Gold price hits new record highs as the West loses price-setting powers: Frank Giustra & Pierre Lassonde on new geopolitical reality & resource nationalism

As gold set another record high, Canadian mining legends Frank Giustra, CEO of Fiore Group, and Pierre Lassonde, Chairman Emeritus at Franco-Nevada, say the West has lost its power to set the price of gold. Giustra and Lassonde also warn that in the new geopolitical reality of resource nationalism, Canada is failing its economy and citizens.

With gold futures hitting another record high of above $2,264 an ounce at the start of the second quarter, Giustra and Lassonde pointed to a major shift in the gold market.

"The world hasn't woken up yet. The marginal buyer of gold is no longer the U.S. It's no longer Europe. It's China. Between the country's central bank and the Chinese public, China takes up over two-thirds of all the annual production. They are the new marginal buyer. That's where the gold price is set," Lassonde told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, during Kitco Insights Interactive Mining Titans' Power Panel.

For what this means for the U.S. dollar and gold this year and beyond, watch the video above.

BRICS Plus, which now includes Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, Ethiopia, Iran, and the United Arab Emirates, can get up one morning and say they are going "to back their collective new currency with gold," which they can now set to create more credit and reserves, Giustra pointed out.

A coordinated move by the BRICS Plus against the U.S. dollar could lead to violent results, he warned.

"No one wants war, but here's the problem — the U. S. is facing an existential threat. It's a national security issue," Giustra said. "If there's a sudden move towards replacing the U.S. dollar, meaning perhaps a BRICS announcement of a new currency [backed by] gold, I think then it would react quite violently.

Giustra also outlined the top geopolitical risks for 2024. For insights, watch the video above.

Has Canada lost the battle for resources?

Securing critical metals for the energy transition has become a matter of national security for many countries. However, Canada is losing this battle, according to Giustra and Lassonde.

While many countries are facing massive metal shortages, Canada is distracted with overseas investments. For example, Canadian pension funds that represent CAD$2.7 trillion of Canadian savings have more invested in China than they do in Canada, which is unforgivable, Giustra and Lassonde told Kitco News.

More specifically, Canadian pension funds have less than 3% of their total assets invested in Canadian public companies, down from 28% in 2000.

"When you look at the mineral sector in Canada, it's been totally ignored by the government for the last 40 years. Our politicians, both at the federal and the provincial level, couldn't care less about the mining industry," Lassonde said. "Frank says we could lose the race. We've already lost the race."

Giustra pointed out that bold action is required to solve this crisis, but Canada lacks visionary leadership.

"Canada is endowed as one of the most prolific mineral countries on the planet, the second largest landmass in the world, and largely unexplored. [However], there is almost zero investment in the Canadian mineral sector. It's worrisome. Canada's in danger of losing out in this race for critical minerals," he said.

On what this all means for Canada's economy and some of the irreversible consequences, watch the video above.

This panel is brought to you by Eagle Plains Resources.

Eagle Plains is a mineral exploration company operating for 30 years with over 50 projects in Western Canada. The company has over $7M cash, generates significant revenue, has only 115M shares outstanding, and has never been rolled back.

Kitco Media

Michelle Makori

Time to Buy Gold and Silver

David

Gold price solidly up, very near all-time highs

Gold prices are sharply up in midday U.S. trading Thursday, near the daily highs, and are closing in on the recent record highs. Silver prices are modestly higher. More technical buying is featured in both metals, amid bullish charts. June gold was last up $27.10 at $2,239.90. May silver was last up $0.198 at $24.95.

It was a very busy U.S. data release schedule Thursday, but none of the data contained big surprises and the markets showed no major reactions. U.S. markets are closed Friday for the Good Friday holiday but personal income and outlays, including PCE inflation data, will be released that day.

Today is the last U.S. trading day of the week, of the month and of the quarter, which makes it an important trading day from a technical chart perspective. Gold today is set to close at a very bullish weekly, monthly and quarterly high close today, as well as a record high close in futures markets.

U.S. stock indexes are mixed at midday. The U.S. stock indexes continue on a slow and steady rise and are near their recent record highs.

Federal Reserve Governor Christopher Waller said Wednesday recent stronger-than-expected U.S. inflation data is “disappointing” and said that he wants to see “at least a couple months of better inflation data” before cutting, Bloomberg reported. “In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data,” Waller said.

The key outside markets today see the U.S. dollar index slightly higher but down from the daily high. Nymex crude oil prices are higher and trading around $82.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 4.2%.

Technically, the gold futures bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the contract high of $2,246.60. Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week’s low of $2,170.80. First resistance is seen at the contract high of $2,246.60 and then at $2,250.00. First support is seen at today’s low of $2,207.50 and then at $2,200.00. Wyckoff's Market Rating: 9.0.

The silver bulls have the overall near-term technical advantage but have faded recently. Silver bulls' next upside price objective is closing May futures prices above solid technical resistance at last week’s high of

$25.975. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $25.055 and then at $25.50. Next support is seen at this week’s low of $24.445 and then at $24.22. Wyckoff's Market Rating: 6.0.

Hey!! Try out my “Markets Front Burner” weekly email report. Front Burner is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Email me at jim@jimwyckoff.com and I’ll add your email address to the Front Burner list.

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

David

U.S. Core PCE rises 0.3% in February, in line with expectations

720

Gold investors, with nothing else to do, can at least breathe a sigh of relief as inflation pressures rise in line with expectations.

Friday, The U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.3% last month. The data rose in line with economist expectations.

However, as a sign that inflation pressures aren’t going away, the report also noted an upward revision for January, with core inflation rising by 0.5%.

For the last 12 months, consumer price pressure continued to ease, rising 2.8% in February. Although inflation is still well above the Federal Reserve’s target of 2%, it continues to trend lower.

The report said headline inflation rose 0.3% last month, a tick lower than expected. Economists were looking for a 0.4% increase. For the year, headline inflation rose 2.5%, in line with consensus projections.

Markets are closed for Good Friday, so there has been no reaction to the latest inflation data.

With inflation pressures rising in line with expectations, investors could start to focus on a growing imbalance in the economy as consumers spent more than they made last month.

The report said wages increased less than expected last month, rising 0.3%. According to consensus forecasts, economists were looking for a 0.4% increase. Meanwhile, personal consumption jumped 0.8% in February. Economists forecasted a 0.5% increase.

According to some economists, the in-line inflation data could support the Federal Reserve's plan to begin its easing cycle in June, even as inflation remains elevated.

Last week, the Federal Reserve signaled it wanted to cut interest rates three times this year, even as inflation was holding around 2.4%.

An impending pivot in the U.S. central bank’s aggressive monetary policies has emboldened gold investors in recent days. Thursday, during the final trading day in March and the first quarter, June gold futures rose to a new all-time high of $2,256.90 an ounce and settled the session at $2,234.40 an ounce.

In an interview with Kitco News, Darin Newsom, Senior Market Analyst at Barchart, said that inflation could be one factor in why the gold market has been able to defy fundamental and technical logic.

Gold’s rally on Thursday came despite resilient strength in the U.S. dollar, which closed the session near a six-week high above 104 points.

“Gold could be telling us that inflation will stay around for a while. And that there's a real there's a real threat geopolitically,” he said.

Some analysts have also noted that gold doesn’t actually need a rate cut to maintain its upward trajectory. While higher inflation could keep the Federal Reserve from cutting rates this year, it is unlikely they will raise interest rates. This environment would still push real interest rates lower, which should weigh on the U.S. dollar, supporting gold prices.

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David

Gold appears unstoppable as it hits record highs above $2,250, capping off a solid month and quarter

The gold market continues to be an unstoppable juggernaut as it closes out the month and quarter near a record high, solidly above $2,200 an ounce.

Analysts note that gold’s performance on Thursday, which wraps up a shortened trading week ahead of the Easter long weekend, is even more impressive when compared to the U.S. dollar Index, which is trading near a six-week high above 104 points.

Gold prices last traded at $2,241 an ounce, up 2.7% from last week. For the month, gold is up 9%, and for the quarter, the precious metal is up 8%.

Gold’s further push into blue sky territory also comes ahead of important inflation data. Although markets are closed for Easter, it is not a recognized government holiday, so the U.S. Bureau of Economic Analysis will be releasing its Personal Consumption Expenditures (PCE) Index. According to consensus estimates, economists expect inflation to have risen 0.3% in February.

Some analysts have said that gold is attracting new momentum because inflation is less of a threat than it was. Last week the Federal Reserve signaled that it still looks for three rate cuts this year even as they see inflation holding above its 2% target.

Darin Newsom, Senior Market Analyst at Barchart said that the gold rally is a signal that investors are worried that the Federal Reserve won’t be able to get inflation under control as it starts to cut interest rates.

He added that he also sees gold well supported as a geopolitical risk hedge.

“Geopolitical fears are still out there and will only continue to grow as we approach the November U.S. election,” he said. “If the Fed starts cutting rates, bond yields will fall, which makes gold a more attractive safe-haven.”

At the same time, some analysts note that the U.S. dollar is losing its grip on the gold market as U.S. government debt continues to spiral higher.

“Gold is not expensive. The truth is that the U.S. dollar is cheap as the government floods the global economy with it,” said Julia Khandoshko, CEO at the European broker Mind Money, in an interview with Kitco News.

Although the Federal Reserve has been tightening its balance sheet as part of its aggressive monetary policy, some analysts have noted that the nation’s money supply continues to grow.

David Kranzler, precious metals analyst and creator of the The Mining Stock Journal said in a comment on social media that the U.S. The Monetary Base, as measured by Money Zero Maturity (MZM), is up nearly 10% since March 2023.

“Gold smells a massive money-printing program coming at some point. In fact, low-grade money printing has already occurred,” he said.

MZM represents money readily available within an economy for spending and consumption. and includes M2 money supply, less the time deposits, plus all money market funds.

Regardless of what is driving gold at its record highs, Adam Button, Chief Currency Strategist at Forexlive.com said that he expects this is only the start of the rally.

Despite gold’s historic rally, Button said that the precious metal sector continues to be ignored in the broader marketplace. He added that the mining sector, while off its lows is still significantly undervalued compared to gold prices.

“This quiet rally is extremely encouraging for gold investors,” he said. “This is not an exhausted bull market. The time to sell is when everyone is talking about gold and the miners are taking off.”

Although Button is bullish on gold, he added that investors should wait for a pullback before jumping in. He pointed out that there appears to be some initial support at $2,150 that could attract some buyers.

Ole Hansen, Head of Commodity Strategy at Saxo Bank said that he expects the gold market to have further upside potential. He added that it's more than just momentum that is pushing gold prices higher.

“Gold’s continued ability to withstand headwinds from dollar and yield movements is nothing but impressive and it highlights a market that continues to attract demand making it a relatively easy task for hedge funds to defend their huge long positions,” he said. “My main concern during the past couple of weeks has been the risk of weakness forcing a cascade of long liquidation, but with prices now above $2,200 that risk continues to fade.”

Although gold is ending a shortened trading week on a strong note, next week does present new risks. The economic calendar next week will focus on the U.S. labor market with March’s nonfarm payrolls report on Friday as the highlight.

The week also features a solid lineup of central bank speakers including Federal Reserve Chair Jerome Powell, who will be speaking at Stanford's Business, Government, and Society Forum.

Some analysts have said that stronger employment numbers, coupled with stubborn inflation may force the Federal Reserve to push back the start of its approaching easing cycle.

“Macro traders certainly still have scope to add to their gold length — but only if rates market expectations notably firm. This places the onus on upcoming data to corroborate the Fed's outlook for three cuts this year, but continued strength in the data with little change in tone from the FOMC also raises the risk of a buyer's strike in Treasuries, leading to higher rates that could mechanically weigh on the yellow metal through the re-accumulation of macro trader short acquisitions,” said commodity analysts at TD Securities.

Economic data for the week

Monday: ISM Manufacturing PMI

Tuesday: JOLTS job openings

Wednesday: ADP nonfarm employment change, ISM Service Sector PMI, Powell to speak

Thursday: Weekly jobless claims

Friday: Nonfarm payrolls

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David

Currency risks will drive gold and silver sky-high by year-end â BMO Capital Markets

Currency risks will drive gold and silver sky-high by year-end – BMO Capital Markets

While gold and silver prices may continue to consolidate in the near term, the rally in the precious metals sector is only getting started, according to commodity analysts at BMO Capital Markets.

In a report published Wednesday, the Canadian bank announced a significant upgrade for its gold and silver price projections for the next three years, with the high-water mark in the final quarter of 2024. The bank’s commodity analysts see gold prices averaging this year around $2,169 an ounce, up 11% from its previous forecast.

At the same time, they see gold prices averaging next year around $2,100 an ounce, a 12% increase from December’s estimates. Gold prices are expected to average around $2,000 an ounce in 2026 and $1,950 in 2027, an increase of 8% and 3%, respectively from the December estimates.

Looking at silver, BMO sees the white metal averaging around $25.60 an ounce this year, up 13% from the December forecasts. The price is expected to average around $25.30 an ounce next year, up 11% from the previous estimate. Finally, prices are expected to average $24 in 2026 and $23.50 in 2027, an increase from the previous estimate of 8% and 3%, respectively.

This year, BMO sees gold prices averaging around $2250 an ounce in the fourth quarter, a 13% increase from the previous estimate. At the same time, silver prices are expected to average the final quarter of the year around $28 an ounce, a 22$ increase from December’s forecast.

June gold futures last traded at $2,214 an ounce, up 0.67% on the day.

The commodity analysts said that gold’s consolidation near its recent all-time highs is an indication that the precious metal is forming a new base and investors are getting comfortable with higher prices.

They added that they remain bullish on the precious metal as a hedge against rising currency risks worldwide, and noted that gold’s all-time highs also coincide with Bitcoin’s move to record highs above $73,000 per token.

“Given no politician is likely to be elected by promising to spend less in a year loaded with elections across key democracies, there is certainly a chance that later in the year we may see further currency concerns supporting precious metal performance as a new era of elevated fiscal spending across global economies gathers traction,” the analysts said in the report. “While we see some consolidation in the current range through mid-year, we expect further sequential gains in H2 as the U.S. rate cut cycle starts to gather pace and geopolitical tensions rise as the U.S. election nears. This could be one of the rare years where both macro and retail investors increase exposure to precious metals.”

While gold regains its luster as a risk hedge, BMO also said they expect the market to remain well supported by “price-insensitive central banks.”

The bank also reiterated its call for Chinese demand to dominate the marketplace.

“China’s households accumulated strong savings over the pandemic, and even over the past two years ~35trn RMB was added. However, these households have had somewhat of a dilemma as to where to put this money, something often termed the ‘ugliness contest’ for Chinese investors,” the analysts said. “Historically, money might have been invested in property as a default position; however, as has been widely discussed this sector continues to face major structural issues which are impacting buyer confidence. With this, gold exposure has become a necessity for Chinese portfolios, as they continue to expect disinflation and income uncertainty.”

Meanwhile, BMO explained that silver will remain well-supported by industrial demand and weak supply growth.

“Historically, money might have been invested in property as a default position; however, as has been widely discussed this sector continues to face major structural issues which are impacting buyer confidence. With this, gold exposure has become a necessity for Chinese portfolios, as they continue to expect disinflation and income uncertainty,” the analysts said in the report.

“Recent weeks have seen vast lay-offs at the world’s largest solar manufacturer, Longi Green Technology, while there have been a number of news articles around poor utility return on solar installations in Europe,” they added. “This has led to some fears of a wider solar industry slowdown; however, we see this as a cyclical element of overinvestment and higher interest rates.”

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David

Silver can still outperform gold even as prices fall 1% below $24.50 – MKS

Silver continues to underperform within the precious metals market and has been unable to hold gains above $25 an ounce even as gold prices hold near their record highs.

Despite the disappointing price action, many analysts remain optimistic that silver will have its turn to shine in the spotlight.

Even with higher volatility, Nicky Shiels, head of metals strategy at MKS PAMP, said silver is building a solid floor above $23.50 an ounce. She added that she sees potential for the white metal to reach $28 an ounce this year.

The bullish outlook comes as gold prices hold solid support above $2,150 an ounce; spot silver has fallen to a one-week low, last trading at $24.36 an ounce, down more than 1% on the day. The gold/silver ratio remains elevated and is above 89 points.

However, with inflation expected to remain stubbornly elevated for longer than forecasted, Shiels said that she expects the ratio to start falling.

“US growth has exceeded expectations as the Fed manufactures a soft landing while ROW / global growth is ‘stable’ish.’ With expected easier G-10 monetary policy now collectively tolerating a ‘higher for longer’ inflation regime, high beta cyclical commodities like Silver should outperform & the ratio should rerate lower,” she said in a note published last week.

Last week the Federal Reserve signaled that it was still on track to lower interest rates three times this year even as inflation remains above its 2% target.

Along with easing interest rates, Shiels noted that silver remains well supported by strong supply and demand fundamentals as demand continues to outpace supply.

She pointed out that India has once again become a robust source of demand for the physical metal. Quoting the nation’s trade data, Sheils said that in the first two months of the year, India has imported about 3,000 tonnes of silver.

“While that buying pace may subside, we don’t foresee a dramatic scale back in purchases at $25/oz+ prices,” she said.

At the same time, analysts expect healthy industrial demand to push the silver market into another deficit this year. According to research from the Silver Institute, global silver demand is expected to reach 1.2 billion ounces in 2024, the second-highest level on record.

Shiels noted that ongoing demand for silver has pushed above-ground stocks held with the London Bullion Market Association to record lows of 814 million ounces.

Meanwhile, the supply of silver continues to dwindle. Sheils noted that silver production from Mexico and Peru, the world’s top two producers, has dropped to its lowest level in 14 years.

“Mexico & Peru together are producing 25% less vs 2016 levels, helping drive the drawdown in above-ground stocks as a substitute,” she said.

As to what will drive investors back into silver, Shiels said that she expects investment demand to pick up as central banks start to cut interest rates. The Federal Reserve is likely to embark on its easing cycle with a cut in June. She added that geopolitical uncertainty ahead of the U.S. elections can also create some safe-haven demand for silver.

“Trying to time investor engagement is tricky, but as is the case with gold, it’s usually a FOMO trade, so a technical breakup & above $26 (a relatively sticky area) should attract the momentum crowd,” she said.

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David

Gold gains on technical buying, friendly outside markets

Gold prices are posting decent gains in midday U.S. trading Monday, supported by chart-based buying amid bullish technicals, and by friendly daily “outside market” forces that see the U.S. dollar index lower and crude oil prices higher. Silver prices are trading slightly up. April gold was last up $16.80 at $2,176.70. May silver was last up $0.042 at $24.885.

Broker SP Angel this morning said in an email dispatch that China and other central banks continue to buy gold. “Recent interest rate moves by major central banks of Japan, Taiwan and Turkey along with the expectations for U.S. rate cuts are making gold increasingly attractive. Investors also remain concerned at the level of high government debt supported by the U.S. and China.”

The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are higher and trading around $82.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 4.25%.

Technically, April gold futures bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the contract and record high of $2,225.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,149.20. First resistance is seen at the overnight high of $2,182.50 and then at Friday’s high of $2,188.00. First support is seen at today’s low of $2,164.40 and then at Friday’s low of $2.158.40. Wyckoff's Market Rating: 8.0.

May silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the March high of $25.975. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at Friday’s high of $25.11 and then at $25.50. Next support is seen at last week’s low of $24.58 and then at $24.22. Wyckoff's Market Rating: 6.5.

May N.Y. copper closed up 80 points at 401.55 cents today. Prices closed near mid-range. The copper bulls have the firm overall near-term technical advantage but appear tired now. Prices are in a six-week-old uptrend 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 416.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 385.00 cents. First resistance is seen at today’s high of 404.70 cents and then at Friday’s high of 406.65 cents. First support is seen at today’s low of 399.05 cents and then at 396.75 cents. Wyckoff's Market Rating: 7.0.

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

David

Gold price correction This week won’t derail a broader rally as Fed looks to cut rates

The Federal Reserve has given the all-clear to gold after signaling it still wants to cut interest rates three times this year, even as inflation remains above the 2% target; however, some market analysts said that the precious metal could see a healthy correction next week and in the near term.

Following the Federal Reserve’s monetary policy meeting on Wednesday, gold prices rallied to a record high above $2,220 an ounce; however, the rally was short-lived, and prices are looking to end the week in neutral territory. April gold futures are currently trading around $2,164 an ounce, only a few dollars up from last week’s close.

Although the market looks a little heavy, a short trading week with markets closed Friday because of the Good Friday holiday could limit price volatility next week.

James Stanley, senior strategist at Forex.com, said that he expects gold prices to ultimately trend higher ahead of the Federal Reserve’s June monetary policy meeting when the central bank is expected to start its easing cycle.

He noted that gold remains well supported as the Federal Reserve signaled that it will ease interest rates even if inflation remains elevated.

“The Fed had every opportunity to strike a more balanced note, but they didn’t. If you look at the data, there is no reason for the Fed to look for three rate cuts this year. They don’t need to cut as the unemployment rate remains at the lowest point in my lifetime,” he said. “The fact that the Fed didn’t strike a more balanced tone raises a lot of questions for me and is a red flag for the economy that I think will continue to support gold.”

However, Stanley added that although he likes gold, he expects to see a correction in the near term. He said that investors should be cautious of chasing prices near record highs.

“Gold wants to go higher, but I think a pullback would be healthy. For investors who were long gold at the start of the month, this would be a good place to take some profits so we could see a short-term correction,” he said.

Looking at technical levels, Stanley said he is watching initial support at $2,146, as that was the December swing high. However, he added that he wouldn’t be surprised to see gold test support at $2,075 an ounce, representing a three-year resistance point before the early March breakout.

Lukman Otunuga, manager of market analysis at FXTM, said that although the Federal Reserve continues to signal rate cuts this year, the depth of the easing cycle will remain data-dependent. He explained that gold needs to see more disappointing economic data in the coming weeks and months to support the current rally.

“Although the Fed has signaled that three US interest rates remain on the cards in 2024, it’s all about economic data which could support or oppose the argument around rate cuts,” he said. “Gold bulls could return to the scene if incoming US data next week supports the case for lower rates. However, bears are also lurking and waiting for another opportunity to strike prices lower.”

Despite the bullish outlook, Otunuga said that, ahead of next week, the gold market “is looking a little tired.”

Although gold prices could see a correction next week, other analysts have said that investors should remain focused on the broader uptrend.

Naeem Aslam, Chief Investment Officer, said that although gold has seen a strong rally this month in anticipation of the Fed’s easing cycle, there is still significant potential for higher prices.

“We certainly haven’t hit high in terms of the gold price. We think that the important ingredient is the Fed’s definition of a normal interest rate, i.e., their target level,” he said. “We do think that the process has started as the Fed is sending a subdued signal that their pre-Covid level needs to be adjusted, and once they make it clean, we would expect the gold price to rally.”

While gold’s technical price action represents a short-term risk, the precious metal also faces some fundamental threats in the near term.

David Morrison, senior market analyst at Trade Nation, said that renewed strength in the U.S. dollar creates a headwind for gold. The greenback is ending Friday at a four-week high above 104 points.

“Could this sudden reemergence of dollar strength indicate that investors are less sanguine than the Fed over the prospect of rate cuts? Perhaps. But it also reflects that the latest round of central bank meetings have made it clear that rate cuts are coming from just about everyone,” he said in a note Friday. “In fact, the Swiss National Bank have already moved. That being the case, the US dollar is back in favour as it’s now the cleanest shirt in the laundry basket. It could be that this shake-out of the weaker holders of gold and silver can set the stage for a bigger rally. But that may be wishful thinking if the dollar continues to strengthen.”

Economic data for next week

Monday: New home sales

Tuesday: Durable goods orders, consumer confidence

Thursday: Weekly jobless claims, US GDP, Pending home sales

Friday: Core PCE price index

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David

Wall Street advises caution on gold prices next week, Main Street mashes the gas

After last week’s price action was led by inflation data, gold markets were once again dominated by the Federal Reserve and interest rate expectations, though traders’ feelings seemed to evolve as the days went by.

In the immediate aftermath of Wednesday’s FOMC meeting, markets took the Fed’s maintenance of three projected rate cuts in 2024 and ran with it, weakening the greenback and driving the yellow metal to yet another all-time high in both futures and spot prices on Thursday.

Then, later trading brought a major bounce to the U.S. dollar and a significant retracement for gold, which continued through the Friday trading session.

pic

The latest Kitco News Weekly Gold Survey showed market experts divided and cautious on gold’s direction heading into the final week of the first quarter, while retail traders are very much back on the bullish bandwagon.

Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, captured the zeitgeist among market participants at the conclusion of Fed week. “I am neutral on gold for the coming week,” Cieszynski said. “It has had a big move lately, and may consolidate in the coming days with the US Dollar strengthening, and it being month-end, plus a short trading week next week.”

Darin Newsom, Senior Market Analyst at Barchart.com, said he’s keeping his downward bias for next week. “I’ll stick with this for a third consecutive week,” he said. “It was looking a bit questionable Thursday, until the April contract dropped more than $40 off its session high through the close. With daily stochastics continuing to indicate more downside potential in the market, and the US dollar index gaining strength, April gold could work lower over the next week.”

“The key will be its previous 4-day low, theoretically sitting at $2,150.20 next Monday, depending on what happens Friday,” Newsom added.

“Despite surging to a fresh all-time high on Thursday, gold bulls seem tired and weighed down by a stronger dollar as the week comes to an end,” said Lukman Otunuga, senior market analyst at FXTM.

Everett Millman, Chief Market Analyst at Gainesville Coins, said he thinks that despite Powell’s vote of confidence on the overall economy, and the employment situation in particular, it was the rate cut forecast that drove the optimism coming out of the FOMC on Wednesday.

“I think it does go back to the dot plots, the fact that they haven't shifted to a less dovish stance, at least not in their forecast,” he said. “There is definitely some reason to be skeptical of the dot plots themselves, they haven't always played out according to what the Fed is forecasting. But I think that's really the main reason why gold moved higher, why it seemed to like the news, even though it really wasn't all that dovish.”

“We're not going to say it was the same type of stance the Fed had coming into this year, where they tried to be talking tough about inflation,” he added. “We didn't really see any of that.”

Looking beyond the FOMC, Millman said that there may just be a momentum trade going on with gold right now. “The fact that we have continued to maintain close to all-time highs, that's going to push a lot of trend-following traders and tactical investors into going long gold or covering their shorts,” he said. “I think that’s probably having a larger effect on the gold price action we're seeing, more so than people's expectations of the Fed, although obviously that's always going to be percolating in the background.”

Millman said that the technical picture is not confirming a continuation of this major pullback. “From what I've seen, most of the technical patterns in the gold chart are fairly bullish,” he said. “Having said that, I’m a big believer in mean reversion, and the fact that gold was almost certainly a little bit overbought when it got close to that $2,200 level, I think this is a routine correction that we should expect to see after gold had a month where it posted triple digit gains. So it doesn't surprise me, and I think we're going to have to see how it plays out in these coming weeks.”

Millman agreed that now is a perfect time to sit still and wait for things to settle a bit. “My vote is certainly neutral or sideways,” he said. “I think it would be extremely encouraging if gold could just hold on to most of its gains, given that we've already moved so much higher. When I do look out a little further, towards the third quarter, fourth quarter, by year-end, I do expect gold prices to be higher than they are now. I do expect them to be at new all-time highs. But in the short term, I think that the market just needs a breather.”

This week, 15 Wall Street analysts participated in the Kitco News Gold Survey, and their views were spread fairly evenly across the spectrum. Six experts, or 40%, expected to see higher gold prices next week, while four analysts, or 27%, predicted price declines. Five experts, representing 33%, predicted sideways trading for the precious metal, or suggested they would sit on the sidelines next week.

Meanwhile, 170 votes were cast in Kitco’s online polls, with the vast majority of Main Street investors anticipating further gains for gold next week. 117 retail traders, representing 69%, looked for gold to rise next week. Another 25, or 15%, predicted it would be lower, while 28 respondents, or 16%, were neutral on gold’s near-term prospects.

Next week will see the release of new home sales on Monday, durable goods, consumer confidence, and the Richmond Fed survey on Tuesday, and MBA mortgage applications on Wednesday. Thursday, however, will be the busiest day next week due to the long Easter weekend, with final Q4 GDP, jobless claims, pending home sales and the University of Michigan’s consumer sentiment survey.

Sean Lusk, co-director of commercial hedging at Walsh Trading, was surprised at the positive sentiment from both Powell and the markets, and he doesn’t believe the Fed will be able to deliver 75 basis points of cuts this year.

“I really can't believe what I'm hearing, to be quite honest with you,” Lusk said. “I suppose I shouldn't be that surprised. Are they saying the economy's not as strong as it's perceived to be, given where the indexes are? Or are they saying that there's no inflation, or not as much inflation as it appears to be for the rank-and-file at the grocery store, because it does exist there.”

Lusk said that as far as the greenback is concerned, it's been a ‘buy-the-rumor, sell-the-fact’ event, which he found interesting. “The dollar shot up for two days in a row here, and that's kind of an odd reaction when you get, I would say, neutral to dovish commentary,” he said. “But you also have to recognize, at least in gold's case, volume was ticking up to 300,000, 400,000 contracts in the April contract. Now it's down about 150,000 a day, but you’ve got option expiration on the April contract Monday, and then you're going to roll to June.”

“I think this is all this is, today's weakness, maybe yesterday, they got up to some obscene high and they're yanking back and that's the normal ebb and flow in the markets,” he said. “Plus, you're coming into month and quarter-end, and we've had a hell of a performance here for the better part of two months, since the February lows.”

“They're going to back off here and take some profits, but I don't see any technical damage being done to the charts,” he added. “This thing could fall back to $2,125 and we're still in a bullish posture. We hit our 5 percent marker, that's where we're kicking around, maybe we're just a little bit below it today. I still think once June goes most actively traded, which it will next week, it has a chance to get to and surpass its contract high at $2,246 and then spike up to about $2,270, $2,280, in that area. That'll be 10 percent higher on the year, so that's the target. But if we start slipping underneath some [Fibonacci] numbers here at $2,125, then it can go down to halfway back from the February lows."

“Could they wipe this out at any moment?” he asked rhetorically. “Yeah, but what's changing? Why would they? You're just not going to go up every darn day at these levels, but you are consolidating in some higher ranges, and that's really the more important thing here. You’ve got June gold consolidating between $2,190 and $2,210 for the most part, and that's what I'm keying on here. The market still is in a pretty deep contango here, pretty steady, and should that remain, it just tells you the price is going higher.”

“Listen, my gut feeling here is that seasonally, we'll have some dips and valleys into the end of the quarter, and a three-day weekend next weekend, but the wild card is going to be what the wild cards have been: the Middle East, Eastern Europe, there's always black swans circling with the banking crisis,” he said. “In April, we'll get a second round of earnings, we'll see what those are. Then you're probably going to have a pullback in May when realization starts to hit that they’re not going to cut three times, maybe once at best.”

“Gold rallied through $2220 on the back of the initial dovish read of the FOMC as the dollar and US rates fell,” said Marc Chandler, Managing Director at Bannockburn Global Forex. “However, the market took another look, and rallied the dollar and steadied US rates. Gold pulled back to almost $2162.”

“I look for a firm dollar in the coming days and this may weigh on the yellow metal,” Chandler added. “Support is in the $2145-50 area. While many focus on the central bank gold buying, Chinese and Turkish retail investors also reportedly have been keen buyers. The momentum indicators are stretched but could be relieved by extended sideways activity.”

Mark Leibovit, publisher of the VR Metals/Resource Letter, is also expecting USD strength to push gold lower. “As Dollar rallies, look for a pullback.,” he

James Stanley, senior market strategist at Forex.com, said he believes gold is due for a pullback next week.

pic

“The trend is starting to feel frothy and even with the Fed going dovish and sticking with three cuts in the forecast, bulls weren’t able to do much beyond $2,200 yet,” he said. “There was an open door for a pullback as gold was holding a descending triangle very near the highs, but the Fed was surprisingly dovish (imo) at the FOMC rate decision and that brought a jolt to the USD which has largely been priced-out since.”

And Kitco Senior Analyst Jim Wyckoff sees gold prices rangebound next week. “Sideways, as bulls have run out of gas on a near-term basis,” he said.

Spot gold last traded at $2,165.31 per ounce at the time of writing, down 0.74% on the day but up 0.43% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

David

Gold price gains against the Swiss franc highlight its potential when the Fed starts cutting rate

Gold price gains against the Swiss franc highlight its potential when the Fed starts cutting rates teaser image

The Federal Reserve’s signal that it still sees the potential for three rate cuts this year, even as inflation remains above its 2% target, has helped propel gold prices to new record highs.

However, some analysts have said that the gold’s true light will shine when the central bank actually embarks on its easing cycle. Some analysts have said that gold’s reaction to the Swiss National Bank’s move to ease is an indication of what to expect.

Thursday, Switzerland’s Swiss National Bank surprised markets with a 25 basis point cut, bringing interest rates to 1.5%. The SNB is the first major central bank to cut interest rates.

The central bank said it eased its monetary policy as inflation is expected to remain below its 2% target this year.

“For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years,” the bank said in its monetary policy statement.

The central bank also reduced its annual inflation forecasts. It now sees average inflation reaching 1.4% this year, down from its December estimate of 1.9%. Inflation is expected to slow even further next year, rising 1.2%, down from the previous 1.6% estimate. In its first look at 2026, the SNB projects average inflation at 1.1%.

Economists from Capital Economics said that they expect the SNB will continue to lower interest rates this year as inflation pressures remain weak.

“As it happens, we think inflation is actually likely to be lower than the SNB is forecasting, and so we expect it to cut rates again in September and December, taking the policy rate to 1.0%, where we expect it to stay throughout 2024,” the economists said in a note.

The SNB’s interest rate cut has had a solid impact on the gold market. Gold prices have pushed significantly higher against the Swiss franc Thursday.

Holding near session highs, spot gold last traded at CHF55,352.36, up +2.06%.

Although some analysts have described the SNB’s move as a surprise, it is not unexpected for others. March Chandler, managing director at Bannockburn Global Forex, said that he has been warning investors that cuts were coming.

“Rate cuts from the Fed are coming, so the SNB has to beat them to it too because they need to give their currency some cushion against weakness in the U.S. dollar,” he said.

While it's not exactly an “apples to apples” comparison, some analysts have said that gold price action against the dollar when the Fed cuts could be similar to what has been seen against the Swiss franc.

Chandler said that the biggest difference is that he expects gold’s rally to lead what appears to be a likely cut in June. He added that he expects bond yields and the U.S. dollar to weaken ahead of the Fed’s June meeting, which will support higher gold prices.

Phillip Streible, chief market strategist at Blue Line Futures, said that gold’s move against the Swiss franc highlights broader market conditions. He pointed out that the weakness in the Swissy helped propel the broader U.S. dollar index to a one-month high, which has hurt gold.

Despite hitting all-time highs overnight above $2,220 an ounce, gold is ending the day in the red against the greenback. Spot gold last traded at $2,183.14 an ounce, down 0.13 on the day.

However, Streible said that gold still has plenty of room to run when it’s the Fed’s turn to cut rates.

“Research we have looked at says since the 1990s, gold has rallied 6% in the first 30 days after the Federal Reserve’s first rate cut in an easing cycle,” he said.

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David