Gold and silver move marginally lower heading into the European open

Gold and silver move marginally lower heading into the European open

Gold and silver are trading marginally lower on the last trading day of the week. The yellow metal sold off before it could make a meaningful test of the $1800/oz area. Silver is still holding on to the psychological $26/oz area.

Risk sentiment was mixed overnight. The Nikkei 225 closed just over half a percent lower while the ASX (0.08%) and Shanghai Composite (0.15%) both moved slightly higher. US sentiment took a hit late in the session after Biden hinted at a capital gains tax rise to as much as 43.4%.

In the FX markets, the dollar index (0.10%) has moved lower once again and trades at 91.18. The biggest mover overnight was AUD/USD which trades around 0.27% higher along with NZD/USD which is a closed second at 0.26%. Copper has had another good session pushing up 0.83% and oil is just under half a percent in the black.

In terms of news, BOJ Gov Kuroda says too early discuss timing, means of exit from ultra-easy policy. This is nothing new really.

On the geopolitical front, China's Global Times tweets UK is lying, violating international law, interfering with China.

On the data front, we had the Japanese preliminary PMIs for April. Manufacturing came in at 53.3 (prior 52.7) & services hit 48.3 (prior 48.3), this morning UK March retail sales printed at +5.4% vs +1.5% m/m expected. Australia PMIs (preliminary, April) manufacturing 59.6 (prior 56.8) & services 58.6 (prior 55.5)

Japan finance minister Aso says discussing support policies for the upcoming State of Emergency due to another rise in coronavirus infections.

Use of Johnson & Johnson vaccine in the US expected to be approved again as soon as this weekend

Bitcoin dipped below 50K overnight and some crypto analysts are attributing the move to the fact that rumours of US tax on cryptocurrencies persistently arise.

Looking ahead to the rest of the session highlights include PMI's from the major nations, Russian interest rate decision, U.S. new home sales. We could also get comments from ECB's President Lagarde and German Buba's Wuermeling.

 

By Rajan Dhall

For Kitco News

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Gold and silver are mixed leading into the European open

Gold and silver are mixed leading into the European open

Gold is trading marginally lower heading into the European open and this comes after a 0.32% fall in yesterday's session. Silver performing slightly better trading 0.30% higher but this also comes after a drop on Monday's session.

After inheriting a negative close from Wall Street bourses in the Asia Pac area are pretty mixed. The ASX (-0.68%) and Nikkei 225 (-1.97%) took a tumble but India's Nifty (0.25%) and South Korea's Kospi (0.68%) both performed well while the Shanghai Composite traded flat.

In the FX markets, the dollar index fell 0.11% and the biggest mover was AUD/USD which rose 0.67%. In the rest of the commodities complex, copper moved another 1% higher and spot WTI also moved 0.86% in the same direction.

In terms of news stories, UK March jobless claims change came in at 10.1k vs 86.6k prior. The unemployment rate (Feb) also fell to 4.9% vs the analyst consensus of 5.1%. There was also German PPI data this morning and it continued to rise to reach 0.9% m/m for Match (exp 0.6% prior 0.7%).

Following the Fed's rhetoric, the RBA April monetary policy meeting minutes noted that unemployment too high. The RBA also said they would "reasonably" do what they can to support the Australian economy.

The PBOC sets China's 1-year loan prime rate at 3.85%, 5-year at 4.65%. Both are unchanged and this was expected.

Sticking with China, Premier Li also warn other countries against meddling in other nations affairs.

There was UK media report that "Russia 'planning large-scale warship assault on Ukraine water supplies'". US expresses deep concerns re Russia's plans to block parts of the Black Sea, seems the situation is escalating pretty quickly.

White House issues a statement saying infrastructure talks were fruitful. This comes after some reports yesterday that the U.S. administration where set to talk about how to section off parts of the bill.

In Australia, Rio Tino said their iron ore shipments increased but they also noted that production moved slightly lower. Brazil's Vale reported iron ore output of 68.0 tons vs expectations of 72 tons.

Looking ahead to the rest of the session highlights include NZ CPI and GDT. We could also hear from German Buba Vice President Buch and ECB's de Cos.
 

By Rajan Dhall

For Kitco News

 

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Gold and silver are flat leading into the EU open

Gold and silver are flat leading into the EU open

Gold and silver are both trading flat leading into the EU open this morning. Gold had a pretty impressive session yesterday rising 1.58% and pushing past the previous wave high on the daily chart. Silver also did pretty well and moved back into the middle of the long term consolidation area between $21.66/oz and $30.09oz to trade at $25.77/oz.

After inheriting a positive risk tone from the U.S. bourses in the Asia Pac area traded well overnight. The ASX (0.07%), Nikkei 225 (0.14%) and Shanghai Composite (0.77%) all traded higher.

In FX markets, GBP/USD was the biggest mover overnight and moved 0.30% in the red. Elsewhere after some mild USD strength, the dollar index trades 0.07% higher. In the rest of the commodities complex, spot WTI trades 0.57% higher while copper lost 0.73% of its value overnight.

In terms of news stories, there was lots of Chinese data overnight. GDP for Q1 2021 came in at +0.6% q/q (expected +1.4%) and the March industrial production also missed expectations to print at +14.1% y/y (expected +18%). The Chinese unemployment rate moved lower to 5.3% from the last reading of 5.5%. The good news came from the retails sales data which rose to 32.5% vs the analyst consensus of 28%.

More from China as the nations US Treasury holdings hit US$1.104tln, highest since the middle of 2019.

Turkey has banned the use of cryptocurrencies to purchase goods and services. The price action in Bitcoin reflected the news as BTC/USD fell 2.76% leading into the EU open.

We also heard from some central bank members. Fed’s Daly is concerned about the frequency of Federal Reserve market interventions. While Fed's Mester noted the economy has a long way to go until sustainable recovery. Mester also stated that she is not concerned about inflation getting too high.

The White House's infrastructure bill could be passed in small bills and congress will work out the path moving forward (according to U.S. press).

Looking ahead to the rest of the session highlights include EU CPI data, U.S. building permits data, Michigan data and comments from BoE's Woods and Cunliffe.

 

By Rajan Dhall

For Kitco News
 

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Gold and silver start the EU session higher

Gold and silver start the EU session higher

Gold and silver have both recovered after some strength in the US session yesterday. Overnight gold is trading just above flat while silver has moved 0.57% in the black. In the rest of the commodities complex, copper is 0.10% higher and spot WTI has moved up 0.92%.

In the Asia Pac area, the ASX (0.66%) and Shanghai Composite (0.42%) closed higher but the Nikkei 225 bucked the trend to closed -0.44% in the red. This came after another record close for the S&P 500.

In FX markets, the dollar index trades 0.14% lower with the biggest beneficiary being NZD as NZD/USD moved 0.70% higher. The next biggest mover was AUD/USD which trades just up over half a percent. Bitcoin continues to trade well and is currently at $64,482.22.

In terms of news, BOJ's Kuroda stuck to his usual stance and said the bank will persistently continue with powerful easing towards 2% inflation target.

Sticking with central bankers, ECB's Villeroy says the ECB could possibly look to end PEPP purchases in March next year.

The RBNZ kept rates and their funding for lending scheme unchanged overnight. They also said they are willing to cut the OCR if required.

French minister says EMA likely to issue new guidance on J&J vaccine today. This comes after the US halted the use due to some blood clotting cases.

Goldman Sachs have reiterated their stance on iron ore and say they have a negative outlook for the iron ore price 6-12 months out.

China's Li said China and the US should step up communication, manage differences, respect each other.

On the data front, Australian Westpac Consumer Confidence Index for April came in at +6.2% m/m (prior +2.6%) and Japanese Core Machinery Orders for February fell to -8.5% m/m (vs. expected 2.5%).

Looking ahead to the rest of the session highlights include the IEA monthly report, EU industrial production and weekly DoE's. There are lots of central bank speakers including Fed Chair Powell, Fed's Clarida, Bostic, Kaplan, Williams, ECB's Lagarde, Schnabel, Panetta, de Guindos and BoE's Haskel.
 

By Rajan Dhall

For Kitco News

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This could push gold price to $1,800 this week

This could push gold price to $1,800 this week

Gold has a chance to break above its key resistance level of $1,750 an ounce this week. Here's what investors need to watch, according to analysts.

The yellow metal had a very decent start to the second quarter, with prices up around 1% on the week. June Comex gold futures last traded at $1,746 an ounce. Earlier in the week, the precious metal was up almost $50 since last Friday as it traded close to the $1,760 an ounce level.

After being bombarded with the Federal Reserve news coverage this week, markets seem to understand that the Fed will be waiting until next year to be proven wrong on its transitory inflation stance, OANDA senior market analyst Edward Moya told Kitco News. And this shift in sentiment could cap the rapid rise in the 10-year U.S. Treasury yields.

"What was different this week was that the Fed seems convinced that we will have to wait until next year to be proven wrong on inflation. Prior to this, markets were trying to hedge as far as this inflation risk. Now, this will get pushed much further down the road," Moya said.

The change in sentiment could be supportive for gold going forward, especially ahead of the U.S. inflation data on Tuesday, which could also surge after a surprisingly strong PPI data on Friday.

"U.S. PPI jumped 1% month-on-month to leave the annual headline rate at 4.2% – the highest since September 2011. This was well ahead of the consensus forecast of 0.5%," said ING chief international economist James Knightley. "This will add to the upside risks for CPI."

A stronger-than-expected CPI number could trigger another rally in yields. But if gold can hold around the $1,750 level, then there is potential for the yellow metal to recover to $1,800 an ounce, analysts told Kitco News.

"If we do get hotter inflation readings next week, it could be a catalyst for higher Treasury yields, which would be bad for gold. But once we pass that event and if gold is still near $1,750, that would be a green light for prices to rise higher. There could be more upside potential for gold after the CPI data," Moya said.

The good news for gold is that it might have already hit its lows during the first quarter of 2021.

"Looks like the bottom appears to be in place for gold. The Fed removed the big risk as far as yields surging. We are going to see an environment where gold could continue to rise," Moya said. "And even though we might not see the August record highs, gold could make a move towards $2,000 again."

It is still too early to decide how the economic recovery will evolve, Moya said. "There are still too many risks in place. Plus, once the economic recovery picks up in the rest of the world, we'll see significant dollar weakness."

The technical outlook is showing a double-bottom in gold, said Walsh Trading co-director Sean Lusk. "The low from March 31 and March 8 form a classic double bottom. The $1,759 level is providing a bit of resistance. If gold breaks it, the precious metal can go to $1,800," he said.

Other supportive drivers for gold are stronger physical demand and renewed central bank gold buying, strategists at TD Securities said.

"Strong Chinese and Indian demand along with renewed interest from central banks have all delivered sufficient support for the yellow metal to hold onto its pandemic-era uptrend," the strategist said. "The breadth of central banks purchasing gold could potentially rise substantially considering the massive increase in sovereign debt and the rapid pace of money supply growth in reserve currency countries. A sustained rise in official interest could provide further support for the yellow metal."

However, new record highs are unlikely for gold until safe-haven demand continues to go towards cryptos, Moya noted. "There has been some diversification away from gold. Crypto madness didn't blow up yet. If the crypto bubble pops, it is a game-changer for gold. But that is difficult to gauge. The $2,250 level could be realistic for gold if we were to see the crypto bubble burst," he said.

Blue Line Futures chief market strategist Phillip Streible was more bearish, noting that gold cannot do well in the current environment defined by fast-paced growth.

"Gold only does well when you have rising inflation and slower growth. We are not in that environment," Streible said. "If gold falls below $1,700 an ounce, we are buyers at $1,680," he said.

The only wildcard that could push gold higher right now is a flare-up in geopolitical tensions, according to Streible.
 

Data to watch

Tuesday's CPI number is forecasted to jump to 2.5% year-on-year in March. Over the summer, ING projects inflation to get close to 4% in light of a stimulus-fuelled economy.

"Inflation could stay closer to 3% for much of the next couple of years and in an environment of strong growth and rapid job creation it adds to our sense that risks are increasingly skewed towards a late 2022 rate hike rather than 2024 as the Fed currently favors," Knightley said.

Other data to watch next week include U.S. jobless claims, retail sales, NY Empire State manufacturing index, Philadelphia Fed manufacturing index, and industrial production, all scheduled to be released on Thursday.

Also, markets will be paying close attention to Friday's building permits and housing starts.

 

By Anna Golubova

For Kitco News

Kinesis Money Sytem – Manages your Gold and Silver – Find out More

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You can now pay with Bitcoin on PayPal and Visa -Frank Holmes on crypto’s future

You can now pay with Bitcoin on PayPal and Visa -Frank Holmes on crypto's future

Bitcoin is now accepted as a form of payment via both PayPal and Visa. Frank Holmes, CEO of U.S. Global Investors said that this was the result of increased adoption.

"I think this adoption process is accelerating," Holmes said. "Metcalfe's law says that as adoption accelerates, you get these exponential moves in the underlying crypto."
 

By David Lin

For Kitco News

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Gold and silver are at key levels ahead of the EU open

Gold and silver are at key levels ahead of the EU open

After falling another 1.56% during Tuesday's session gold is hanging on at the previous wave low support this morning near $1686/oz. Silver is trading 0.32% in the black very close to the $24.00/oz psychological area. Both chart structures look very weak but this could be a telling session as gold could make a double bottom or push to trade at its lowest level since June 2020.

After inheriting a negative lead from the U.S. bourses, indices in the Asia Pac area are mixed. The Nikkei 225 (-0.86%) and Shanghai Composite (-0.44%) closed lower while the ASX closed 0.78% in the black.

In FX markets, the dollar index is down a tough (-0.02%) and the biggest mover was USD/JPY which rose 0.30%. Other than the yen weakness it was a pretty lacklustre session. Lastly, in the rest of the commodities complex, spot WTI (1.07%) and copper (0.32%) both trade higher.

There has been some data out this morning, U.K. final GDP for Q4 came in at 1.3% to beat the prelim reading of 1.0%.

On a more negative note overnight, there has been a new lockdown imposed for a city (Ruili) in China after new coronavirus cases. Residents have been told to stay home for a week and cars are prohibited from leaving the city.

Sticking with China, there were financial media reports which said the PBOC will ensure stable liquidity next month.

On the data front overnight, Chinese Manufacturing PMI (51.9 vs expected 51.2) & Services (56.3 vs expected 52.0) both beat analyst consensus readings to stay in expansionary territory. However, in Japan Industrial Production for February (preliminary) fell -2.1% month on month vs the expected reading of -1.3%.

Heads up for U.S. President Biden to speak on infrastructure today (Wednesday). There are also suggestions that Biden could also increase the corporation tax rate.

We also heard from Fed's Barkin who said he is not convinced of use cases for Bitcoin. He then spoke about rates saying the Fed will hold rates until 3 part test met and once past this crisis the US must get fiscal house in order.

Looking ahead to the rest of the session highlights include German employment numbers, EU CPI, Canadian GDP, US ADP, U.S. pending home sales and weekly DoE's.
 

By Rajan Dhall

For Kitco News

 

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What’s the catalyst to take gold price to $1,900?

What's the catalyst to take gold price to $1,900?

Now that gold is sitting comfortably above $1,700 an ounce, is it ready for liftoff towards $1,900? Analysts remain optimistic but say that the precious metal needs a new catalyst to get it there.

After an eventful week, gold managed to stay above $1,720 an ounce. The precious metal even attempted to break the key resistance level of $1,750 on Thursday. And even though the move up failed, June Comex gold futures were last trading at $1,733.90, up 0.38% on the day.

"Factors that would normally weigh on gold, such as rising stock markets and the firm U.S. dollar, do not appear to be pressuring its price all that much at present," said Commerzbank analyst Eugen Weinberg.

This trading pattern could be a sign that it's time to start picking up gold, RJO Futures senior commodities broker Daniel Pavilonis told Kitco News.

"Market sentiment is low compared to where it was back in August. This is a good sign. It is probably the time to start picking up gold. Next week, we could see more of an up week for gold," Pavilonis said.

Gold is being pulled by two different outlooks — the short-term risk-on view, which is based on vaccinations and the economic recovery, and the long-term risk-off view, which is filled with uncertainty and an accommodative Federal Reserve.

"I'm not surprised we are not breaking to the upside yet. The U.S. dollar continues to be firm. It will be firm for the next little while as Europe is shutting down after failures with vaccine distribution. Flows of funds are likely to skew to the U.S.," said TD Securities head of global strategy Bart Melek.

In the long-term, however, there is uncertainty, Melek pointed out. "We happen to think we break out into $1,900 by year-end because we will see inflation and no action from the Federal Reserve," he said. "Also, we'll have more debt and more infrastructure spending."
 

Potential catalysts

Yet, gold is unlikely to surge until there is a new catalyst, according to analysts.

"Gold appears comfortable at current price levels. Physical demand offers a cushion on the downside, but a macro catalyst to drive upside risk is absent," said Standard Chartered precious metals analyst Suki Cooper.

One such catalyst could be gold's break from 10-year Treasury yields. Recently, gold has been dragged down whenever yields would go up. But that inverse relationship could break, which would help gold breakout, Pavilonis said.

"Rates are going up a bit today, and gold is holding well. It is a positive sign. Maybe we start to snap free of the correlation that if rates go up, gold has to go down. If we can deviate away from that with the announcement of Biden's new infrastructure package, it will be good for gold," he said. "When we see inflation, it is time to buy gold."

With more money printing and more accommodative policies out there, inflation will kick in, and the February low could be the bottom in gold, Pavilonis noted. "The longer we see sideways price action in gold, the more the path of least resistance becomes to the upside," he said.

Another catalyst could be the U.S. dollar finally losing steam. "As the year unfolds, the USD resumes its downtrend, and real yields remain negative, prices are likely to regain traction," Cooper said.

Also, there are a number of risks that could flare up, affecting investors' risk appetite, said FXTM market analyst Han Tan.

"From signs that COVID-19 cases are making a resurgence globally to simmering U.S.-China tensions, amid the shifting expectations for the Fed's policy outlook, the relative calm in markets could yet be upended by the realization of such risks," Tan stated.
 

What to watch next week

The biggest data release is slated for Friday — the latest employment data. Market consensus is for the U.S. economy to have added 655,000 jobs in March. The U.S. ISM manufacturing PMI and jobless claims are scheduled for Thursday, while ADP employment data are going to be released on Wednesday.

Markets will also be watching the U.S. house price index on Tuesday and pending home sales on Wednesday. The U.S. markets will be closed for Good Friday.

Aside from macroeconomic data, investors will be keeping a close eye on the rhetoric from Washington, any new stimulus announcements, and the number of global COVID-19 cases.

"With the ink on the $1.9tn fiscal relief plan barely dry, next week sees President Joe Biden push ahead with the $3tn Build Back Better green energy and infrastructure plan," said ING economists. "The difficulty will be getting it passed by Congress, given the need for 60 Senators putting it forward for a vote … It may need to be broken up into smaller packages and diluted to some extent should Republicans put up stiff opposition. It is not going to be an easy sell."

 

By Anna Golubova

For Kitco News

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Gold price fails attack on $1,750 as Fed’s Powell hints tapering

Gold price fails attack on $1,750 as Fed's Powell hints tapering

Gold shot up to a one-week high as it attempted to break the key resistance level at $1,750 an ounce after Federal Reserve Chair Jerome Powell praised economic progress and hinted at potential rollback of asset purchases.

"As we make substantial further progress toward our goals, we'll gradually roll back the amount of Treasurys and mortgage-backed securities we've bought," Powell told NPR's Morning Edition in a live interview. "We will very gradually over time and with great transparency when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times."

The Fed currently makes $120 billion in monthly bond purchases.

In response to the comments, gold jumped to a one-week high, with June Comex futures reaching $1,747.10 an ounce. However, the attempt to breach the $1,750 an ounce level has failed so far as prices retreated, and June futures were last at $1,735.20, down 0.02% on the day.

Powell also highlighted that the U.S. economy is recovering quicker-than-expected due to fiscal and monetary stimulus and vaccine progress. This will allow the Fed to taper at some point in the future, Powell said Thursday.

"In a nutshell, it's a combination of better developments on COVID, particularly the vaccines, and also economic support from Congress. That's really what's driving it," he said. "That's going to enable us to reopen the economy sooner than might have been expected."

The Federal Reserve was quick to respond to the COVID-19 pandemic, cutting rates near zero and making $120 billion in monthly bond purchases. On the fiscal side, Congress passed more than $4 trillion in stimulus in the past year.

In the last monetary policy announcement, Powell promised to keep the central bank's accommodative stance in place until the economy reaches full employment and inflation averages around 2%.

During the NPR interview, Powell reiterated that any rate hikes would only be considered "when the economy is all but fully recovered."
 


 

By Anna Golubova

For Kitco News

 

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Gold, silver, platinum and palladium are ‘a form of currency’

Gold, silver, platinum and palladium are 'a form of currency'

Mar 20, 2021

Guest(s): Anna Golubova Social Media Reporter

A lot has happened in the gold space this week. And the tides may finally be turning for the precious metals. Here's a breakdown of the top three stories.

 

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