A big move in gold price is coming after weeks of neutral stance – analysts

The gold market has been steady so far in June, trading between $1,940 and just under $2,000 an ounce. But analysts warn that after weeks of sideways price action, gold is ready for a more significant move.

The caveat is it could be in either direction, Gainesville Coins precious metals expert Everett Millman told Kitco News. "Gold has traded sideways long enough that we are due for a bigger move one direction or the other — retesting the $1,880 level or getting back up to around $2,000," Millman said.

The Fed confused the markets Wednesday with a "hawkish pause" and a promise of two more rate hikes.

"What the Fed did was neutral for gold. A pause is good for gold. But it was the most hawkish pause we could have gotten. And that is why gold has traded sideways," Millman explained.

Gold is holding up well in the face of the Fed's warning of two more rate hikes, OANDA senior market analyst Edward Moya told Kitco News.

"The Fed locked themselves into a hold since they signaled they were going to do that before the meeting," said Moya. "There was a communication mistake by Fed Chair Jerome Powell in weeks leading up to this decision. Otherwise, data supported the hike."

At the press conference, Powell did not commit to a rate hike in July, stating that the U.S. central bank will remain data-dependent, added Moya.

"Fed Chair Powell is trying to keep optionality on the table. There's a chance we could have continued softer inflation prints. He doesn't want to lock himself in," he said. "That's why gold is not at $1,900. If the Fed's dot plot was confirmed at the press conference, gold would be trading at $1,900."

At the time of writing, August Comex gold futures were trading at $1,968.20, down 0.13% on the day and largely flat on the week.

Markets are currently pricing in one more rate hike in July only. If that changes, gold will react, the analysts said.

In the meantime, gold is paying close attention to macro releases and the U.S. dollar. Also, precious metals investors are monitoring central bank gold buying activity, which has slowed in the second quarter.

"Even though it slowed down quite a bit," said Millman. "The World Gold Council survey said that one in four central banks planned to continue to buy gold. They buy in large volumes, and gold will respond to what central banks are doing."

 

Mixed signals and gold's price direction

There is still a risk of a significant selloff in the gold market because that would be symmetrical to what happened over the past two years when gold reached $2,000 an ounce, Millman pointed out. "The next most likely move for gold is lower," he said.

Markets are eyeing Powell's two-day testimony before the House and Senate next week, a lineup for Fed speakers, and more macro releases.

"Gold is going to be facing a lot of mixed signals next week," said Moya. "Fed speakers, flash PMIs, and more easing from China (commercial banks are cutting rates). In theory, we could still see risk appetite holding in there, which will keep gold choppy."

With the Fed largely data-driven into the July meeting, macro releases could become big market movers.

"Gold pricing is still searching for confirmation that the Fed is really done and/or a US$-negative catalyst," said MKS PAMP head of metals strategy Nicky Shiels. "Data will become more sensitive and important into a July meeting where a hike is pretty much guaranteed."

Gold's technical trading is also essential to monitor. The longer the precious metal remains steady in the face of this hawkish pressure, the more likely prices will rally, noted Shiels.

"On the surface, it's a bearish precious outcome, but the longer gold can't go down, [it] must go up. The thinking is that gold prices will read through their hawkish rhetoric/talk, and at the core is, the Fed has paused (and can pause again) = therefore, they're done," she said.

 

Data next week

Tuesday: U.S. building permits and housing starts,

Wednesday: Fed Chair Powell testifies

Thursday: Bank of England rate decision, Fed Chair Powell testifies, U.S. jobless claims, U.S. existing home sales

Friday: U.S. manufacturing PMI

By

Anna Golubova

For Kitco News

Time to Buy Gold and Silver

David

Gold breaks below its 100-day moving average but recovers as the dollar tanks

Commentaries & ViewsShare this article:

Gold futures basis the most active August Comex contract traded below its 100-day simple moving average which is currently at $1950.70 after trading to an intraday low of $1936.10. However, as of 4:34 PM EDT, gold futures are trading just off the high of $1972.80 and are fixed at $1970.40.

On May 17, gold prices broke below their 50-day moving average for the first time since pricing moved above it on March 13. The rally that occurred in March began in November 2022 when gold had hit a triple bottom just above $1620. The first leg of this rally would take gold to just below $1980 before entering a corrective period which took gold pricing to approximately $1810. On March 13 gold traded back above its 50-day moving average on its way to this year’s highest value just above $2080 in May. After hitting the highest value of the year gold began its current correction that took gold to its current price as seen in the chart below.

That being said, today’s story is not so much about gold closing fractionally higher and back above its 100-day moving average but rather the dollar's strong devaluation and gold’s tepid response. If not for the decline in the dollar index today gold most certainly would have closed strongly in the negative. The dollar declined by 0.77% taking the dollar index to 102.12. Gold futures only gained 0.08% in trading today and when compared to the dollar's decline of 0.77% it indicates that traders were selling gold futures.

The same can be seen in the pricing of spot gold which increased by $16 per ounce according to the Kitco Gold Index (KGX). On closer inspection dollar strength added $17.10 per ounce, and normal trading resulted in a price decline of– $1.10.

The chart above is a long-term daily Japanese candlestick chart of the dollar index. It clearly illustrates how strong selling pressure has been taking the dollar index (DX) from a high above 114 in September of last year to lows just above 100.50 in February. Each of the last two rallies has had lower highs than the previous. Most importantly today’s strong price decline took the dollar index below both its 100 and 50-day moving averages.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold, silver sell off as FOMC conclusion looms

Gold and silver prices are lower in midday dealings Tuesday, losing initial gains that were seen following a U.S. inflation report that came in very close to market expectations. Position evening ahead of Wednesday afternoon’s FOMC meeting conclusion is featured. Futures traders with weak long positions were also featured sellers. A lower U.S. dollar index and higher crude oil prices did limit the downside in gold and silver today. August gold was last down $10.70 at $1,959.00 and July silver was down $0.20 at $23.85.

Today’s U.S. consumer price index report for May showed a rise of 4.0%, year-on-year, the same as in the April report and right in line with market expectations. Other internals of the CPI report also came in about as expected. The marketplace is a bit upbeat on the CPI numbers, as they were not a negative surprise on the U.S. inflation front. Wednesday morning’s U.S. producer price index report for May is seen down 0.1%, month-on-month.

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

In overnight news, China’s central bank eased its monetary policy by trimming a key lending rate. The central bank cut its seven-day reverse repurchase operations to 1.9% from 2.0%. This latest move is a further attempt by the Chinese government to boost Chinese economic growth, which is slowing.

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The U.S. data point of the week is the FOMC meeting of the Federal Reserve, which begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. A majority of the marketplace still thinks the Fed will pause in its interest-rate-tightening cycle. Today’s as-expected CPI report falls into the camp of those expecting the Fed to pause at this week’s FOMC meeting.

Technically, the gold futures bulls have the overall near-term technical advantage. 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 the May low of $1,949.60. First resistance is seen at last week’s high of $1,987.80 and then at $2,000.00. First support is seen at the May low of $1,949.60 and then at $1,940.00. Wyckoff's Market Rating: 6.5

The silver bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at $25.00. 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 last week’s high of $24.62 and then at $25.00. Next support is seen at $23.50 and then at $23.00. Wyckoff's Market Rating: 6.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold, silver down amid bearish outside markets; FOMC looms

Gold and silver prices are lower in midday U.S. trading Monday. A trio of bearish outside markets are pressuring the precious metals today: a firmer U.S. dollar index, solidly lower crude oil prices and a rise in U.S. Treasury yields. The marketplace is a bit quieter just ahead of the U.S. central bank monetary policy meeting and key U.S. inflation reports. August gold was last down $7.80 at $1,969.30 and July silver was down $0.37 at $24.03.

The U.S. data point of the week is the FOMC meeting of the Federal Reserve, which begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. A majority of the marketplace still thinks the Fed will pause in its interest-rate-tightening cycle. However, a stronger U.S. jobs report last Friday has bolstered those outliers who are thinking the Fed will make another rate hike this week.

Other important U.S. economic reports out this week include the consumer and producer price index reports for May on Tuesday and Wednesday, respectively. The CPI is forecast up 4.0%, year-on-year, while the PPI is seen down 0.1%, month-on-month.

Asian stock markets were mixed overnight and European stock indexes were mostly firmer. U.S. stock indexes are firmer at midday.

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The key outside markets today see the U.S. dollar index firmer and erased overnight losses. Nymex crude oil prices are solidly lower and trading around $67.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.776%.

Technically, August gold futures bulls have the overall near-term technical advantage amid recent choppy trading. 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 the May low of $1,949.60. First resistance is seen at last week’s high of $1,987.80 and then at $2,000.00. First support is seen at today’s low of 1,963.10 and then at last week’s low of $1,953.80. Wyckoff's Market Rating: 6.5

July silver futures prices hit a four-week high last Friday. The silver bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. 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 today’s high of $24.395 and then at $24.75. Next support is seen at $23.75 and then at $23.50. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed down 355 points at 375.35 cents today. Prices closed near mid-range today after hitting a four-week high last Friday. The copper bears have the overall near-term technical advantage. However, prices are in a fledgling uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 400.00 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 380.00 cents and then at last week’s high of 383.35 cents. First support is seen at today’s low of 373.50 cents and then at last week’s low of 368.60 cents. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold price going into Fed decision: selloff or test of $2k?

With Federal Reserve rate hike expectations see-sawing on mixed macro data, most analysts call for a pause in June but are not ruling out more rate hikes this summer. Here's what it means for gold.

The gold market is ending the week 0.4% higher after August Comex futures found solid support at the $1,960 an ounce level. However, analysts are less bullish on gold in the short term, citing risks of more Fed rate hikes and higher U.S. dollar weighing on the precious metal.

"Gold is vulnerable after trading in a fairly muted range," TD Securities senior commodity strategist Daniel Ghali told Kitco News. "All eyes are on the rate decision. And the outlook implied by the stamens of economic projections."

 

The Fed decision

The FOMC June 13-14 meeting is important because of the rate decision, the updated economic projections, and the new dot plot, which will give some idea about the Fed's reaction function over the next few months.

The Fed is expected to keep rates unchanged at 5.25% next week, letting the lag effects of monetary policy tightening from the last 15 months take effect. The CME FedWatch Tool is pricing in a 72% chance of a pause at the time of writing. If the Fed does pause, it would be the first 'on hold' decision since January 2022.

A pause would be bullish for the gold sector, OANDA senior market analyst Edward Moya told Kitco News.

"For gold, we are going to see more optimism that the Fed is done," Moya said. "The Fed seems likely to pause their tightening cycle, and if the updated forecasts remain optimistic that inflation will get a lot closer to target, it could be good news for gold bulls. Gold volatility should be elevated as prices could break out of the $1,950 to $2,000 trading range."

On the other hand, any hawkish surprise could mean a steep selloff for gold, Ghali noted. "Recent positioning raised implications of a surprise hike for next week. And a cohort of money managers might be vulnerable to that hike. A break below $1,940 an ounce would be significant."

Markets are referring to a potential pause in June as a "hawkish skip," citing the Bank of Canada's decision to pause for two consecutive meetings in the spring and then revert to another rate hike at the June meeting.

"We expect the Fed to leave interest rates unchanged at next week's FOMC meeting but, in what could be characterized as a 'hawkish skip,' to signal via forward guidance that officials are minded to hike interest rates again, probably at the following meeting in late-July," said Capital Economics chief North America economist Paul Ashworth. "The recent resilience of employment and stickiness of core inflation will ensure that the Fed delivers that rate hike as planned next month."

All eyes are on next week's inflation numbers

The big macro event everyone is keeping a close eye on is the U.S. May CPI report, which will be released on Tuesday — one day before the Fed's rate announcement.

And some analysts see the Fed decision as hinging on that inflation report.

"Should core inflation come in at 0.5% month-on-month – or 0.6% rather than the 0.4% consensus expectation – then the odds would likely swing in favor of a hike on Wednesday, as the measure would be heading in completely the wrong direction," said ING chief international economist James Knightley.

 

Gold price levels to watch

The gold market has formed a bottom at the $1,950 an ounce level, which serves as a solid support, RJO Futures senior market strategist Frank Cholly told Kitco News.

"A lot depends on the dollar right now," Cholly said. "Gold will need something above $2,000 for the August contract to give more confidence."

For the summer months, gold could be in store for a slow downward move as investor appetite lacks conviction during a seasonally slow period for consumption, said Standard Chartered precious metals analyst Suki Cooper.

"The gold market is caught within a comfortable range, and while tail risks exist that could push prices higher, risks through to year-end are increasingly to the downside," Cooper said Friday. "We believe the floor is well supported; in turn, prices are more likely to drift lower than plummet."

Standard Chartered is projecting gold to average at $1,975 an ounce in Q2 and $1,925 in Q3.
 

Next week's data

Tuesday: U.S. CPI

Wednesday: Fed rate decision, PPI,

Thursday: ECB rate decision, U.S. retail sales, Philly Fed manufacturing index, U.S. jobless claims, U.S. industrial production, NY Empire State manufacturing index,

Friday: Michigan consumer sentiment

By

Anna Golubova

For Kitco News

Time to Buy Gold and Silver

David

Slight price rises in gold, silver as FOMC meeting looms

Gold and silver prices are slightly higher in quieter U.S. trading early Friday. It appears the precious metals are pausing ahead of a busy U.S. data week next week, including inflation reports and the FOMC meeting. August gold was last up $1.60 at $1,980.20 and July silver was up $0.097 at $24.445.

The marketplace is looking ahead to next week’s FOMC meeting of the Federal Reserve, which begins Tuesday and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. A majority of the marketplace thinks the Fed will pause in its interest-rate-tightening cycle. But now many market watchers think the U.S. central bank will follow the Bank of Canada’s recent moves. The BOC this week raised interest rates by 0.25% after a four-month pause. Also next week comes the consumer price index and producer price index, on Tuesday and Wednesday, respectively.

Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

In overnight news, China’s producer price index unexpectedly dropped sharply in May, at down 4.6%, year-on-year. That’s the biggest drop in seven years. China’s consumer price index rose 0.2%, year-on-year. This latest data from China is another clue that major central banks of the world are taming problematic inflation.

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The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are near steady and trading around $71.25 a barrel. Crude prices briefly dropped sharply Thursday on reports the U.S. and Iran may be getting close to an agreement on its nuclear program that could prompt the lifting of oil sanctions on Iran. However, prices recovered as most traders doubt the U.S. and Iran can really come to terms on the matter. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.755%.

There is no major U.S. economic data due for release Friday.

Technically, the gold futures bulls have the overall near-term technical advantage. 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 the May low of $1,949.60. First resistance is seen at this week’s high of $1,986.50 and then at $2,000.00. First support is seen at $1,965.00 and then at the May low of $1,949.60. Wyckoff's Market Rating: 6.5

The silver bulls have gained the overall near-term technical advantage. Silver bulls' next upside price objective is closing July futures prices above solid technical resistance at $25.00. 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 $24.75 and then at $25.00. Next support is seen at $24.12 and then at $24.00. Wyckoff's Market Rating: 6.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold, silver surge as USDX sinks, U.S. Treasury yields slip

Gold and silver prices are sharply higher in midday U.S. trading Thursday, boosted by a solidly lower U.S. dollar index and a dip in U.S. Treasury yields on this day. August gold was last up $24.60 at $1,983.00 and July silver was up $0.796 at $24.325.

The marketplace is starting to zero in on next week's FOMC meeting of the Federal Reserve. The majority of the marketplace thinks the Fed will pause in its interest-rate-tightening cycle. But now many market watchers think the U.S. central bank will follow the Bank of Canada's recent moves. The BOC this week raised interest rates by 0.25% after a four-month pause. The BOC's move “brings home the reality that a pause needn't be a pivot. It can also be a way to slow down increases while fresh data come in,” said a Wall Street Journal story today.

Asian and European stock markets were mostly weaker overnight. U.S. stock indexes are firmer at midday.

In other news, the Euro zone reported its first-quarter GDP was revised down to -0.1% from the fourth quarter. Meantime, the fourth-quarter GDP was revised down to -0.1%. That means the Euro zone technically entered a recession in the first quarter, albeit just barely.

The Turkish lira hit a new record low against the U.S. dollar, prompting some worries of a possible currency contagion at some point, if the lira continues to weaken.

  Stocks will end 2023 higher, but 'Fed has gone too far' – David Nelson

The key outside markets today see the U.S. dollar index sharply down. Nymex crude oil prices are sharply lower and trading around $70.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.73%.

Technically, August gold futures bulls have the overall near-term technical advantage amid recent choppy trading. 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 the May low of $1,949.60. First resistance is seen at this week's high of $1,986.50 and then at $2,000.00. First support is seen at 1,970.00 and then at this week's low of $1,953.80. Wyckoff's Market Rating: 6.5

July silver futures prices hit a four-week high today. The silver bulls have regained the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. 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 today's high of $24.46 and then at $24.75. Next support is seen at $24.00 and then at today' low of $23.51. Wyckoff's Market Rating: 6.0.

July N.Y. copper closed up 195 points at 377.55 cents today. Prices closed nearer the session high today and closed at a four-week high close. The copper bears still have the overall near-term technical advantage. However, a six-week-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 400.00 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 this week's high of 381.15 cents and then at 385.00 cents. First support is seen at today's low of 373.45 cents and then at this week's low of 368.60 cents. Wyckoff's Market Rating: 4.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold and silver prices look vulnerable as seasonal summer weakness kicks in – DeCarley Trading's Carley Garner

The gold market has shown resilience with prices holding critical support around $1,950 an ounce even as the Federal Reserve is expected to maintain a tight grip on its monetary policy; however, despite the relative buoyancy in the marketplace, one strategist said that now is not the time.

In an interview with Kitco News, Carley Garner, co-founder of the brokerage firm DeCarley Trading, said that while she remains bullish on gold in the long term, now is not the time to buy.

She explained that gold is entering a traditionally weak seasonal period that could weigh on prices, and she expects that gold will have one more correction before it starts its rally to all-time highs.

"If we break below support at $1,950, we could see prices fall significantly lower," she said. "There is not much holding up the market before $1,880. It's a big air gap lower. If you are bullish and you want to start building a position now, you should only nibble at the market, not load up."

She added that gold's 200-day moving average of $1,880 represents a significant support level.

Garner said that investors looking to play the market might want to buy weekly options. However, she said that she wouldn't look to buy gold until at least late July or even early September, depending on where prices are.

Although Garner expects to see gold fall lower in the short term, she added that she is not actively shorting the market. She said that elevated levels of market uncertainty continue to provide some support for the precious metal.

"I would rather be a little bit late to the gold rally than be caught short," she said.

As to what would shift her near-term sentiment in gold, Garner said that she would need to see a clear break above $2,000 an ounce.

"Unless we get a break above that resistance level, gravity will take hold of the price," she said.

Garner is also short-term bearish on silver. She said she expects one more selloff before a long-term rally.

"I think we need to see some weak longs shaken out of silver before we see a sustainable move higher. I think prices could fall to $20 an ounce before they move back to $30," she said.

Along with seasonal factors, Garner said that the Federal Reserve's monetary policy stance continues to keep investors out of the gold market. Although markets are priced in for the central bank to hold interest rates unchanged next week, there are still expectations that rates will go higher before the summer is done.

 Plenty of value in gold as WisdomTree forecasts $2,285 by Q1 2024

However, a growing chorus of analysts and economists have said that further economic weakness will keep the Federal Reserve on the sidelines in July as well.

"I hope that the Fed is done raising interest rates," she said. "They have a habit of becoming fixated on one idea. They want to see inflation down to 2%, but I think that is going to get them in trouble. They should look at a target of 3% for now and go from there."

Despite her growing concerns, Garner said that if the Federal Reserve can pull back on the monetary policy reins, it would support sluggish economic growth through the rest of the year, avoiding a recession. She said that in this environment, the asset she is watching is copper.

Along with fears of a U.S. recession, copper has also been held back this year by volatile economic activity in China; however, Garner said that she expects the base metal to have priced in that weakness.

"I like copper on the upside. The price is holding $3.50, which is a critical trend line. There is potential for copper prices to push to $4.50," she said.

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David