Bears in control: Gold is in 'no man's land'

It was not a good week for gold. Prices hit four-week lows, and markets are now anticipating a far less dovish Federal Reserve at next week's monetary policy meeting. Here's a look at Kitco's top three stories of the week:

3. Gold price is in 'no man's land' after $40 drop as outlook on U.S. economy shifts

2. Investors are better off holding cash and gold this 'cruel' September, says CNBC's Jim Cramer

1. Cameco trades at 10-year high as Wall Street Bets turns focus on uranium
 

By Anna Golubova

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Price pressure on gold, silver, as charts turn more Bearish

Gold and silver prices are solidly lower in early U.S. trading Thursday. Gold prices hit a four-week low and silver a three-week low. The near-term chart postures for both metals have deteriorated this week, which is inviting the shorter-term futures traders to play the short side of the markets. October gold futures were last down $21.70 at $1,770.90. December Comex silver was last down $0.446 at $23.355 an ounce.

Global stock markets were mostly weaker in overnight trading. The U.S. stock indexes are pointed to modestly lower openings when the New York day session begins. Global shares saw some price pressure Thursday due in part to worries about an economic slowdown in China, the world’s second-largest economy. Reports coming out of China say giant property developer China Evergrande Group has serious debt problems that could be just the tip of the iceberg for China’s housing sector that plays a big role in China’s economic growth.

It’s a busy day for U.S. economic data, highlighted by the retail sales report for August, seen down 0.8% from July after a 1.1% drop seen in the July report. Retail sales the last few weeks have taken a hit due to the Covid variant that is still impacting much of the U.S.

The key outside markets today see the U.S. dollar index higher, which is also a negative for the metals markets. Nymex crude oil futures prices are near steady and trading around $72.50 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.307%.

Other U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, manufacturing and trade inventories and Treasury international capital data.

Technically, October gold futures bulls have lost their slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $1,836.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at $1,785.00 and then at today’s high of $1,795.10. First support is seen at today’s low of $1,770.80 and then at $1,760.00. Wyckoff's Market Rating: 5.0.

The silver bears have the firm overall near-term technical advantage and gained more power today. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $24.50 an ounce. The next downside price objective for the bears is closing prices below solid support at the August low of $22.35. First resistance is seen at $24.00 and then at $24.345. Next support is seen at today’s low of $23.31 and then at $23.00. Wyckoff's Market Rating: 3.0.

 

By Jim Wyckoff

For Kitco News

 

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Is it time to buy gold? WGC says September has high confidence level

The World Gold Council (WGC) rarely comments on when it is best to buy or sell gold, but its recent report highlighted September as one of the most opportune times to purchase the precious metal.

“September has been one of the strongest months historically for the price of gold, and this could present an opportunity for investors as we head into the fourth quarter of the year,” the WGC said in a report.

Gold has delivered positive returns during the month of September “with a confidence level” of nearly 90%, the WGC said, citing its analysis.

The two main drivers behind this momentum are strong physical demand and increased investment activity.

“[September’s price action ] is likely driven by a combination of two trends: a period of strong demand linked to the Indian wedding season and other festivals in October and early November, and higher global investment activity following typically quieter summer months. As such, investors have often used September as an opportune time to add gold to their portfolios,” the report said.

Specifically for this September, the WGC sees upside for gold, pointing to August’s lack of price action, aside from the flash crash at the beginning of the month.

“Real government bond yields via the US-10-year TIPS yield hit all-time lows in early August, which is normally a positive for gold as its opportunity cost improves. Despite the very strong correlation over recent years, we’ve seen the gold price lag this move at times, which appeared to be the case in August. This was likely a product of a stronger US dollar. We would not be surprised to see an uptick in the price of gold should real rates hold below -1%, particularly as month-end jobs data was weaker,” the report said.

Despite all the volatility, the precious metal wrapped up August down 0.6% on the month and down around 4% on the year.

“Global financial markets were relatively quiet during the month, which is common in August, with most stock markets drifting higher on lighter volumes,” the report said. “The slight fall in the gold price in August was primarily driven by momentum factors, led by ETF outflows and a reversal from the strong July gold return, as well as modestly higher rates. Countering their negative impact was follow-through from interest rate declines in July. Despite the August 9th flash crash, gold ended an otherwise uneventful month resiliently flat.”

One of the most popular questions on investors’ minds has been what caused the flash crash on August 9 when gold dropped 4% to below $1,700 an ounce in just 15 minutes.

The WGC looked into the matter, pointing to low liquidity and technical positioning as the main reasons behind the flash crash.

“This happened during a period where there is generally less liquidity in global markets across all assets. There were some technical components that could have created this quick sell-off. First, technicians highlighted the recent ‘death cross’ where the 50-day moving average fell below the 200-day moving average, which is considered bearish. Second, the quick sell-off likely initiated some stop-loss orders that were probably situated around the US$1,700 level, and this created a snowball effect causing additional selling,” the report noted.

Amidst all of this, institutional investors are eyeing gold this fall, especially with prominent voices such as John Paulson, president and portfolio manager at Paulson & Co, and Mark Mobius, founder of Mobius Capital Partners, highlighting gold as a store of value.

“The principle of gold as a store of value is one of our key messages for investing in gold; we have seen the purchasing power of fiat currencies decrease substantially over recent years, a trend that has continued from the last century,” the WGC said.

Inflation is the reason why gold is on the radar of big institutional players, according to the WGC, which said that higher price pressures are already hurting consumers.

“There are some clear less-talked about examples of inflation. ‘Shrinkflation,’ or the idea that you receive less of something for the same price (a nifty way around price increases) has become more common. So-called ‘hedonic adjustments,’ often in the context of electronics where the price of goods are adjusted down to reflect innovation – such as increased functionality or processing capacity – create a deflationary effect, despite the fact that the total amount spent by consumers may remain the same or potentially increase,” the report said. “While inflation may be transitory in the eyes of central banks, consumers – and investors – may feel differently. This could lead to increased allocations of real assets like real estate, TIPS, and commodities, like gold, which have performed well in higher inflationary environments.”

 

By Anna Golubova

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Both gold and silver sustained major technical chart damage in trading yesterday

Immediately following the release of the U.S. Labor Department’s nonfarm payroll jobs report, we saw both gold and silver sell off sharply. Initial estimates by economists polled by Dow Jones were forecasting that July’s additional jobs would total above 800,000 individuals. While the vast majority believed that we would see a major uptick in the number of new jobs added last month, there were quite a few analysts that had the contrary approach believing that the actual numbers would come in well under expectation. Unquestionably, the majority of economists polled by Dow Jones were spot on in their forecast.

The net result of today’s selloff took gold pricing to the worst daily weekly slide over the last seven weeks. Aided by dollar strength and 10-year U.S. Treasury. Today’s extremely strong jobs report month certainly diminished the demand for precious metals and safe-haven assets as a whole.

Gold prices had been in a slow and methodical decline although trading in a narrow range it undoubtedly had a bias to the downside today’s action topped even the tepid declines witnessed this week in both gold and silver. The U.S. Labor Department reported that new jobs added in July showed a re-economy in recovery with an additional 943,000 nonfarm payroll jobs added last month. This came in well above expectations as analysts had predicted that 845,000 jobs would be the total number of jobs added last month. Economists also called for a downtick in the unemployment rate from 5.9% to an estimated 5.7%. Economists underestimated the actual number indicating that the unemployment rate had dropped to 5.4%.

With a solid indication that the U.S. economy is improving dramatically even though there are major issues such as a recent surge in the Delta variant of the Covid-19 virus which has plagued certain states in the country. This coupled with recent surges in inflationary pressure also could be highly supportive of the precious metal with one major caveat, that the Federal Reserve is not 100% correct in believing the vast majority of these recent inflationary pressures are transitory and will subside over time. While it is logical to understand while supply chain bottlenecks and many businesses lacking the proper staffing to fully operate their businesses, there are items such as energy and to a great degree food costs that could most certainly last longer than the Federal Reserve anticipates. In an interview with Kitco news Anna Golubova, RJO Futures senior commodities broker Daniel Pavilonis said that “This job number is bullish for the U.S. dollar and is pushing rates higher, which has an inverse reaction for

gold.”

This will certainly cause many precious metal analysts to rethink their current assessment and models as to the future price of gold. If the next jobs report is as robust as July’s report came in we could expect a real potential for the Federal Reserve to revamp and modify not only their timeline for tapering but their timeline for normalizing interest rates.

However, this could have an unexpected effect. If the Federal Reserve begins to taper much sooner than expected, and or raises rates in a timeline much more rapid than they have recently stated it could cause dynamic pressure on U.S. equities taking them lower and possibly even being the impetus that would cause the major indices would experience one of the first deep corrections in years. A correction is when an index or stock loses 10% of the value from the most recent highs. This could create a new incentive for market participants to reevaluate adding safe-haven assets to their portfolios to protect their capital.
 

By Gary Wagner

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold and silver are mixed heading into the European open

Gold and silver are starting the session mixed on Friday. The yellow metal is trading at $1800/oz while silver has moved 0.10% higher to trade at $25.15/oz. In the rest of the commodities complex, copper trades 0.88% higher and spot WTI 0.61% in the black.

After a positive closed on Wall Street on Thursday, the Nikkei 115 (0.33%) and ASX (0.36%) both traded well overnight but the Shanghai Composite bucked the trend to move -0.27% in the red. Futures in Europe are pointing to a modestly positive open.

In FX markets, the dollar index is marginally higher and the biggest mover overnight was AUD/USD which fell just -0.13%. After closing 2.94% higher on Thursday BTC/USD failed to capitalize on those gains in the Asia Pac session.

Looking at some of the news stories from overnight, US Senate leader Schumer confirmed the infrastructure amendment process debate will recommence on Saturday.

Germany June industrial production -1.3% vs +0.5% m/m expected.

RBA Governor Lowe says the RBA does not need macroprudential tightening but it might be needed next year. He added a pick up in wages growth is gradual, in 2 yrs time still sees it under 3%.

Fed's Kashkari says the cryptocurrency market is akin to the "wild west", and is "full of nonsense". Speaking on the U.S. economy he added the economy is still in a deep hole, up to 9 million jobless.

The Chinese state planner says the nation will release the nation's commodities reserves that are essential for livelihood in a gradual and timely manner.

U.S. Democratic Senator Manchin has asked Fed's Powell to reverse easy monetary policy amid inflation worries.

The Union as the Escondida copper mine in Chile has asked workers to prepare to strike due to slow negotiations.

Looking ahead to the rest of the session highlights include the U.S. and Canadian NFP jobs reports, Canadian Ivey PMI, and comments from BoE's Broadbent.

 

By Rajan Dhall

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold is trading marginally lower leading into the European open

Gold has kicked off the new week on the back foot. The precious metal is trading -0.33% lower but just above the $1800/oz psychological level. Silver is just marginally higher at the time of writing hovering at $25.50/oz. In the rest of the commodities complex, copper is trading close to $4.50/lb around 0.44% in the black and spot WTI has lost -0.75% after a few decent sessions.

Risk sentiment in the Asia Pac area has been positive overnight. The Nikkei 225 (1.82%), ASX (1.34%) and Shanghai Composite (1.88%) all traded higher. European futures are pointing towards a positive open.

In the FX space, the majors all traded within their ranges overnight, the dollar index trades at 92.08. In cryptocurrencies, BTC/USD has dipped just below the psychological $40k mark.

Looking at the news from the weekend and overnight, China Caixin Manufacturing PMI for July 50.3 (prior 51.3).

The China Daily noted that the Chinese government is set to intensify policy support to bolster the nation's economic growth.

Workers at BHP's Escondida mine rejected the company's final wage offer and if no deal is reached within the next 5-10 days strike action could resume once again.

Germany June retail sales +4.2% vs +2.0% m/m expected.

China has set up a $32bn fund to support State-Owned firms.

China has put travel restrictions in place for some areas due to rising new coronavirus cases.

US Infrastructure bill introduced onto Senate floor. The vote is expected to be completed this week.

Japan Jibun Manufacturing PMI for July 53.0 (prelim was 52.2, prior 52.4).

Australia – Markit Manufacturing PMI for July (final): 56.9 (flash was 56.8, prior 58.6). Australia – AiG Manufacturing PMI for July: 60.8 (prior 63.2).

Fed's Brainard says she would like to have the September jobs data at hand to assess improvements in the labor market.

Looking ahead to the rest of the session highlights include manufacturing PMI's from the major nations.

 

By Rajan Dhall

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold and silver trade flat leading into the European open

performing well again on Thursday gold is heading into the European open flat. Silver is also trading flat after pushing 2.17% into the black during yesterday's session. Looking at the rest of the commodities complex, copper is -0.71% lower and spot WTI is half a percent in the red.

Indices in the Asia Pac area traded negatively. The Nikkei 225 (-1.80%), ASX (-0.33%) and Shanghai Composite (-0.43%) all lost ground overnight. Futures markets in Europe are indicating that there will be a negative cash open.

In FX markets, the dollar index is 0.14% higher as AUD/USD was the biggest loser overnight dropping -0.24%. In the crypto space, bitcoin has just dipped under the psychological $40k mark.

Looking at the news from overnight, the Biden administration says will not rule out further lockdowns if scientists recommend it.

Some of China’s key fertilizer companies are to suspend exports. This is a temporary measure to ensure there is enough supply in the domestic market.

Australia PPI for Q2 +0.7% q/q (prior +0.4%). Australia Private Sector Credit for June +0.9% m/m (expected 0.4%).

France Q2 preliminary GDP +0.9% vs +0.8% q/q expected.

Japan Retail sales for May +3.1% m/m (vs. expected +2.7%). Japan Industrial Production for June 2021 +6.2% m/m (preliminary) (vs. expected 5.0%). Japan Jobless (Unemployment) rate for June: 2.9% (expected 3%, prior 3%).

Iron Ore prices once again moved lower overnight with analysts citing the Chinese property market as a key concern. It has been noted that Chinese authorities there urged the cities of Yinchuan, Xuzhou, Jinhua, Quanzhou and Huizhou to stabilize their property markets with stronger regulation.

Workers in the Andina copper mine in Chile have chosen to go on strike.

Looking ahead to the rest of the session highlights include German GDP, EU CPI, EU unemployment rate, US PCE, Canadian GDP, and Michigan consumer expectation data. There will also be earnings from Glencore.

By Rajan Dhall

For Kitco News

 

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Broader trends in the gold market still positive even as demand drops 10% in first half of 2021

Gold demand picked up in the second quarter, but it wasn't enough to undo the weakness seen at the start of the year, according to the latest research from the World Gold Council.

Thursday, in its quarterly Gold Demand Trends report, the WGC said that global gold demand in the second quarter totaled 955.1 tonnes, virtually unchanged from the second quarter of 2020. However, the report noted that due to a disappointing start in the first quarter, total gold demand dropped by 10% for the first half of the year.

Although gold demand is down sharply in the first half of the year, Juan Carlos Artigas, head of research at the WGC, said that investors need to look at the broader picture. He added that he would describe the selling in the investment market as a tactical adjustment from last year 's record inflows.

"Net-net, we are still in a positive investment territory," he said. "Nothing we have seen in the second quarter and the first half of the year would suggest a shift in the broader market trends."

Looking at the overall market, the WGC said that although the yellow metal stabilized between April and June, it could not recover from steep losses in investment demand in the first three months of the year. A wave of selling in gold-backed exchange-traded products swept through global markets during the first quarter. The report said that the gold ETF market saw inflows of 40.7 tonnes in the second quarter, leaving demand in the first six months of the year down by more than 129 tonnes.

ETF Investment demand is down sharply compared to 427.5 tonnes inflows seen in the second quarter of last year. However, the numbers are skewed as investors raced into gold at a record pace last year after central banks and governments worldwide pumped historic amounts of liquidity into markets to support the global economy devastated by lockdowns due to the COVID-19 pandemic.

The WGC said that global gold investment demand totaled 283.9 tonnes, down 52% compared to the second quarter of 2020. While ETF demand was fairly lackluster, the report noted that bar and coin demand remained healthy through the second quarter, rising by 243 tonnes, an increase of 56% from last year but down 30% from the first quarter of 2021.

"Thailand was the largest contributor after switching from net negative investment in Q2 2020 to modest positive investment," the report said. "Bar and coin demand is likely to gain on the back of rising inflation and gold 's strong returns momentum of the last couple of years, potentially reaching 1,100-1,250t. ETF investment, meanwhile, will almost certainly not maintain 2020 's record pace. Instead, we expect demand to return to a more sustainable level, with annual inflows at or below the 10-year average of 150t," the analysts said in the report.

The WGC also noted significant improvement in the Jewelry sector, which has been particularly hard hit due to the COVID-19 pandemic. The report said that global jewelry demand totaled 390.7 tonnes, up 60% from last year. However, total demand for the first half of the year was 873.7 tonnes, down 17% compared to the five-year average.

The WGC said that it expects jewelry demand to continue to improve throughout the year but remain below the five-year average.

"Continued global economic recovery should support consumer demand for global gold jewelry throughout 2021, although continued COVID disruption in some markets – most pertinently, India – will provide a headwind. While pent-up demand could serve as a boost, a strong price recovery in H2 could push jewelry demand towards the lower end of the range," the analysts said.

Looking at two important regional jewelry markets, the report said that China 's gold jewelry demand in the second quarter increased to 147t, up 67% compared to last year.

"Looking ahead to the rest of the year, we are optimistic about the prospects for Chinese gold jewelry demand. Not only is Q2 a seasonally low quarter for gold jewelry demand, but policymakers continue to focus on stimulating domestic consumption with initiatives such as shopping festivals, which are likely to be supportive of local gold consumption. Furthermore, economic growth should also remain supportive," the report said.

Meanwhile, India saw a 25% increase from its extremely low base reported last year. Demand in India during the first half totaled 157.6t, 46% below the H1 2019 and 39% lower compared to the five-year average.

One significant bright spot in the gold market was renewed demand from central banks. The report said that the central bank bought 333 tonnes of gold in the first half of 2021, 39% above the five-year average.

Thailand, Hungary, and Brazil were the biggest buyers in the gold market.

"Having been relatively subdued in the second half of 2020, demand picked up in the first half of 2021, with almost two-thirds concentrated in Q2," the analysts said.

Another bright but small part of the gold sector was an increase in industrial demand. The report noted that industrial demand for gold increased by 18% to 80 tonnes.

While gold demand was relatively muted in the second quarter, the report noted that supply increased 4% in the first half of the year to 2,308 tonnes. The report said that mine production rose 9% to 1,783 tonnes, the largest increase in the first half of the year on record.
 

By Neils Christensen

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold, silver and bitcoin rise ahead of the European open

After a tough end to last week gold has started the week on the front foot rising 0.23% in the Asia Pac session. Silver is also trading well and has moved 0.23% higher to trade at $25.22/oz. In the rest of the commodities complex, copper is 0.40% higher and spot WTI has lost -1.18%.

In the indices, the Nikkei 225 has risen 1.04% and the ASX traded flat. The Shanghai Composite however fell a massive -2.50%. Index futures in Europe are also pointing towards a negative cash open.

In the FX markets, the biggest mover overnight was USD/JPY which fell -0.20%. The dollar index is trading -0.08% lower but to strengthen against the Australian dollar as AUD/USD fell -0.18%. In the crypto space, bitcoin has had a revival over the weekend and looks like it could hit $40k.

Looking at the major stories from the weekend and overnight, the companies in China struggled in the markets overnight after Beijing tightened regulations. This included a ban on companies offering tutoring in the school curriculum going public and raising capital.

Some housing companies also suffered in China after the PBOC ordered lenders in Shanghai to raise mortgage loan rates for first-time homebuyers.

Japanese Manufacturing PMI (Jul) 52.2 vs prev 52.4.

More from China as the Vice Foreign Minister said that the relationship with the U.S. is at a stalemate and now faces difficulties. Although, China says it has asked the U.S. to remove sanctions on Chinese leaders.

The U.S. infrastructure talks continued over the weekend and apparently, there is still a substantial disagreement.

Sydney is to announce an extended lockdown today (to mid-September).

In the U.S. Fauci says some in the US may need booster shots of COVID-19 vaccine.

Looking ahead to the rest of the session highlights include the German IFO reading, U.S. new home sales, and comments from BoE's Vlieghe.
 

By Rajan Dhall

For Kitco News
 

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

'We're in untested waters,' hard assets are real winners

Gold is fighting for its spot above the $1,800 an ounce level. But analysts are not ruling out a selloff towards $1,730 as risk appetite and a stronger U.S. dollar weigh on gold.

Here's a look at Kitco's top three stories of the week:

3. Elon Musk on owning bitcoin, ethereum and doge: 'I might pump, but I don't dump'

2. This shows 'how easy' it is to manipulate the gold market – trader's chat logs

1. 'We're in untested waters' with inflation and the real winners are hard assets like gold – former JPMorgan MD

 

By Anna Golubova

For Kitco News
 

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secur

David