch tool, the probability of a 25-bps rate hike is 81.9% and the probability that the Fed will not raise rates is 18.1%. It is noteworthy that according to the FedWatch tool, the probability that the Fed will not raise rates at its next meeting was 35% yesterday versus 0% one week and one month ago.

The Federal Reserve has been caught between a rock and a hard place attempting to raise rates enough (which intrinsically results in a contracting economy) to lessen the current level of inflation but not too much to result in a recession. It seems more and more unlikely that the Federal Reserve will be able to pull off a “soft landing”. The banking crisis that was reported this weekend further exacerbates the ability of the Fed to reduce inflation and not lead the country into a recession.

Continued rate hikes by the Federal Reserve create bearish market sentiment for gold prices because gold does not yield interest. However, higher inflation has the opposite effect creating bullish market sentiment for gold. Collectively these two forces work against each other with elevated inflation pushing prices higher and rising interest rates pulling prices lower. That being said, gold futures were able to hold above the key psychological level of $1900 per ounce.

Today gold futures opened at $1919.40 which was also the high, and traded to a low of $1899.80. As of 5:15 PM EST, the most active April contract is currently fixed at $1908.30. Concurrently, the US dollar is trading fractionally higher up 0.08% with the dollar index currently fixed at 103.265.

Although there are a couple of economic reports that will come out before the next FOMC meeting, the Federal Reserve now has the most important data it will use to make its final decision regarding the level of the next rate hike.

Gary S. Wagner

Time to Buy Gold and Silver

David