Gold fails to hold the key psychological level of $1,800

After yesterday's moderate upside move taking gold above $1,800, technical selling pressure resulted in gold breaking back below $1,800. Yesterday the Bureau of Labor Statistics released its inflationary report for August, indicating that the CPI (Consumer Price Index) increased by 0.3% last month. August’s rise in inflationary pressures came in under estimates by economists polled by the Wall Street Journal, who were expecting an increase of 0.4%. The Bureau of Labor Statistics report indicated that inflationary pressures are still prevalent and remain at an elevated level taking the CPI index to 5.3% over the last 12 months.

Today’s sell-off seems to have been the result of technical selling pressure. The fact that gold closed just under its 200-day moving average yesterday, which is the first level of technical resistance, and opened below that price point today was enough for short-term traders to take profit.

Reuters reported that David Meger, director of metals trading at High Ridge Futures, said, “There weren’t any particular headlines to prompt gold’s pullback and this was rather due to its “technical inability to trade up through the 200-day moving average on Tuesday.” Meger added that, “any good news is bad news for gold,” and if more positive economic data comes out, the Fed would be more willing to begin reducing asset purchases, and gold’s likely to move sideways heading into the FOMC meeting.”

Gold continues to be range bound and could continue to trade sideways until the conclusion of the Federal Reserve’s September FOMC meeting on the 22nd of the month. Market participants are waiting for more clarity in regards to the Federal Reserve’s timeline to begin tapering. Currently, it is believed that the Fed will not announce when tapering will begin until the November FOMC meeting. One unique component market participants will focus upon and glean insight from this month’s FOMC meeting is the release of a revised “dot plot,” which will include anticipated interest rates (Fed funds rates) up to the year 2024.

Given that we did see gold give back gains from yesterday’s move above $1,800, the risk to any major continuation of selling is limited. Analyst Ole Hansen of Saxo bank said, “Risk to the downside for gold is also limited since the slowdown in inflation thereby reduces the pace with which tapering can be carried out.”

The one thing that seems to be exceedingly clear is that traders and market participants are waiting for further information from the Federal Reserve when the FOMC meeting concludes exactly one week from today. Up until that point, we could see gold trade sideways and consolidate either just below or just above $1800 per ounce.

 

 

By Gary Wagner

Contributing to kitco.com

 

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The gold price is not going anywhere anytime soon

Stuck in a narrowing trend, gold prices are not expected to go anywhere soon as sentiment has turned decidedly neutral among Wall Street analysts with lackluster interest from retail investors, according to the latest results of the Kitco News Gold Survey.

Since mid-July, gold prices have tested resistance at $1,830 but have failed to hold the ground. The latest failed push higher and the drop below $1,800 ahead of the weekend have disappointed bullish investors and analysts.

"Gold just seems stuck in a $1,760-$1,840 trading range at the moment without much direction, and there isn't much in the way of news in the coming week that could potentially change that," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

This week 15 Wall Street analysts participated in Kitco News' gold survey. Among the participants, 9, or 60%, called for gold prices to trade sideways. Meanwhile, bullish and bearish outlooks garnered three votes each or 20%.

Although retail investors are still bullish on gold, there is a distinct lack of interest in the marketplace. Participation in this week's survey fell to its lowest point since May 2019.

A total of 494 votes were cast in online polls. Of these, 274 respondents, or 55%, looked for gold to rise next week. Another 127, or 26%, said lower, while 93 voters, or 35%, were neutral.

Ole Hansen, head of commodity strategy at Saxo Bank, said that gold would continue to struggle as the U.S. dollar remains relatively strong. He added that the U.S. dollar remains the most substantial headwind against gold, with real bond yields still in deeply negative territory.

Although Hansen doesn't see gold prices going higher anytime soon, he added that in the current environment, he doesn't see gold prices falling much below $1,800 an ounce.

"The gold market has seen strong physical demand, but if prices are going to go higher, then we need to see paper investors and speculators come back to the market and they won't until they see price back above $1,830 an ounce with some momentum behind the move," he said.

David Madden, market analyst at Equiti Capital, said that he also expects gold to remain range-bound. He added that growing market uncertainty with equity markets at record valuations will keep a safe-haven bid in gold.

Marc Chandler, managing director at Bannockburn Global Forex, said that he is also bearish on gold as he sees more momentum for the U.S. dollar in the near term. He added that rising inflation is pushing interest rates higher and that is supporting the U.S. dollar.

However, some analysts are not ready to give up on gold just yet. Adam Button, chief currency strategist at Forexlive.com, said he is bullish on the precious metal as inflation continues to push higher.

"This week's price action was concerning, but I see it as a head fake," he said. "The main concerns are the duration of global supply bottlenecks and China's 'common prosperity' push."

Nicholas Frappell, global general manager at ABC Bullion, said that he is also bullish on gold as he sees supportive technical factors.

"The Daily Ichimoku Cloud top has been part of the technical resistance around US$1830, but the cloud top drops to US$1803-04 next week, allowing more scope for gold to trade above that level," he said.
 

By Neils Christensen

For Kitco News

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David

Gold and silver are marginally higher heading into the Europen open

Gold and silver are heading into the European open marginally higher this morning. On Tuesday the yellow metal suffered heavily and dropped back through $1800/oz while silver also fell 1.50%. Looking at the rest of the commodities complex, copper is 0.21% higher and spot WTI is trading 0.70% in the black.

Risk sentiment overnight has been very mixed the Nikkei 225 closed 0.91% higher but the ASX (-0.36%) and Shanghai Composite (-0.01%) traded poorly. Futures in Europe are also mixed with the Dax looking positive while the FTSE is down.

In FX markets, the dollar index is 0.10% higher building on yesterday's gains and GBP/USD was the biggest mover falling 0.15%. In the crypto space, there has been a pretty big sell-off which took BTC/USD back through $50k to trade at $46,232.

Looking at the main stories from overnight, Fed's Bullard looks past NFP miss, reaffirms taper call. He said he is "looking for job gains to average out around 500k per month this year".

Crypto exchange Coinbase says US regulators to pursue legal action against it.

Japan's ruling party contender Kisida is planning a big monetary policy shift.

Magnitude 7.4 earthquake southern Mexico.

Heading into the EU session it is important to note that some gold miners lead the declines after the drop in the gold price.

The NHC say there is a 50% chance of a hurricane in Mexico within the next 48 hours.

Fed's Kaplan was reportedly a buyer and seller of stocks in 2020. According to a financial disclosure he made multiple trades valued at over $1mln each.

U.S. Democrat Senator Manchin has said he will only be backing around $1trl of Joe Biden's spending plans, according to press reports.

Looking ahead to the rest of the session highlights include EIA energy report, Fed Beige Book, DoE's, BoC rate decision. We could also hear from BoE's Ramsden, Broadbent, Tenreyro, Fed's Williams, and Kaplan.

 

By Rajan Dhall

For Kitco News

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

 

David

Gold price analysis on the weekly chart

On the weekly chart, it seems easy to see why gold is stuck in a strong consolidation zone. It is best to pick up this timeframe at month-end and as August just closed the downside rejections seem evident. Another key consideration has to be the lack of volume over the last 5-6 weeks there seemed to be no real conviction in any of the downside moves.

Looking closer at the technicals, the green shaded area has supported the bulls and now the price could look to break the grey downward sloping trendline. If this is the case it could be a great indication that the yellow metal could be headed to the red resistance and possibly beyond that, to the high marked in purple.

What is 

interesting is that the main volume area of this current distribution is at $1730/oz. These high-volume nodes act as a magnet for price and there could be another pullback on the cards. The lower level that should be of concern is the green consolidation low. If that breaks then it would make a lower high lower low chart pattern which Elliott Wave analysts could be interested in. The retracement wave 1-2 did stop at the 61.8% Fibonacci retracement but no lower low has been made. For me, if the $1919/oz wave high is broken that would invalidate any potential wave pattern down and the uptrend could resume. It is fair to say we are still in an uptrend on the weekly chart but in a very stubborn area.

 

By Rajan Dhall

For Kitco News

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David

Gold and silver move marginally higher heading into the European open

Gold and silver start the week marginally higher. The yellow metal is trading at $1827/oz while silver has moved to $24.77/oz. In the rest of the commodities complex, copper is down -0.31% and spot WTI has dropped -1.07%.

Looking at the risk sentiment in the Asia Pac session, the Nikkei 225 (1.81%), ASX (0.07%), and Shanghai Composite (1.24%) all traded well overnight. Futures in Europe are pointing towards a positive cash open.

In FX markets, it was pretty cagey overnight. The biggest mover was AUD/USD which dropped 0.20% and the dollar index traded 0.08% higher. In the crypto space, BTC/USD moved above $50K to hit $51.839.

Looking at some of the news stories from the weekend and overnight.

A unit of the military seized power and suspended the constitution in Guinea. This was said to be one of the reasons that Aluminium rose overnight.

Germany July factory orders +3.4% vs -1.0% m/m expected.

China's major state-owned banks were reportedly seen buying US dollars late last week, according to a Reuters report.

NZ PM Ardern has said the lockdown is to be eased in all regions outside of Auckland.

Chinese officials are to tighten foreign exchange market supervision.

In Japan, Toro Kono is the front runner to be the new leader of the nation. Kono is currently the regulatory reform and vaccine minister of the nation.

Looking ahead to the rest of the session highlights include U.K. and German construction PMI and comments from BoE's Saunders. The U.S. session is due to be quiet as it is Labor Day in America.
 

By Rajan Dhall

For Kitco News

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

 

David

Gold has a path to $1,900 if it can break above $1,830 next week, analysts.

The gold market is holding near session highs but is seeing little reaction as momentum in the service sector falls relatively in line with expectations.

Friday, the Institute for Supply Management (ISM) said its non-manufacturing index showed a reading of 61.7% for August, down from July's reading of 64.1%. According to consensus estimates, economists were forecasting a reading around 61.9%.

The gold market is holding on to solid gains just below critical resistance levels following the latest economic data. December gold futures last traded at $1,829.2 an ounce, up nearly 1% on the day.

Gold prices surged earlier in the session after the U.S. Labor Department said that 235,000 jobs were created in August, significantly missing expectations.

Katherine Judge, senior economist at CIBC, said that the ISM data and labor market numbers highlight slowing economic growth in the U.S. as the COVID-19 Delta variant sweeps through the nation. However, she added that the slowdown could be temporary.

"Combined with the disappointing jobs report for August, this report also favors a slower pace to H2 2021 GDP growth than our previous forecast taking into account the impact of the Delta variant spread. However, this will be only a temporary detour, and we look for a reacceleration in growth next spring as the Delta wave will then be behind us," she said.

Looking at the components of the report, the Business Activities Index dropped to a reading of 60.7%, down from July's reading of 67. At the same time, the New Orders Index fell to 63.2%, down from the previous level of 63.7%.

Momentum in the U.S. labor market remained relatively unchanged, with the Employment data falling to 53.7%, down from July's reading of 53.8%. However, the index has less importance coming after the release of the government's nonfarm payrolls.

Inflation pressures also dropped slightly from their elevated levels. The Prices Index fell to 75.4%, down from July's reading at 82.3%.

By Neils Christensen

For Kitco News

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

 

David

Gold remains above key and critical short-term support but it is the release of Friday’s jobs report that will shape the future direction of gold

Gold pricing has remained fairly stable and continues to trade above $1800 per ounce. The clear break in gold occurred on Friday after Federal Reserve Chairman Jerome Powell spoke at the virtual Economic Symposium. Last Friday’s dynamic surge in gold took the precious yellow metal from its opening price of $1795 top close at approximately $1820. This single-day move took gold pricing above its 100 and 200-day moving averages. During the same period, gold’s 100-day moving average crossed above the longer-term 200-day moving average.

Gold continues to hold its ground considering the strong gains in U.S. equities with the NASDAQ composite, closing at a new record high today. The NASDAQ composite gained 50 points which is an increase of 0.33% and closed at 15,309.3812. The S&P 500 closed at a record high on Monday and is currently trading a few points below Monday's record close.

Dollar weakness has certainly aided in gold’s stable performance. Now for the fourth consecutive day, the dollar has closed lower when compared to the previous day. Today the U.S. dollar index lost 12 points and is currently fixed at 92.515.

As of 5:55 PM EDT gold futures basis, the most active December 2021 Comex contract is fixed at $1816.30 after factoring in today’s fractional decline of $1.80. However it was silver that had a strong advance just shy of 8/10 of a percent, and after you factor in today’s $0.19 gain the December contract of silver is currently fixed at $24.195.

The next report that market participants along with the Federal Reserve will use to determine whether or not the economic recovery in the United States is slowing is Friday's job report. This will help shape or determine the future course of the Fed’s monetary policy as it will have the most recent data indicating whether or not the economic recovery continues to pick up steam, or whether it is contracting due to the Delta variant of the Covid-19 virus.

Today ADP released its private-sector employment data which came in disappointingly below the economist forecast polled by Dow Jones. Estimates for today’s ADP report were that there would be 600,000 new private-sector jobs in August. However, the report indicated that only 374,000 new jobs were added last month. The question becomes whether or not the ADP’s private-sector report is a precursor to a disappointing Labor Department jobs report which will come out on Friday. Typically ADP jobs report cannot be directly correlated to the US Labor Department’s report.

According to CNBC, “U.S. companies created far fewer jobs than expected in August as the Covid resurgence coincided with cutbacks in hiring, according to a report Wednesday from payroll services firm ADP. Private payrolls rose just 374,000 for the month, well below the Dow Jones estimate of 600,000 though above July’s 326,000, which was revised downward slightly from initial 330,000 reading.”

If the Labor Department report comes in under current economic predictions it could have very bullish undertones for gold, and bearish undertones for the dollar. This is because the Federal Reserve’s mandate of maximum employment is the main criteria that the Federal Reserve is currently looking at to guide their future actions in regards to the onset of tapering as well as when they will raise interest rates.
 

By Gary Wagner

Contributing to kitco.com

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

 

David

Mixed PMI's ahead of the U.S. open

PMI's in Europe have once again impressed leading into the U.S. market open. The Eurozone number itself came in at 61.4 vs analyst expectations of 61.5 marginally missing out. The report itself said that manufacturing growth slowed to a size month low. It noted, "The euro area manufacturing sector registered another marked expansion during August, latest PMI data showed, although momentum waned once again as the headline index fell to a six-month low.". Some important nations noted slower expansions with the likes of Germany, Ireland, Austria, and France noting slower growth. The Netherlands was the best performing although it also moved to a 5 month low.

In the U.K. once again rising supply chain constraints lead to slower production growth and rising input prices in August. The report said shortages of inputs and delivery delays disrupted production schedules, leading to slower output growth, and also resulted in marked increases in input prices. Things like building materials including lumber and cement are hard to get hold of at the moment and some construction projects are having to be delayed. Despite this Rob Dobson, Director at IHS Markit said "Business confidence remained elevated despite the widespread shortages as firms focused on the longer-term outlook and brought back furloughed workers. However, the solid jobs growth seen in August could soon wane if supply disruptions and shortages of both labor and required skills continue to worsen.”

Obviously, the Chinese number disappointed markets overnight. The manufacturing sector has moved back into contractionary territory in the nation. The PMI measure of the services sector plunged into negative territory as a recent outbreak of Covid-19 weighed on activity. Some analysts suggested the clampdown by the Chinese government on the property sector is a reason for the PMI fall. The government has asked companies to lower leverage and debt levels which means fewer projects can be put in place for the time being. Later in the session, we will be looking out for the U.S. ISM reading. Economists are looking for 58.6 lower than the last reading of 59.5.

UK Manufacturing PMI (Aug) 60.3 vs exp 60.1 prev 60.4

EU Manufacturing PMI (Aug) 61.4 vs exp 61.5 prev 62.8

German Manufacturing PMI (Aug) 62.6 vs exp 62.7 prev 65.9

French Manufacturing PMI (Aug) 57.5 vs exp 57.3 prev 58.0

Italian Manufacturing PMI (Aug) 60.9 vs exp 60.1 prev 60.3

Indian Nikkei Markit Manufacturing PMI (Aug) 52.3 vs exp 55.0 prev 55.3

China Caixin Manufacturing PMI (Aug) 49.2 vs exp 50.2 prev 50.3

Australian Manufacturing PMI 52.0 vs prev 56.9

Japanese Manufacturing PMI (Aug) 52.7 vs prev 52.4

 

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 both trade higher leading into the European open

Gold and silver have moved higher overnight paring some of the losses that were seen during Monda's session. The yellow metal is back at $1817/oz while silver is trading at $24.15/oz. In the rest of the commodities complex, copper is another 0.15% higher and spot WTI has pushed up 0.11%.

Risk sentiment was pretty good overnight as the Nikkei 225 (1.08%), ASX (0.41%) and Shanghai Composite (0.23%) all closed higher. Futures markets in Europe are pointing towards a positive cash open too.

In FX markets, the dollar index has dropped 0.25%. The best performer overnight is NZD/USD which has risen nearly 1%. In the crypto space, BTC/USD is marginally higher (0.20%).

Looking at the news stories from overnight, Chinese manufacturing PMI (Aug) reached 50.1 vs expected 50.2 (prev 50.4).

Australian PM Morrison says will get 0.5m vaccine doses from Singapore.

The Pentagon announces the completion of U.S. withdrawal from Afghanistan.

ECB's Holzmann says expects inflation to fall this year and the next.

More curbs in China as the securities regulator is looking to impose more controls on private equity funds.

Fed's Mester says inflation criteria have not been made yet to support a hike. Mester also added the U.S. employment levels are not yet at full capacity.

Looking ahead to the rest of the session highlights include German employment numbers, EU CPI, Canadian GDP, U.S. CB consumer confidence and comments from Germany's Mauderer and ECB's Lane. ECB members Robert Holzmann and Klaas Knot are among the speakers at a conference in Alpbach, Austria.

 

By Rajan Dhall

For Kitco News

 

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

 

David

Kootenay Silver CEO on price cycles, M&A, and AI in mining

Silver is on track to make a comeback after being stuck in a range for so long, said Jim McDonald, CEO of Kootenay Silver, who said that the long-term bull cycle is not yet over.

“We’re expecting another breakout to come here in the silver price pretty soon. It’s a very interesting action on the gold market there a few weeks ago, when overnight in the Asian markets it spiked down to $1,690 [an ounce] very briefly, that was a real technical hold. The whole market scenario is very strong for the precious metals going forward,” McDonald told David Lin, anchor for Kitco News.

McDonald cited higher investment demand for silver as a potential catalyst for higher prices.

“I’m referring to investment demand here that has been set up due to the massive amount of currency injections that have been done around the world over the last year and a half, approximately. It’s never happened on this scale before and that creates debasement of purchasing power of those currencies all around the world,” he said. “That creates a very strong demand for bullion silver and bullion gold.”

While gold has breached new all-time highs, silver has struggled to touch its 2011 highs. This is because the long-term bull cycle has not finished yet, McDonald said.

“We think that silver is going to break out over that $30 [an ounce] mark pretty strongly and make a run on that $50 number, and probably surpass it this time, due to the backdrop that it’s against,” he said.

For updates on Kootenay Silver’s latest drill results and long-term plans, watch the video above. Follow David Lin on Twitter: @davidlin_TV.
 

By David Lin

For Kitco News

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

David