Gold, silver power higher amid keen marketplace anxiety

Gold and silver prices are sharply higher in midday U.S. trading Tuesday, with gold poised to close at a 1.5-year high close. More safe-haven demand amid a very spooked marketplace is featured as the Russia-Ukraine geopolitical situation appears to be deteriorating by the day. April gold futures were last up $35.80 at $1,936.60 and May Comex silver was last up $0.909 at $25.27 an ounce.

The West’s very heavy sanctions have crippled Russia’s economy. Add that to the unexpectedly strong resistance being put up by the Ukrainian military to its Russian aggressors and Russian President Putin has been put on very thin ice. Some pundits are calling him “unhinged” based upon his recent comments and television appearances. If the demoralized Russian public becomes seriously disenchanted with Putin, the marketplace wonders what he will do. Will his generals attempt a coup? Will Putin attack Western countries? In a desperate move to save his hide or to safe face, would Putin resort to using his nuclear missiles? These are questions that will keep markets on edge for likely some time to come.

U.S. President Biden will address the Russian situation Tuesday evening in his annual state of the union address.

Global stocks markets were mixed to lower overnight and the U.S. stock indexes are solidly lower at midday. Reports say Russian has stepped up its military campaign against Ukraine Tuesday, including shelling civilian targets.

The key outside markets today see Nymex crude oil prices posting sharp gains and trading around $106.50 a barrel. The U.S. dollar index is sharply higher today. The benchmark U.S. 10-year Treasury note is presently yielding 1.709%. U.S. Treasuries are seeing strong safe-haven buying interest.

Technically, April gold futures prices are poised to close at a 1.5-year high close today. Bulls have the solid overall near-term technical advantage. 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 the February high of $1,976.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,950.00 and then at $1,976.50. First support is seen at today’s low of $1,903.00 and then at this week’s low of $1,892.20. Wyckoff's Market Rating: 8.5.

May silver futures bulls have the firm overall near-term technical advantage. Prices are in an uptrend on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the February high of $25.705 and then at $26.00. Next support is seen at $25.00 and then at today’s low of $23.345. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 1,260 points at 458.30 cents today. Prices closed near the session high today. The copper bulls have the overall near-term technical advantage. Prices are in a choppy, two-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the February high of 469.95 cents. The next downside price objective for the bears is closing prices below solid technical support at 440.00 cents. First resistance is seen at 460.00 cents and then at 463.80 cents. First support is seen at 450.00 cents and then at this week’s low of 445.00 cents. Wyckoff's Market Rating: 6.5.
 

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold price to hit $2,150 on Russian invasion, 'very high inflation path' – Goldman Sachs

As the West steps up sanctions against Russia in the aftermath of a full-scale invasion of Ukraine, Goldman Sachs raised its commodities price forecasts, citing supply disruptions and an even more problematic inflation outlook.

The commodities to pay close attention to are the ones Russia is a major producer of — oil, gas, aluminum, palladium, nickel, wheat and corn.

"The range of near-term price outcomes for commodities has become extreme, given the concern of further military escalation, energy sanctions or potential for a cease-fire," Goldman said in a note to clients on Sunday. "We expect the price of consumed commodities that Russia is a key producer of to rally from here."

Gold is another safe-haven commodity that is due for a much bigger rally going forward, according to Goldman.

"The recent escalation with Russia create clear stagflationary risks to the broader economy, driven by higher energy prices, which reinforce our conviction in higher gold prices in coming months and our $2,150/toz (troy ounce) price target," Goldman said.

In reaction to additional sanctions against Russia, gold surged above $1,916 an ounce on Monday. Some gains were lost as the trading session progressed, with April Comex gold last at $1,905.70. But the precious metal is still set for the best monthly performance since May.

Goldman explained that gold would play a central role in this conflict as Russia turns to the precious metal for leverage amid sanctions. Russia's gold reserves total 2,298.53 tonnes, according to World Gold Council.

"Gold's unique role as the currency of last resort will likely be apparent if restrictions on Russia's central bank accessing its offshore reserves leave it leveraging its large domestic gold stockpiles to continue foreign trade, most likely with China," the bank said.
 

Gold price could hit $2,000 'in only a matter of days' – analysts

Also, Goldman increased its one-month Brent crude oil price projection to $115 a barrel from $95, adding that Russia is becoming more isolated as the West's sanctions kick in. "[For Brent, there is] significant upside risks on further escalation or longer disruption," the note added.

At the time of writing, Brent was trading above $100 per barrel and the U.S. West Texas Intermediate (WTI) was at around $96.

From the macro perspective, Goldman raised its inflation outlook, stating that it is "increasingly concerned" about the pace of inflation in 2022. "A very high inflation path in 2022 should make an easy case for steady rate hikes at all seven remaining" Federal Reserve meetings in 2022, said Goldman economist David Mericle said in another note to clients.

The bank now expects core inflation to run at 3.7% through the end of this year. Its previous estimate was at 3.1%. In light of this, Goldman is estimating to see seven rate hikes in 2022 and another four in 2023.

The first rate hike will likely come on March 16, with the CME Fed WatchTool projecting a 92.5% chance of a 25-basis-point hike.

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold price starts the week back above $1,900 but sees major volatility on further safe-haven demand

he gold market continues to see significant volatility as Western nations react to the Russian invasion of Ukraine.

Safe-haven demand pushed gold prices up 2% at the start of the Asian trading session, kicking off the new week on a solid note. However, analysts note that the precious metal still faces strong momentum in the U.S. dollar as the world's dominant currency in this uncertain environment.

April gold futures last traded at $1,917.50 an ounce, up 1.5% on the day. Gold's solid start comes as U.S. equity markets see strong selling pressure with the S&P 500 opening the week down 2%.

Traders have a lot to catch up on as markets are just starting to react to the news over the weekend that NATO nations imposed further sanctions on Russia, kicking some banks out of the SWIFT global payments system.

Meanwhile, on Sunday, Russian President Vladimir Putin ordered his country's deterrence forces — including nuclear arms — onto their highest state of alert.

The U.S. and other Western nations are also sending military aid to Ukraine as Russian forces surround and draw closer to Ukrainian's capital city, Kyiv.

Analysts have said if tensions continue to escalate, gold prices could quickly push back to $2,000 an ounce.

David Madden, market analyst at Equiti Capital, said that in the current environment with so much geopolitical uncertainty, he could see prices pushing to new all-time highs in a few days.

Is gold price at risk of a bigger pullback after $100 swings?

However, some analysts have said that gold still faces a lot of headwinds and volatility is picking up. Last week as Russia invaded Ukraine, gold prices saw an intra-day swing of nearly $100.

Christopher Vecchio, senior market strategist at DailyFx.com, said in a note Sunday that Thursday's intra-day high could mark the peak for gold this year.

"The path for gold prices is clear from here: it's World War 3 or bust. If gold prices are going to run higher from this point, there needs to be a significant escalation in the Russia-Ukraine conflict, ultimately drawing in the European Union, the United States, and more broadly, the NATO alliance," he said in the note. "Otherwise, in an economic environment defined by slowing growth among G7 countries and more hawkish central banks – which is pushing up real interest rates – gold prices are not well-suited to sustain a meaningful rally."
 

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

Russia-Ukraine conflict – $100 gold price swings and volatility warning

Gold saw $100 price swings on Russia's invasion of Ukraine. In an initial reaction, gold hit the highest levels since September 2020 but could not hold the gains. After markets received some clarity around new Russia sanctions, gold dropped back below the $1,900 an ounce level. Here's a look at Kitco's top three stories of the week:

3. Dramatic price swings: Gold price sheds $90, silver price sees sharp reversal as analysts warn of more volatility to come

2. Watch palladium, gold, and silver prices as the West sanctions Russia in response to the Ukraine crisis

1. Gold's path to $2k: Fed rate hikes won't hurt gold price rally this year, says Wells Fargo

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

Is gold price at risk of a bigger pullback after $100 swings?

After the initial geopolitical shock of Russia's full-scale invasion of Ukraine, gold has retreated below the $1,900 an ounce level. But analysts are still warning of high volatility ahead for the precious metal.

The gold market saw price swings of around $100 during the last couple of trading sessions as markets reacted to the crisis in Ukraine. April Comex gold futures were last at $1,885.40, down 2.12% on the day after hitting a 1.5-year high of $1,976.50 on Thursday.

Analysts point to clarity around sanctions as one of the reasons behind gold's pullback, adding that many were pricing in a much harsher response from the West.

"Some of the extreme political tension is off. We know Putin has invaded Ukraine in a much broader sense than we thought. And prior to that, the belief was that the response would be robust, which could very well include removing Russia from the SWIFT payment system. That didn't happen," TD Securities head of global strategy Bart Melek told Kitco News. "The sanctions, certainly judging by the markets' response, were not as strong and restrictive as they could have been."

One of the more significant outcomes was the energy market not getting hurt by sanctions, which means less oil supply stress.

"Oil prices have come off. Less inflationary expectations and higher real rates are not great for gold," Melek said. "The West is not sanctioning Russian oil or gas exports. And at the same time, we might get more support from OPEC."

On top of that, the West's disagreement over removing Russia from the SWIFT system shows that the severity of response will vary, Gainesville Coins precious metals expert Everett Millman told Kitco News.

 

"The resistance of many EU members to impose harsher sanctions from Russia, such as banning them from the SWIFT system, is part of the reason behind gold's reversal. Now it does seem like Europe is not aligned with the U.S. and Britain to impose the harshest possible sanctions. And that does de-escalate the crisis a bit," Millman said.

Plus, gold's geopolitically-triggered rallies usually run out of steam very quickly, he added. "That's what we saw in 2014 during the annexation of Crimea. I'm not surprised we gave back all the gains so quickly."

However, Melek warned that Russia-Ukraine tensions could reignite at any time. "During war the only thing we can be sure of is not knowing."

And Millman noted that investors should be ready for high levels of volatility going forward. "The focus of the gold market has shifted away from inflation and Fed policy to geopolitics and crisis in Ukraine. I'm expecting a lot more volatility until there is some resolution or diplomatic solution," he said.

Gold price could hit $2,000 'in only a matter of days' – analysts

Can't forget about the Fed

Aside from geopolitical tensions, good news for gold is the repricing of how many rate hikes the U.S. economy will see this year in light of the war in Ukraine.

For example, the Fed's 50-basis-point rate hike in March, which was at an 80% probability before, now is at just 24.8%, said Melek.

"The view here is that central banks may stay accommodative for longer than previously thought," he said. "This idea will support gold. Central banks don't want to remove liquidity when volatility is already elevated. They want to hit inflation hard, but they don't want to collapse the economy either."

Ukraine will be on the Fed's radar during the March decision, added Millman. "The geopolitical situation will likely prevent the Fed from hiking as many times as the markets expect. We'll get at least one rate hike in March. But it could be one and done, or we could see fewer rate hikes this year. I keep hearing 7-9 rate hikes in 2022. That's way too many," he said.

 

Gold's price levels to watch

Analysts are not ruling out a retest of the $1,850 an ounce level just because of how quickly the precious metal went from $1,800 to $1,900 an ounce.

"It is hard to be bullish when there is this much volatility. Even before gold's big move on Thursday, prices had blown past the $1,800 to $1,900 in just one week. I do think that we are due for a retest of some of those lower levels just because the price has moved so much so quickly," said Millman.

Melek is watching $1,860 an ounce on the lower end and $1,916 an ounce on the upper end, as he expects some range-bound trading next week.

 

Data next week

Aside from the focus on Russia's military action in Ukraine, markets will be paying close attention to Fed Chair Jerome Powell's testimony before both the House and Senate banking committees next week.

"[Powell's] hawkish commentary following the January Federal Open Market Committee meeting resulted in market interest rate hike expectations jumping higher with a strong chance of a 50bp interest rate increase priced in by financial markets. We suspect he will be more cautious next week given the financial market nervousness, and this will likely cement expectations for a 25bp rate increase on March 16," said ING chief international economist James Knightley.

On the data front, the U.S. employment report will be critical to watch, with market consensus calls expecting 438,000 jobs added in February.

Tuesday: U.S. ISM manufacturing PMI

Wednesday: U.S. ADP nonfarm employment, BoC rate decision, Beige Book, Powell testifies before U.S. House

Thursday: U.S. jobless claims, ISM non-manufacturing PMI, Powell testifies before U.S. Senate

Friday: U.S. nonfarm payrolls

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

Dramatic price swings- Gold price sheds $90, silver price sees sharp reversal as analysts warn of more volatility to come

High levels of volatility are making their way through financial markets following Russia's attack on Ukraine, with gold seeing $90 price swings and silver posting a sharp reversal as investors digest the new geopolitical reality.

The precious metals market saw strong gains for most of the day following Russia's full-scale invasion of Ukraine. Gold hit a 1.5-year high of $1,976.50, and silver saw seven-month highs of $25.67.

However, both metals ended up losing ground and closing the session lower on the day as traders reassessed the situation. April Comex gold futures were last at $1,903.80, down 0.35% on the day, and March silver was at $24.21, down 1.40% on the day.

"The initial shock of what took place overnight with Russia and Ukraine sent all safe-haven metals higher, gold and silver specifically. Other commodities affected by Russia also moved up," RJO Futures senior markets strategist Peter Mooses told Kitco News. "And as the day progressed, things started to pull back. Margin calls had to be met, and traders had to get in and out of their positions due to the volatility the morning caused. There was profit-taking as well."

The bulk of losses came after U.S. President Joe Biden announced new sanctions against Russia, which targeted more of the country's banks, state-owned companies, and Russia's ability to do business in other currencies, including the dollar, euro, pound, and yen.

"This is a premeditated attack," Biden told reporters on Thursday. "Putin is the aggressor. Putin chose this war. And now he and his country will bear the consequences."

Markets were relieved to hear that U.S. forces would not fight in Ukraine and that new sanctions were signed not to hurt the energy market. "Our sanctions package is specifically designed to allow energy payments to continue," Biden said.

The president urged U.S. oil and gas companies not to exploit the Russia-Ukraine conflict to hike prices, adding that he will be releasing additional barrels of oil as conditions warrant.

Another boost to risk-on sentiment came after Biden decided not to impose sanctions on Putin himself or disconnect Russia from the SWIFT international banking system.

Biden's sanctions largely underwhelmed, which did take away from the risk-off sentiment, said OANDA senior market analyst Edward Moya.

"Gold prices quickly tumbled after it became clear it would not have a catalyst to take out the $2,000 level today. Gold's afternoon selloff accelerated after President Biden unveiled the next round of sanctions, which many thought was not hard-hitting enough given last night's Russian invasion of Ukraine," Moya said. "The decision not to kick Russia out of the Swift banking system means both Russia and Europe won't suffer immediate additional economic pain."

Gold price is not reacting to war in Europe, here's the real reason it moved up – Alain Corbani

However, precious metals investors should brace for more volatility ahead as Russia's invasion of Ukraine continues.

"Market reaction is saying the sanctions might help and we would not need the safe-haven as much as we thought overnight. That's why we saw some liquidation in the metals," Mooses said. "Tomorrow, we'll see what Russia's next move is. We should anticipate a lot of volatility, especially going into the weekend. There is a possible buying opportunity forming for anyone wanting to get back into the market and be long gold and silver."

Important to keep in mind that markets can surprise investors, especially in the post-pandemic environment. "We've seen over the past two years the market does not respond the way it used to. We saw with pandemic at times where we got bad news it made equities and other metals move higher and traders moved away from the metals as a safe haven," Mooses noted.

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

Gold hits $1,930 as Russia-Ukraine conflict intensifies, bitcoin falls

Gold is up sharply after recent reports that the Russia-Ukraine conflict is intensifying.

Spot gold crested $1,930 an ounce Wednesday evening eastern time.

Bitcoin dropped, losing over 7% for the day and currently trading under $35,000.

According to reports by Reuters Russian President Vladimir Putin authorised a military operation in eastern Ukraine. Gunfire and explosion were heard over night in Ukrainian capitol, Kyiv.

 

By Michael McCrae

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold is making its move as markets hit with geopolitical shock and recession fears

 

Anna Golubova  Saturday February 19, 2022 12:38

Kitco News

Share this article:

 

Gold is trading at the highest level in over eight months. And analysts project more gains as we head into a geopolitically uncertain long weekend. Here is a look at Kitco's top three stories:

3. Bitcoin is 'paying the price' for Wall Street's 'de-risking' plight

2. Potential Russian invasion of Ukraine could tip economies into an 'outright recession' – Morgan Stanley

1. Gold price hits $1,900 on mounting Russia-Ukraine tensions and recession fears
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

What's next for gold price? Geopolitics shock markets, growth outlook at risk

Don't be surprised to see some exaggerated moves in gold as the market goes into a geopolitically-tensed long weekend, analysts told Kitco News. But the outlook for gold remains bullish as the precious metal tests $1,900 an ounce.

It has been chaotic trading in the stock market this week with piece-meal updates on the geopolitical situation in Ukraine keeping investors in a risk-off mood. Also, the repricing of the Federal Reserve's rate hikes to battle four-decade high inflation saw investors leave risky assets and embrace safe havens such as gold.

Russia's military exercises are scheduled to end on Sunday, with troops' movements being the key development being watched. Meanwhile, U.S. President Joe Biden remains convinced that Moscow is planning an "imminent invasion."

All eyes are on the U.S. Secretary of State Antony Blinken meeting with Russian Foreign Minister Sergei Lavrov in Europe next week.

"Right now, investors are having a hard time handling all of these geopolitical risks, headlines, and incremental updates. There is not going to be an immediate resolution on Ukraine's situation," OANDA senior market analyst Edward Moya told Kitco News.

On top of the geopolitical angle, the big gold driver is economic growth concerns due to aggressive tightening by central banks.

Countries are finally coming out of the pandemic, but they face very sticky inflation. This puts growth outlooks at risk, Moya pointed out. And what this geopolitical story has done is pour extra fuel onto the global energy crisis by accelerating supply chain issues, which could feed into more aggressive central bank tightening.

"In the end, it will hurt growth, and that should be supportive for gold. We will be talking about an inverted yield curve [often seen as a precursor to recession or depression] a lot sooner than anyone anticipated. The outlook on Wall Street is quickly shifting," he noted.

Many investors are becoming concerned about where the economy will be in 12-24 months as Wall Street talks recession.

"We are going to see there's this scrambling towards cash across many investors. Flight to safety is growing. Even if we have an extended period of uncertainty as far as what will happen in Ukraine, you will still see continued move into safety. That should benefit gold," Moya said.

The inflation argument makes gold look very appealing to investors who are fleeing the risky stocks and crypto market, said Phoenix Futures and Options LLC president Kevin Grady told Kitco News.

"A lot of the gold's price moves are coming from the inflation story. We see inflation hitting 7.5%, which is a 40-year high. But if we use the same metric to measure the consumer price index (CPI) as in 1980, our inflation would be closer to 15%. People are realizing this, which is why gold is finally rallying. The Fed has no handle on inflation, and the energy market is facing a lot of pressures from high demand," Grady said. "Everyone is waiting for this Federal Reserve meeting in March to see how the central bank will approach inflation."

Gold price hits $1,900 on mounting Russia-Ukraine tensions and recession fears

Gold price at $1,900

Gold tested the $1,900 an ounce level on Thursday, reaching the highest level since mid-June. At the time of writing, April Comex gold futures were trading at $1,899.10, up 3% on the week.

There is more upside potential for gold going into next week, Moya pointed out. "There are elevated risks going into the long weekend. Risk sentiment soured, and there is not much that could bring it back quickly," he said.

As far as support and resistance levels for gold, $1,930 is going to be the critical resistance level on the upside, according to Moya. On the downside, gold has support at $1,880. "Given the holiday on Monday, you should not be surprised to see some exaggerated swings at the open," he added.

Grady is watching two levels from the end of May as resistance points — $1,919 and $1,922 an ounce. There is a lot of overhead resistance above these levels, he noted. Short-term support for gold is at $1,881.60, which was the February 16 high. If that doesn't hold, gold could retreat to $1,845 an ounce.

There is a risk for a pullback in gold if geopolitical tensions deescalate, Grady warned, stating that investors already saw this being partly played out this week. "Last Friday, we saw stocks collapse and gold explode after the U.S. warning that Russia could attack Ukraine' any day'. Then on Monday, we had a reversal as tensions calmed down. And then the cycle was repeated once again," he said.
 

Next week's macro data

On the data front, markets will be eyeing Fed speakers after scaling back their expectations of a 50 basis point rate hike at the March meeting back to 33%, according to the CME FedWatch Tool.

"Next week's Fed speak agenda includes a few hawkish voices (Bostic, Mester and Waller), which could revamp speculation on rate-hike front-loading and further help put a floor under the dollar," said ING FX strategist Francesco Pesole.

Tuesday: Manufacturing PMI, CB consumer confidence, Federal Reserve Bank of Atlanta President Raphael Bostic speaks

Thursday: GDP Q4, initial jobless claims, new home sales, Federal Reserve Bank of Cleveland President Loretta Mester speaks

Friday: PCE price index, personal spending, durable goods orders
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David