Hawkish central banks will test gold bulls’ resolve into year-end

Hawkish central banks will test gold bulls' resolve into year-end

he gold market is holding its ground at around $1,800 an ounce despite growing hawkish rhetoric from central banks around the world; the bullish sentiment in the marketplace is pointing to a positive end for the precious metal for 2022.

The latest Kitco News shows that retail investors are still significantly bullish on gold heading into the final full trading week of the year. At the same time, Wall Street analysts are slightly more cautious, with many saying that lower gold prices represent a strategic buying opportunity.

Although the Federal Reserve has signaled that it is nowhere near ready to halt its tightening cycle, analysts note that the market is starting to discount the hawkish stance. Some analysts have said that investors are now shifting their focus to the growing recession fears and away from the inflation threat.

"The Fed is not pumping the breaks just yet, but it is taking its foot off the gas, and that should help gold consolidate around $1,800," said Frank Cholly, senior market strategist at RJO Futures.

Christopher Vecchio, head of futures and forex at Tastylive.com, said that weaker economic growth is helping to bring down real yields, which continues to support gold around $1,800 an ounce.

"I think gold right now is well positioned to start the new year on a strong note," he said.

This week, 20 Wall Street analysts participated in the Kitco News Gold Survey. Among the participants, nine analysts, or 45%, were bullish on gold in the near term. At the same time, five analysts, or 25%, were bearish for next week and six analysts, or 30%, saw prices trading sideways.

Meanwhile, 772 votes were cast in an online Main Street poll. Of these, 437 respondents, or 57%, looked for gold to rise next week. Another 202, or 26%, said it would be lower, while 133 voters, or 17%, were neutral in the near term.

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The gold market is looking to end the week in roughly neutral territory, with prices down 0.5% from last Friday. February gold futures last traded at $1,800 an ounce.

Adam Button, head of currency strategy at Forelive.com, said he expects to see lower prices next week as hawkish central bank comments could weigh on prices.

Not only is the Federal Reserve not done raising interest rates, but European Central Bank President Christine Lagarde warned investors that the ECB is expected to continue to raise interest rates by 50 basis points well into 2023.

However, Button added that any dip in the price could be a buying opportunity as this is seasonally a strong period for gold.

"Even holding steady for the remainder of the month would be a win and set up gold for a nice rally in January," he said.

While gold has remained resilient as central banks tighten monetary policies worldwide, some analysts have noted that bullish momentum is starting to weigh as resistance holds around $1,800 an ounce.

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Downside risks for gold and silver prices in 2023 – Natixis' Dahdah

"The momentum indicators have not recovered. I still think a bigger pullback may be coming, but so far [gold has been] more resilient than I thought," said Marc Chandler, managing director at Bannockburn Global Forex. "This seems to be corresponding to a U.S. dollar, which seems better offered into rallies than bought on dips."

Darin Newsom, senior market analyst at Barchart, said that he sees the U.S. dollar entering a short-term uptrend helping to push gold prices lower.

"Last week's call for a lower market is still working, unless Feb gold posts a strong rally to close out Friday. If it doesn't, then the contract will have completed a bearish spike reversal on its weekly chart, confirming the secondary (intermediate-term) trend has turned down," he said.

By Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David

Gold, silver hit hard by hawkish Fed, surge in greenback

Gold and silver prices are sharply lower in midday U.S. trading Thursday. The precious metals bulls were running for cover today amid sharp gains in the U.S. dollar index and in the aftermath the FOMC meeting that sees the Federal Reserve still leaning hawkish on U.S. monetary policy. February gold was last down $32.00 at $1,786.00 and March silver was down $0.836 at $23.305.

A still-hawkish Federal Reserve had traders and investors in a "risk-off" stance Thursday. Two months of better-than-expected U.S. inflation data were not enough to convince the Fed to let its foot off the monetary-policy-tightening gas. "Higher for longer" is the marketplace takeaway from this week's FOMC meeting—meaning higher interest rates for a longer period of time—to ensure the Fed tamps down hard on inflation.

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

The European Central Bank and the Bank of England monetary policy meetings on Thursday saw both the BOE and ECB raise their main interest rate by 0.5%. That follows the U.S. Federal Reserve's half-point rate hike. The central banks of Switzerland and Norway also raised their interest rates Thursday but also in smaller increments of policy tightening.

China and its fight against Covid remains near the front burner of the marketplace. Broker SP Angel this morning said in an email dispatch there is increasing evidence that China is now "allowing Covid to rip through the population." There is relatively little vaccination and almost no effective vaccination against Omicron in China. "That means the virus will bypass most of the Covid controls left in place." The Wall Street Journal said today that "China's economy took a big hit in November" due to strict Covid lockdown policies.

The ECB's aggressive monetary policy stance gives gold a lifeline as euro makes a move against U.S. dollar

The key outside markets today see the U.S. dollar index sharply higher. Nymex crude oil prices are weaker and trading around $76.75 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently around 3.45%.

Technically, February gold futures bulls are fading late this week but still have the overall near-term technical advantage. However, a five-week-old uptrend on the daily bar chart is in jeopardy. Bulls' next upside price objective is to produce a close above solid resistance at this week's high of $1,836.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,800.00 and then at today's high of $1,819.70. First support is seen at today's low of $1,782.00 and then at $1,778.10. Wyckoff's Market Rating: 6.0

March silver futures bulls have the firm overall near-term technical advantage. Prices are in a choppy 3.5-month-old uptrend on the daily bar chart. 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 $22.00. First resistance is seen at $24.00 and then at this week's high of $24.39. Next support is seen at today's low of $23.155 and then at $23.00. Wyckoff's Market Rating: 6.5.

March N.Y. copper closed down 1,125 points at 376.55 cents today. Prices closed nearer the session low today. The copper bulls have the slight overall near-term technical advantage. 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 354.70 cents. First resistance is seen at today's high of 386.75 cents and then at this week's high of 392.90 cents. First support is seen at 370.00 cents and then at 360.00 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Tough talk by Chairman Powell signaling more rate hikes over a longer time span

As expected, the Fed announced its decision to raise its benchmark rate by 50-bps. This takes the central bank’s “Fed funds” rate to between 425 – 450 bps (4 ¼% – 4 ½%). However, it was Chairman Powell’s comments regarding his policy outlook during the press conference that garnered the most attention. Market participants and analysts were looking for insight into the forward guidance of the Federal Reserve as it pertains to their monetary policy, inflation, and future rate hikes. Which revealed that the Federal Reserve will continue its policy of monetary tightening by continuing to raise rates in 2023.

The Federal Reserve released a statement as well as its summary of economic projections for 2023 through 2025 after today’s FOMC meeting. One component of their economic projections was the most current “dot plot” which reveals assessments made by each Fed official. When the Fed is fully staffed the dot plot will contain 19 individual projections.

2023 – All of the 19 Federal Reserve members who added their “dot” to the Fed’s projections reflected higher interest rates in 2023. The majority of members (10 votes) anticipate rates to be at 5 ¼%, with four members anticipating rates to go to 5 ½%, two members anticipating rates at 5 ¾% and two members anticipating rates at 4 ¾%.

2024 -seven members anticipate that interest rates will remain elevated above the current rate of 4 ½%, with the remaining 12 members anticipating rate reductions from ¼% to 1 ½%.

2025 – all Federal Reserve members anticipate that fed funds rates will be 4 ½% to 3% by the end of 2025.

Chairman Powell delivered a strong message reinforcing the information contained in their economic outlook and the Fed’s policy outlook saying, “Fed policymaker projections are best assessment of where Fed policy rates will be.”

Chairman Powell’s press conference

Chairman Powell acknowledged that the last two CPI reports were promising but incomplete. “Data we have received so far on inflation for October and November do show a welcome reduction in price pressures; need substantially more evidence though to be confident inflation coming down.” He also said that “recent data gives us greater confidence in our forecast.”

His statements supported the Federal Reserve’s resolve and commitment to keep interest rates at their current level and higher until the Fed reaches its inflation target of 2%. Addressing the possibility of a recession he simply said “no one knows if we are going to have a recession or not.”

Today’s FOMC meeting statement, economic projections, and press conference resulted in declines in the dollar, US equities, and precious metals. As of 5:20 PM EST gold futures basis, the most active February 2023 contract is currently fixed at $1818.80 after factoring in today’s decline of $6.70 or 0.37%. Concurrently the dollar declined by 0.33% and is currently fixed at 103.595. Dollar weakness added $6.70 to the price of spot gold and normal trading indicated that traders moved gold pricing lower by $9.40, according to the Kitco gold index.

It was clear that Chairman Powell's statements today delivered a hard-hitting truth to Americans that inflation will remain persistent for longer than anticipated and interest rates will follow the same course.

By Gary Wagner

Time to Buy Gold and Silver

David

Slightly cooler U.S. inflation report boosts gold, silver

Gold and silver prices are solidly higher in midday U.S. trading Tuesday, but down from daily highs, following a slightly tamer-than-expected U.S. inflation report. Gold surged to a five-month high and silver a seven-month high right after the report’s release. February gold was last up $26.70 at $1,818.90 and March silver was up $0.407 at $23.81.

The U.S. consumer price index report for November showed a rise of 0.1% from October and was up 7.1%, year-on-year. CPI was forecast to come in up 0.3% from October and up 7.3%, year-on-year. The slightly cooler-than-expected inflation data was enough to rally the stock and financial markets, and the metals, while tanking the U.S. dollar index. The CPI report lands in the camp of the U.S. monetary policy doves, who want to see the Federal Reserve back off the accelerator on its aggressive monetary policy tightening path.

U.S. stock indexes are mixed at midday and have lost early strong gains in the aftermath of the CPI report. After the initial euphoria from the CPI report, traders and investors realized the Federal Reserve still has some tightening of monetary policy in their sights. The Fed’s Open Market Committee (FOMC) meeting began Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chair Powell. The FOMC is very likely to raise U.S. interest rates by 0.5%. The European Central Bank and the Bank of England meet on Thursday and are likely to follow the U.S. Federal Reserve with half-point rate hikes.

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The key outside markets today see the U.S. dollar index sharply down and hitting a 5.5-month low. Nymex crude oil prices are sharply higher and trading around $75.85 a barrel. A major oil pipeline in the U.S. has been shut due to a leak, and that’s supporting Nymex crude oil prices this week. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.492% and fell after the cooler CPI report.

Technically, February gold futures prices hit a five-month high today. The gold futures bulls have the firm overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at $1,822.90 and then at today’s high of $1,836.90. First support is seen at $1,800.00 and then at this week’s low of $1,789.00. Wyckoff's Market Rating: 7.0

March silver futures prices hit a seven-month high today. The silver bulls have the firm overall near-term technical advantage. Prices are in a choppy 3.5-month-old uptrend on the daily bar chart. 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 $22.00. First resistance is seen at today’s high of $24.39 and then at $25.00. Next support is seen at this week’s low of $23.32 and then at $23.00. Wyckoff's Market Rating: 7.0.

March N.Y. copper closed up 425 points at 364.25 cents today. Prices closed nearer the session low today. The copper bulls have the overall near-term technical advantage. 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 354.70 cents. First resistance is seen at today’s high of 392.90 cents and then at the November high of 394.70 cents. First support is seen at this week’s low of 378.60 cents and then at 370.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold, silver see routine profit taking

Gold and silver prices are solidly lower in midday U.S. trading Monday. Normal corrective pullbacks and some profit taking by the shorter-term futures traders were featured to start the trading week, following recent good price gains for both metals. A firmer U.S. dollar index on this day also worked against the metals market bulls. February gold was last down $17.70 at $1,792.90 and March silver was down $0.287 at $23.435.

Traders await a major U.S. data point on Tuesday–the consumer price index report for November, out at 8:30 a.m. EST. The CPI is seen coming in up 7.3%, year-on-year.

Major central banks will this week complete the most aggressive year for interest-rate hikes in four decades with their fight against inflation still not over even as their economies slow. The Federal Reserve’s Open Market Committee (FOMC) meeting begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chair Powell. The FOMC is mostly likely to raise U.S. interest rates by 0.5%. Then, the European Central Bank and the Bank of England meet on Thursday and are likely to follow the U.S. Federal Reserve with half-point rate hikes.

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The key outside markets today see the U.S. dollar index modestly up. Nymex crude oil prices are higher and trading around $72.75 a barrel. Prices last Friday hit an 11-month low. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.593%.

Technically, February gold futures bulls still have the overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the December high of $1,822.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,800.00 and then at today’s high of $1,809.30. First support is seen at last week’s low of $1,778.10 and then at $1,770.00. Wyckoff's Market Rating: 6.0

March silver futures bulls have the overall near-term technical advantage. Prices are in a choppy 3.5-month-old uptrend on the daily bar chart. 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 $22.00. First resistance is seen at the December high of $23.90 and then at $24.00. Next support is seen at $23.00 and then at $22.50. Wyckoff's Market Rating: 6.5.

March N.Y. copper closed down 830 points at 379.55 cents today. Prices closed nearer the session low today. The copper bulls have the overall near-term technical advantage. 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 354.70 cents. First resistance is seen at today’s high of 385.95 cents and then at 390.00 cents. First support is seen at last week’s low of 377.30 cents and then at 370.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold trades sideways as investors wait for next week’s FOMC and CPI report

Unlike yesterday’s double-digit gain in gold prices, today we see gold once again consolidating as it did on Tuesday. Tuesday’s price consolidation in gold indicated that the dramatic decline that occurred on Monday was more akin to a one-and-done scenario than the beginning of a correction. It was the equal or slightly higher low on Tuesday that was just as important as the fractional gains. It indicated solid short-term support for gold futures at around $1780.

Yesterday gold had a respectable price advance recovering roughly half of the decline traders witnessed on Monday. But I believe the key takeaway from the fractional gains on Tuesday and today is that market participants are waiting for the latest information on inflation when the CPI (Consumer Price Index) is released next Tuesday and the Federal Reserve’s last FOMC meeting of the year concludes on the following day.

The most important factor in recent and upcoming price changes in gold is that it has been and will continue to be driven by headlines.

Market participants are by large anticipating that the Federal Reserve will announce a 50-basis point rate hike rather than 75-basis points. According to the CME’s FedWatch tool, there is a 79.4% probability of a 50-BP rate hike, with only a 20.6% probability of a 75-BP rate hike by the Fed next week. This would break the 75-BP rate hike cycle set by the Federal Reserve beginning in June. This means that a rate hike of ½ a percent next week has been largely factored or baked into the pricing.

Gold futures basis the most active February 2023 contract opened in New York at $1799.50 and traded to a high of $1806. As of 4:35 PM EST, the February contract of gold futures is currently fixed at $1801.20 after factoring in today’s net gain of $3.30. This is just above the 200-day MA which is at $1800.20.

Today’s gains in gold pricing were based upon dollar weakness combined with fractional selling pressure in gold. The dollar is currently trading lower by 0.28% and gold futures are currently up 0.18% higher which confirms that today’s price change in gold is a net result of that combination.

By Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold breaks above its 200-day moving average then moves back below it

Gold futures basis the most active February 2023 contract opened in New York at $1783.30 and traded to a high of $1803.20 just above its 200-day moving average which is currently fixed at $1800.70. The price point of this long-term moving average at least for the short term became a technical level of resistance moving gold back below it. As of 4:19 PM EST, the February contract of gold futures is currently fixed at $1798.90 after factoring in today’s net gain of $16.50 or 0.93%.

Today’s double-digit gains came out of a combination of dollar weakness and traders bidding the precious yellow metal higher. Currently, the dollar is down 0.41% with the dollar index fixed at 105.105. Gold’s gain of 0.92% indicates that market participants were not only active buyers but provided just over 50% of the gains realized in gold futures.

That same ratio can be seen in today’s pricing of physical gold. According to the Kitco Gold Index (KGX), spot gold as of 4:23 PM EST was fixed at $1786.70 after factoring in a net gain today of $15.50. Dollar weakness accounted for $6.55 of the $15.50 gain with the rest attributable to buyers bidding gold prices higher by $8.95.

Market participants move gold prices higher today as continued concerns focus on the Federal Reserve’s last FOMC meeting of the year next week and the next inflation report, the CPI. This report will be released during the first day of the two-day FOMC meeting. This will allow the Federal Reserve to see if the fractional decline in inflation reported for October 2022 in November is a continuation of declines in the CPI index after hitting the highest level this year in June when the CPI came in at a scorching 9.1%. From July to October, the CPI has had consecutive declines coming in at 8.5% in July, 8.3% in August, 8.2% in September, and 7.7% in October.

Traders and investors have largely priced in the high likelihood that the Fed will raise rates by 50 basis points, or a ½ %. This will take the current target rate of 375 – 400 basis points to 425 – 450 basis points by the end of the year. According to the CME’s FedWatch tool, there is a 74.7% probability of a 50-basis point rate hike and a 25.3% probability of a 75-basis point rate hike. It is the possibility, although remote, of a fifth consecutive rate hike of 75 basis points that continues to give market participants angst about the upcoming meeting.

Technical levels to watch with gold futures

Our technical studies indicate that the first level of resistance still occurs at $1802 based on gold’s current 200-day moving average. The next level of resistance above that is $1825 based upon the double top that occurred in both August and December.

Minor support first occurs at $1775 which corresponds to the 23.6% Fibonacci retracement. Major support occurs between $1720 the 50% retracement and $1745 the 38.2% Fibonacci retracement level.

By Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold consolidates after trading to a double top near $1825 yesterday

Market participants are acutely aware of next week’s FOMC meeting which begins on Tuesday, December 13, and concludes the following day. Following the conclusion of the last FOMC meeting of the year, the Federal Reserve will release a statement which will be followed by Chairman Powell’s press conference. It is highly anticipated that the Federal Reserve will raise its benchmark Fed funds rate as it has at every consecutive FOMC meeting since March.

Traders and investors have largely priced in the high likelihood that the Fed will raise rates by 50 basis points, or a ½ %. This will take the current target rate of 375 – 400 basis points to 425 – 450 basis points by the end of the year. According to the CME’s FedWatch tool, there is a 77% probability of a 50-basis point rate hike and a 23% probability of a 75-basis point rate hike. It is the possibility, although remote, of a fifth consecutive rate hike of 75 basis points that has given market participants angst about the upcoming meeting.

Gold had fractional gains with the most active February 2023 Comex contract gaining $2.30 or 0.13%. As of 4:55 PM, EST gold futures are fixed at $1783.80. Gold futures opened today at $1780.80 and traded to a high of $1793.20, and a low of $1779.10. The dollar gained 0.26% in trading today with the dollar index currently fixed at 105.515. This means that traders were able to bid gold prices higher while overcoming mild dollar strength.

This can also be seen in the pricing of physical gold today. According to the Kitco Gold Index spot gold is currently fixed at $1771.40. Traders bid physical gold higher by $6.40 and dollar strength took away $4.10 of that gain which resulted in today’s net gain of $2.30.

Today’s fractional gain in gold indicates that market participants have paused the selling pressure seen in yesterday’s technical selling that moved gold prices sharply lower.

Important technical levels in gold futures

Our technical studies indicate that the first level of resistance occurs at $1802 based on gold’s current 200-day moving average. The next level of resistance above that is $1825 based upon the top that occurred in August. Major resistance can be seen at $1883; this is based upon the top that occurred in mid-June.

Minor support first occurs at $1775 which corresponds to the 23.6% Fibonacci retracement. Major support occurs between $1720 the 50% retracement and $1745 the 38.2% Fibonacci retracement level.

By Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold, silver hit hard by profit taking, bearish outside markets

Gold and silver prices are sharply lower in midday U.S. trading Monday after hitting multi-month highs overnight. The metals are being hit by heavy profit taking from the shorter-term futures traders and by bearish outside markets. The U.S. dollar index is solidly higher and crude oil prices are lower and lost good early gains. Rising U.S. Treasury yields are also a bearish element for the precious metals markets today. February gold was last down $24.10 at $1,785.20 and March silver was down $0.88 at $22.375.

Today's report on the U.S. ISM services index unexpectedly improved in November, and with only a slight decrease in prices paid. The data may suggest wage pressures will remain stronger. The headline index for November came in at 56.6, which was higher than the expected reading of 53.3. The employment component also moved back to expansion territory. The report falls into the hawkish camp on Federal Reserve monetary policy and helped pressure the stock market, and in turn supported the U.S. dollar index while lifting U.S. bond yields.

Global stock markets were mixed to firmer overnight. U.S. stock indexes are sharply lower near midday, but are still no too far below last week's multi-month highs.

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The key outside markets today see the U.S. dollar index solidly higher after hitting a 3.5-month low last Friday. Nymex crude oil prices are lower and trading around $79.00 a barrel. As of Monday, the European Union and the U.K. have barred inbound shipments of crude oil from Russia and put a cap of $60 a barrel on EU companies doing business facilitating Russian oil shipments elsewhere in the world. At a meeting over the weekend the OPEC oil cartel lefts its collective crude oil production unchanged. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.57%.

Technically,February gold futures prices hit a 3.5-month high early on today and then reversed course to score a bearish "outside day" down on the daily bar chart. The gold futures bulls still have the overall near-term technical advantage but faded today. Prices are in a four-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at today's high of $1,822.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,733.50. First resistance is seen at $1,800.00 and then at the November high of $1,806.00. First support is seen at $1,770.00 and then at $1,750.00. Wyckoff's Market Rating: 6.0Live 24 hours silver chart [

March silver futures prices hit a seven-month high early on today but then reversed course to score a bearish "outside day" down on the daily bar chart. The silver bulls still have the overall near-term technical advantage but faded today. Prices are in a choppy three-month-old 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 $20.79. First resistance is seen at $23.00 and then at today's high of $23.69. Next support is seen at $22.00 and then at $21.435. Wyckoff's Market Rating: 6.0.

March N.Y. copper closed down 440 points at 380.60 cents today. Prices closed near the session low today after hitting a three-week high early on. The copper bulls have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 394.70 cents. The next downside price objective for the bears is closing prices below solid technical support at 354.70 cents. First resistance is seen at today's high of 389.45 cents and then at 394.70 cents. First support is seen at 373.50 cents and then at 365.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Will $1,800 bring the gold bulls back? Analysts look for follow-through buying next week

rowing expectations that the Federal Reserve will slow the pace of rate hikes are creating new momentum in the gold market as prices ended the week above $1,800 an ounce. However, some analysts aren't entirely convinced that new capital is coming into the market.

Analysts said they are anxious to see if the precious metal can attract some follow-through buying next week and solidly break out above its 200-day moving average, something it hasn't done since February.

Not only is gold starting December off on the front foot, but its 7% rally during November was its best performance since May 2021.

Gold's solid finish to the week comes after the U.S. government reported substantial employment gains and higher wages for November.

Friday, the Bureau of Labor Statistics said 263,000 jobs were created in November; economists expected job gains of 200,000. At the same time, wages increased 5.1% for the year, well above expectations.

Ole Hansen, head of commodity strategy at Saxo Bank, said that sentiment is improving with traders now looking to buy the dips instead of selling the rallies; however, he added that there is still little bullish conviction in the market and that needs to change if prices are going to consolidate at current levels.

"From a momentum perspective, we still need to do a little bit more work," he said. "Momentum traders are still not in a hurry to get into gold."

Kevin Grady, president of Phoenix Futures and Options, said that gold's future remains tied to the Federal Reserve and its aggressive monetary policy stance.

Gold's month-end rally started in earnest Wednesday after Federal Reserve Chair Jerome Powell said it could be appropriate for the U.S. central bank to slow its pace of tightening in December.

However, Grady noted that despite the dovish tilt, the Federal Reserve will continue to raise interest rates and that will keep many gold investors on the sidelines.

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He added that he sees the current rally as further short-covering, which is not sustainable.

"You don't want to be short gold if the Fed is going to raise interest rates by 50 basis points," he said. "But people are not saying let's get long gold at $1,800; they are saying let's not be short."

Edward Moya, senior North American market analyst at OANDA, said that given gold's move this past week, he would expect to see some consolidation in the near term.

He added that next week is a relatively quiet one for economic data and traders will probably keep a low profile as they wait for the Federal Reserve's monetary policy decision on Dec. 14.

However, he added that he would look to buy gold as it tests the bottom of its new trading range.

"I'm slightly bearish on gold right now, but if it drops $20 from here, then I would be bullish," he said.

Moya added that long-term, although the jobs data remains persistently strong, other areas of the economy continue to weaken.

He said that after the holidays, he expects to see significant demand destruction as consumers try to pay their bills. This environment will force the Federal Reserve to slow the pace of its rate hikes and even lead to the much-awaited pivot.

"Inflation is still going to be sticky and tricky to navigate, but we are not seeing a risk that the Fed Funds rate goes to 6%," he said. "The Fed is still going to downshift and that will be good for gold."

Heading into the weekend, the CME Fed Watch Tool shows that markets see a nearly 80% chance that the Federal Reserve will raise interest rates by 50 basis points later this month. Markets still see a terminal rate between 5.0% and 5.25%.

Along with economic data, market analysts warn investors to keep an eye on headlines surrounding next week's OPEC+ output decision.

The group of 23 oil-producing nations led by Saudi Arabia and Russia will meet Sunday, with markets expecting the group to announce more production cuts, which would increase fears of a recession and higher inflation.

Next week's data

Monday: ISM services PMI, Reserve Bank of Australia monetary policy decision

Wednesday: Bank of Canada monetary policy decision

Friday: Producer Price Index, preliminary University of Michigan Consumer Sentiment

By Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David