Gold holding $1,800 even as hedge funds liquidate bullish bets

The gold market is holding the line above $1,800. However, it is still unable to gain any upside momentum as hedge funds pair back their bullish bets, according to the latest data from the Commodity Futures Trading Commission.

Although gold prices have been unable to break above critical resistance around $1,830 an ounce, many have noted the precious metal's resilience as real yields have pushed to their highest level in nearly two years.

The gold market has held steady as markets start to price in more aggressive action from the Federal Reserve as it tries to bring the rising inflation threat under control. This year, markets see the potential for four rate hikes, with lift-off commencing as early as March.

"Hawkish signals coming from the Fed, market expectations suggesting a March Fed funds hike is imminent, and increasing speculation that QT is in the cards over the next twelve months prompted specs to aggressively decrease their long gold exposure. Investors extended short positioning and sold longs, as yields across the curve moved convincingly higher," said commodity analysts at TD Securities.

However, TDS noted that there is a chance gold can catch a bid on short-covering as real interest rates are expected to remain low even as the U.S. central bank looks to tighten interest rates.

The CFTC disaggregated Commitments of Traders report for the week ending Jan. 11 showed money managers dropped their speculative gross long positions in Comex gold futures by 4,955 contracts to 119,297. At the same time, short positions increased by 243 contracts to 44,987.

Fed's Powell gives hope to gold bulls in Q1 2022, watch the $1,830 level – Pepperstone

Gold's net length now stands at 74,310 contracts, down more than 6% compared to the previous week.

During the survey week, gold prices managed to bounce off support above $1,780, pushing back above $1,800 an ounce.

While there are expectations that gold prices can eventually move higher, some analysts said that the current consolidation period could be in place until the next monetary policy meeting.

"In our opinion, market participants are likely to refrain from buying gold ahead of the US Fed's first rate hike. They may be hoping that the Fed's meeting next week (25/26 January) will give them further and/or clearer signals that the Fed will be commencing its rate hike cycle in March," said Daniel Briesemann, precious metals analyst at Commerzbank.

The silver market also struggles as hedge funds increase their bearish bets and liquidate their bullish positions.

The disaggregated report showed that money-managed speculative gross long positions in Comex silver futures fell by 1,279 contracts to 50,316. At the same time, short positions increased by 2,696

contracts to 32,514.

Silver's net length stands at 17,802 contracts, dropped more than 18% compared to the previous week.

During the survey period, silver prices managed to hold support around $22 an ounce and push back above $22.50 an ounce.

Looking ahead, some analysts are not optimistic that silver can withstand further technical weakness. Commodity analysts at Credit Suisse see silver prices testing support at $19.65 an ounce, potentially dropping to $18.64. The analysts added that silver prices have to clear $25 an ounce to attract new bullish attention.

"Our bias stays lower for an eventual sustained break of $21.42 to confirm a major top is in place and important change of trend lower," the analysts said.
 

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold price outlook improves as analysts weigh Fed policy mistake, hot inflation data The price outlook for gold is looking better going into the third week of the new year. Analysts are weighing the consequences of a potential monetary policy mistake as the Federal Reserve gets more hawkish amid the latest inflation data. The threat of inflation is finally pushing gold higher as investors expect price pressures to continue climbing. February Comex gold futures were last trading at $1,816.90, up more than 1% on the week. The two key datasets keeping markets in a risk-off mood are inflation and retail sales. In the U.S., inflation ran at the hottest pace since 1982 in December, rising 7% over the past 12 months. Meanwhile, retail sales were down the most in ten months, falling 1.9%. The two big drivers for gold going forward will be the U.S. dollar and bond yields. The dollar has retreated, giving some breathing room to gold, while the bond yields have just paused their climb. "Take a look at how high Treasury yields have run. The market is pricing in well over 90% chance that the Fed will raise rates in March. And gold is having its best week in a couple of months," OANDA senior market analyst Edward Moya told Kitco News. "Gold is not able to break beyond its recent highs, but things are looking pretty good." Gold is watching where the U.S. dollar goes from here. The European recovery along with some new euro strength could play a critical role in determining the greenback's direction. "There are a lot of conflicting outlooks for where the dollar is going to go. You should start to see better global economic recovery, which would drive a lot of European growth potential and could deliver a weaker dollar. The euro growth story got deferred from 2021 to 2022," Moya explained. Also, the latest inflation readings push the Fed to act quickly as it appears to be behind the curve. "They are scrambling. We'll see as far as the balance sheet goes. This will dictate what happens with the back-end of the yield curve — one of the more important drivers for gold. And the back-end is struggling to steepen," Moya added. After a rate hike in March, the second increase could come in June, along with a balance sheet runoff. This is where analysts will start to worry about a potential policy mistake and its impact on the economy. "One of the things that no one has a strong handle on is the risks to the U.S. economy. The Fed policy could possibly invert the curve in the next year or two. All these risks are growing," Moya stated. Last year, the Fed said to expect growth and very slow rate hikes. But instead, we are seeing 7% inflation and an aggressive tightening, Moya pointed out. "Chances of a policy mistake could be positive for gold. Longer-term, you'll see demand for bullion because of that," he noted. Equities are likely to help gold move higher next week, said RJO Futures Senior commodities broker Bob Haberkorn. This is an unusual relationship for gold and equities, but it has been the COVID trade. "Gold has a chance to break higher next week. Equities will be a bit stronger, and that will push gold back up through the $1,830 level. The COVID trade has been lower equities, lower gold," Haberkorn told Kitco News. Gold has struggled around the $1,830 level because of competing narratives of accelerating inflation and rising yields, Haberkorn added. "Yields are going higher with inflation running hot. And gold parked itself in a range. Those two narratives are competing. Next week, depending on how yields look, we could get to anywhere between $1,830 and $1,850," he said. "If bond yields weren't doing what they are doing, gold would be $50-$70 higher." Moya is watching the $1,833 an ounce level next week. "If we can break that and then hold $1,840 an ounce for a day, and we could see bullish momentum," he said. Data to watch It will be a short trading week due to markets being closed on Monday for Martin Luther King, Jr. Day. Dtasets to watch are N.Y. Empire State manufacturing index on Tuesday, building permits and housing starts on Wednesday, jobless claims, Philadelphia Fed manufacturing index, and existing homes sales on Thursday. By Anna Golubova For Kitco News Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

 

 

David

Gold has gained value during 4 of the last 5 weeks

Gold continues to trade in a range-bound manner, but over the last five weeks, gold prices have gained value during four of those weeks. Although gold has traded lower yesterday and today, ending the week with a moderate gain of 0.6%. For the most part, we have seen gold trade through the eyes of the weekly chart with a succession of higher lows. What has been lacking is a series of higher highs based upon the high achieved in June 2022 when gold topped out at $1920.

U.S. equities had mild to moderate gains, with both the Standard & Poor’s 500 and the NASDAQ composite closing higher on the day. However, the Dow Jones industrial average did close lower by 0.56%.

For the most part, market participants and analysts have factored in a much more aggressive Federal Reserve with the anticipation of three or four interest rate hikes this year. The current assumption based on information released from the Federal Reserve is that each rate hike will be ¼%. That means that if they move forward with this more aggressive monetary policy, they will raise rates only 1% this entire year which would take the Fed fund rate from its current fix of zero to ¼%. This means that by the end of 2022 fed funds rate would be fixed between 1% and 1 ¼%.

With recently released data in regards to current inflationary pressures, the Bureau of Economic Statistics has confirmed what analysts and Americans have known for quite some time, and that is that inflationary pressures continue to spiral to higher levels with the CPI (consumer price index) now fixed at 7% in December year over year.

This brings us to the current dilemma faced by the Federal Reserve. The Federal Reserve’s more hawkish or aggressive monetary policy cannot curtail the current rise of inflationary pressures to any great degree. Many analysts, including myself, acknowledge that the Federal Reserve’s Monetary Policy as it stands with a more hawkish demeanor cannot have any dramatic effect on the cost of goods and services by themselves. Any real hope of seeing inflationary pressures diminish must be accomplished through a combination of actions by the administration as well as the monetary policy of the Federal Reserve.

As the data has clearly illustrated, the current level of inflation is based upon the high pent-up demand during the first year and ½ of the recession which in essence began in March 2020. As we approach the second anniversary of the onset of the recession, which is a direct result of a global pandemic in many ways, we are much closer to understanding the new Covid-19 virus. However, that understanding has indicated that we are far from having any real handle on eradicating the virus. What is happening is that the virus has had a global impact as new waves created by mutations or variants of the original virus strain continue to wreak havoc on economies worldwide.

It seems as though the question of what a new normal will look like at the end of the pandemic contains the real possibility that there will not be a conclusion or a point in time when the Covid-19 virus simply does not exist. Rather it is beginning to seem likely that global citizens health organizations and countries will learn more effective measures to deal with the rapid spreading of variants as they emerge.

This might mean that we are currently experiencing the new “normal,” and life, as we know it from the pre-pandemic days, will never completely return. As such people will continue their daily lives with this issue and learn to adapt to it.
 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David

Gold is in a good place no matter what the Fed does in 2022 – Axel Merk

With gold prices holding above $1,800 an ounce, the metal is building a solid foundation for the new year, and according to one fund manager, the precious metal remains an attractive asset no matter what the Federal Reserve plans to do with monetary policy.

In a telephone interview with Kitco News, Axel Merk, president of Merk Investments, said that he expects gold to weather expected rate hikes as a risk and inflation hedge.

"Gold should continue to do just fine as real interest rates will remain in negative territory," he said. "When I look at inflation protection, I am not looking for the next meme stock; that is no inflation protection. If rates were to move higher, then the 'funny season' may be over. And some of the meme stocks and other phenomena might deflate."

Looking at inflation, Merk said that the U.S. central bank's current stance of incremental rate hikes means that they will never be able to get in front of the inflation curve. He added that if the Federal Reserve were serious about inflation, it would have to raise interest rates to 5% or 6%, according to the Taylor Rule.

Although inflation is expected to ease from last month's 7% annual increase, Merk said that even between 3% and 4% is still too high for consumers.

According to the CME FedWatch Tool, markets are pricing in four rate hikes this year, with liftoff coming in January. There are also growing expectations that the Federal Reserve could start to unwind its bloated balance sheet before the end of the year.

 

Retail Investor see gold hitting record highs above $2,000 in 2022

However, Merk said that meeting these expectations is unlikely to impact the growing inflation fears.

"Inflation is spreading from being more than just COVID-related supply shocks and the longer this last the hard it gets to put the genie back in the bottle," he said. "If they want to get ahead of the curve, then they need to surprise markets. If they don't do something big now, then they run the risk of having to do something even bigger down the road."

Merk said that the Federal Reserve's current predicament could be a win for gold either way. He noted that gold will remain well supported in the Fed's expected "salami-style" approach to interest rates will keep real rates in negative territory.

Meanwhile, if the Fed acts aggressively, he said it could push the economy into a recession.

Merk said that if the Federal Reserve wanted to show markets that it was taking the current inflation threat seriously, it would be looking to surprise the market with a potential move in January.

"I am very happy where gold is right now. I think gold has found a solid base here," he said.

With so much uncertainty surrounding the economy and U.S. monetary policy, Merk said that gold remains an attractive portfolio diversifier. Although he is not expected to see any major market crash in 2022, Merk added that it might be prudent for investors to take some profits off the table and have some protection from uncorrelated assets.

 

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold unfurls all of its sails to capture strong tailwinds from dollar weakness

Extreme dollar weakness resulted in strong tailwinds which propelled gold to higher pricing today. As of 5:45 PM EST gold futures basis, the most active February 2022 contract is currently trading up by seven dollars, a gain of 0.38% and fixed at $1825.30. Yesterday’s double-digit gain in gold pricing which opened at $1801.40, traded to a high of $1822.90, and then settled just below yesterday’s high at approximately $1818 was in anticipation that today’s CPI index would reveal that inflation continues to expand. The dollar lost just over 0.7%, giving up 0.67 points, and is currently fixed at 94.955.

The U.S. dollar sold off strongly today as the Bureau of Labor Statistics released the most current data on inflation which showed that inflationary pressures continue to grow, now at the highest level we have seen in 40 years. Today’s inflation report revealed that the current level of inflationary pressures is now at a 40 year high, with the last occurrence of inflation at these levels occurring in June 1982.

The U.S. Bureau of Labor Statistics reported the following, “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in December on a seasonally adjusted basis after rising 0.8 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 7.0 percent before seasonal adjustment.”

The largest contributors to inflationary pressures continues to be the cost of shelter as well as used cars and trucks. The report also indicated that the food index, although it increased less than in recent months still rose 0.5% in December.

The core CPI index which strips out food and energy costs is still the preferred inflationary barometer used by the Federal Reserve. The report indicated that all items with the omission of food and energy indexes rose 5.5%, “the largest 12-month change since the period ending in February 1991.” The energy index rose 29.3% over the last year with food costs increasing by 6.3% during the same period.

With inflation at these historical levels, it will not be an easy or short-term project for the Federal Reserve to halt its dramatic increase. Actions by the Federal Reserve can only do so much to alleviate the spiraling level of inflation. One of the primary causes of the recent inflationary pressures is supply chain bottlenecks and shortages. These bottlenecks are largely a byproduct of the shortage of workers. This worker shortage can be seen in factories producing the goods. It is also prevalent in those workers that are responsible for different components of the distribution. As long as there is a shortage of workers to produce the goods, unload the boats, and truckers to move the goods there will continue to be supply chain bottlenecks and shortages.

If gold continues to gain value as I believe it will, it will not encounter any of the technical resistance occurring at $1833.40, which corresponds to a 38% Fibonacci retracement. Above that resistance can be found at $1851.60 the 23% Fibonacci retracement. Major resistance occurs at $1879.50 which is based upon the high achieved on November 16 of last year.
 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David

Gold price sees 1% gain as Fed's Powell talks policy normalization, controlling inflation and recession risk

The gold market advanced to new daily highs, rising 1% on the day as Federal Reserve Chair Jerome Powell sounded upbeat on the U.S. economy, employment and promised to get inflation under control.

"This year, we see an economy where the labor market is recovering rapidly and inflation is well above 2%. This tells us is that the economy no longer needs or wants the highly accommodative policies we had in place to deal with the pandemic. But it is a long way to normal," Powell said during his nomination testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs.

Powell also warned that if inflation gets entrenched, the Fed would need to embrace a much tighter monetary policy, which could trigger a recession. "If inflation does become too persistent, that will lead to much tighter monetary policy and that could lead to a recession," he said.

The Fed chair added that price stability is also a threat to the hiring progress. "Achieving maximum employment will require price stability."

The problem with inflation comes from a mismatch between demand and supply, Powell explained, adding that the central bank will use its tools to bring inflation under control. "There's high demand for goods. Shifts in demand and a return of greater supply will help to realign these. We will get a return to normal supply conditions during the course of this year," he testified.

The Fed sees inflation pressures on track to last into the middle of this year. However, if inflation is more persistent, the central bank will raise rates more over time. "We are strongly committed to achieving our statutory goals of maximum employment and price stability. We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched," he said.

The gold market reacted positively to Powell's testimony, rising to fresh daily highs, with February Comex gold futures last trading at $1,815.10, up 0.91% on the day.

U.S. lawmakers grilled Powell on why the Fed underestimated inflation last year. In response, Powell admitted that the Fed did think that price pressures would be much lower by now.

"That's not what happened. The supply-side constraints have been very durable. We are not seeing the kind of progress that all forecasters thought we'd be seeing by now. We did foresee a strong spike in demand. We didn't know it would be so focused on goods," he said.

Out of the two central banks' mandates — maximum employment and price stability — inflation is the one that's further away from the Fed's goal at the moment.

Markets were also paying very close attention to Powell's take on policy normalization. And Powell did provide some hints on that front.

"We are going to end asset purchases in March. We will raise rates. And at some point this year will let the balance sheet runoff," he said. "The committee didn't make any decision on the timing. We need to be humble about that. There are risks on both sides on growth and potentially inflation as well. Going to have to be attentive to what's happening in the economy and willing to adapt as we go through the year."

Is hawkish sentiment about to peak? Here's what is next for gold price after this week's Fed-related selloff

Currently, monetary policy is highly accommodative, which encourages demand that feeds into inflation, Powell pointed out. "We are trying to get to a place where we are neutral or even tight," he said.

When it comes to the Fed's balance sheet reduction, the Fed can approach it faster and quicker this time around. "We will have the ability to move sooner and a little faster this time around. More clarity is coming soon on that. We will be discussing it at the January meeting," he noted.

When asked about the U.S. debt, Powell said that the U.S. is on an unsustainable path because the debt is growing faster than the economy. He added that the time to deal with this issue is when the U.S. economy is strong.

On the highly anticipated central bank digital currency (CBDC) report, Powell said to expect it in the coming weeks, stating that it will be more of an exercise to ask questions and seek input from the public than taking positions.

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

This is the difference between gold price surging above $2k or plunging below $1,600 in 2022

here are many opposing forecasts out there when it comes to gold price action in 2022. But what's the main difference between gold climbing back above $2,000 or dropping below $1,600 an ounce?

RBC Capital Markets has outlined two outlooks for gold — the high and the low scenarios. The high one sees gold trading above $2,024 an ounce on average in 2022. And the low one estimates for gold to trade at $1,576 an ounce.

The difference between those two outlooks is COVID-19 developments and equity market performance.

"The high scenario would be one where inflation has taken hold and the economy under-performs expectations. And so it looks like a much more risk-off outlook," RBC Capital Markets vice president of Global Commodity Strategy Chris Louney told Kitco News.

RBC's own base case outlook is much closer to the low scenario because of its take on the U.S. economy and aggressive Fed rate hike expectations.

The bank's base case sees gold averaging the year at $1,695, with the highest quarterly price in Q1 at $1,749 and the lowest quarterly price in Q4 at $1,633.

"Our low scenario versus our base case is much closer because we think that the environment can only become so much more risk-off considering the last two years we've had. The economy has grown pretty well and the unemployment is improving," Louney said.

For gold to change its bearish trajectory, two major game-changer elements need to show up, according to Louney.

"If COVID were to get worse again or equity markets were to underperform expectations, maybe you can see a swing in investors' interest towards assets like gold," Louney said. "We do assume stronger equity markets over the course of 2022. If that were not to come to fruition, you could see inflows into gold. That's when our high scenario could come into play. But that's not our base case."

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Is hawkish sentiment about to peak? Here's what is next for gold price after this week's Fed-related selloff

With the Fed looking to begin rate hikes as early as March and projecting at least three rate hikes this year, gold has been trading under pressure, down 1.6% since the start of the year.

"We see three rate hikes in 2022. Inflation is going to be high. The door is open for March. There's certainly inflation to justify it. Powell has described the U.S. economy as much stronger now and closer to full employment," Louney said. "That's fitting with three rate hike view for 2022."

One of the biggest obstacles to the gold price in 2021 was a lack of investor interest. And before gold can go significantly higher, that will have to change, Louney added.

"If that investor interest needle were to move, because of either deteriorating economic environment, COVID or deteriorating equity market performance, that would shift the risk skew for gold to the upside," he said. "In 2021, the main thing was the lack of investor interest. And that's despite us being in one of the most inflationary environments in recent memory. If you told someone three years ago that we'd have 5% inflation and gold wouldn't be doing that much, they wouldn't have believed you."

Gold ended up closing the year down 3.6%, its worst performance since 2015.

Activity in the gold-backed exchange-traded products was the best and the most relevant example.

"They are down pretty significantly. And again, we're talking about an environment where everyone is talking about inflation. The fact that we haven't seen inflows into gold-backed ETFs is indicative of a lack of interest among investors," Louney said.

People have been putting their money to work elsewhere, with gold not being viewed as "cheap" either. "Gold consumers and retail investors are more price-responsive when it comes to buying. And it's not that gold got incredibly cheap over the course of 2021 by any means," Louney noted.

There is a strong chance that gold will see very similar price action in 2022 as it did in 2021, Louney pointed out.

"None of the forces that have been at play over the course of the year are going anywhere in the near term. So, 2022 in a lot of respects will look like 2021," he said. "I don't think that there's enough undercurrent from inflation to really change the tide. I struggled to see what's going to change materially in 2022 on the inflation front, as far as gold is concerned. I'm not sure how that reaction function changes materially in the span of a few months unless there's a really large change to the macro outlook."
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Retail investors look to gold and silver for best results in 2022, Wall Street points to silver and platinum

After a disappointing year for gold and silver, Main Street is looking for the bearish tide to turn in 2022, picking the two metals as the top performers in the new year, according to Kitco's online survey.

Gold ended the year down 3.6%, posting its biggest annual decline since 2015. Silver wrapped up 2021 with a drop of 11.5%, which was the metal's sharpest decline since 2014.

Both metals failed to gain traction throughout last year despite the hot inflation narrative, as strong economic recovery and a more aggressive Federal Reserve outlook weighed on prices.

Retail investors are hopeful that the bearish trend has peaked, with Kitco's survey results showing participants almost equally split between gold and silver as the top two choices for best performers in 2022.

Out of 1,569 respondents, 32.7% picked gold as the top performer for 2022, while another 32.1% opted for silver. The third most loved metal for next year was copper, with 12.9% of respondents betting on the red metal. Another 9.2% chose lithium and 6.7% picked Bitcoin. Platinum only garnered 4.5% support, followed by palladium at 2%.

The Wall Street side is also bullish on gold and silver in the long term. Analysts told Kitco that gold is well-positioned to rally along with interest rate hikes, while silver has a chance to play catch-up after lagging behind gold for months.

"After facing numerous headwinds in 2021, we believe gold's path higher looks clearer in 2022. Moderating equity market returns and inflation concerns may bring the market's focus and flows back to the yellow metal next year. [The] greenback will not be a substantial headwind in 2022 as it was in 2021," said Wells Fargo in its outlook. "While we are optimistic that gold could finally move higher in 2022, a stronger price trend may take some time to develop, which prompts us to lower our year-end 2022 target range to $2,000-$2,100."

BofA also pointed to gold's upside in 2022 while also highlighting positive outlooks for silver and platinum. "As gold markets refocus from tighter monetary policy toward how high rates can rise, the yellow metal should rally; we believe 10Y Treasuries above 2.5% are difficult to sustain. Increased investment into solar panels should boost silver. Platinum is the rebound trade on normalization of chip shortages in the auto industry; substitution from palladium should also help," the bank said.

Bloomberg Intelligence sees gold outperforming other metals in 2022, citing enduring trends favoring the precious metal.

"A primary question for 2022 might be what stops gold from regaining the upper hand vs. most commodities, and our bias is for enduring trends (notably since the financial crisis) to prevail, which favors precious metals more than industrial and the metals sector over broad commodities," said Bloomberg Intelligence senior commodity strategist Mike McGlone. "Since the end of 2007, gold's roughly 115% gain has underpinnings from an unlimited supply of fiat currency. Greater supply elasticity is a copper headwind. Indicating the difference for investors, the Bloomberg Copper Subindex Total Return is about 20% vs. 40% for the spot."

After largely ignoring the problematic inflation narrative for most of 2021, the markets are becoming fearful of the growing price pressures, Gareth Soloway, chief market strategist of InTheMoneyStocks.com, told Kitco News.

"What I am bullish on is gold. It is going to be the biggest performer here in 2022. You should see a move up to the highs from 2020. There is even a potential for a $3,000 price target on gold. You have to look at the inflation numbers. I don't think inflation will go back to 2%. The Fed will taper, but ultimately people will rotate into gold," Soloway said.

And if gold does well in the new year, silver has a chance to outperform the yellow metal, analysts pointed out.

"There's certainly that catch-up story built in there. It has underperformed gold to date. And you'll find some switching by investors into the silver market as a consequence of that," said ANZ senior commodity strategist Daniel Hynes.

The gold-silver ratio also points to silver's outperformance, noted Perth Mint manager of listed products and investment research Jordan Eliseo.

"The very fact that the gold-silver ratio is at roughly 80:1, that alone suggests that if gold is going to rise, silver at the very least is going to come along for the ride and could quite likely outperform gold," Eliseo said. "Silver also benefits if commodities as a whole do well. If economies perform relatively strongly, it should benefit from an industrial perspective and the whole ESG transition that's taking place in the economy."

Silver price 2022: Here's how silver can outperform gold as it plays catch-up next year

Silver has the best chance to rise in 2022, said Gainesville Coins precious metals expert Everett Millman. "It is so cheap relative to other metals and other commodities. And it figures prominently in emerging technologies and green energy. It is a perfect storm for silver to finally break out in 2022, especially after it really lagged gold these past few years," Millman said.

Analysts also highlighted platinum's upside potential in 2022 due to its supply-demand fundamentals.

"Platinum doesn't have all the conspiracy and short sellers that silver has. The market is smaller. There is not a lot of players involved. You have the supply issues, but these are being resolved. You'll see platinum demand snap back. When supply chain issues are resolved, you should see platinum be the one that outperforms the rest. It's one of the underdogs from last year," Blue Line Futures chief market strategist Phillip Streible told Kitco News.

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Is hawkish sentiment about to peak? Here's what is next for gold price after this week's Fed-related selloff

After shedding more than $35 this week in response to a more aggressive Federal Reserve meeting minutes, the hawkish sentiment might be at its peak, according to analysts. And that is a positive signal that gold bulls are keeping a close eye on.

The big news that shook the gold market this week was the Fed's December meeting minutes, which indicated that a "tight" U.S. labor market and problematic inflation could require quicker rate hikes and a balance sheet reduction.

"Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated," the minutes stated. "Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve's balance sheet relatively soon after beginning to raise the federal funds rate."

Analysts pointed out that this view might already be dated, considering the surge in omicron-related cases in December and January.

"Omicron is having an impact. We are already starting to see that in the employment data," TD Securities head of global strategy Bart Melek told Kitco News.

The U.S. nonfarm payrolls rose only by 199,000 in December, well short of consensus estimates of 400,000. The November data was revised up to 249,000 positions added. Meanwhile, the U.S. unemployment rate dropped to 3.9%, beating market consensus calls for a decline to 4.1%.

"Today was a big disappointment. But despite weak employment, the relative consensus is that there are still inflationary pressures out there. Gold can still get a bit of a rally in Q1, another $40-$50. But afterward, gold is likely to slide lower," Melek said. "There is no guarantee that the Fed will get restrictive. The market believes the Fed will act robustly, but I am not so sure they will be able to."

 

In light of the changes in the macro data and the omicron situation, this week might have marked a peak in how hawkish the Fed is being perceived, Blue Line Futures chief market strategist Phillip Streible told Kitco News.

"Gold will recover from this the selloff. We are using this correction to buy gold again. Right now, it is trading in the lower part of its range. It is worthwhile to step in at these price levels. But we still don't have a big catalyst to take gold significantly higher. We are at peak hawkishness, though," Blue Line Futures chief market strategist Phillip Streible told Kitco News.

The question markets will be preoccupied with going forwards is how many rate hikes can the Fed commit to in 2022?

"Wall Street is now struggling to find out what will end up being the neutral rate. A few rate hikes are already priced in for 2022, but the question everyone has is, will some of the balance sheet runoff end up replacing some of the future rate hikes," said OANDA senior market analyst Edward Moya. "Gold had a bad week, but it could have been much worse when you consider the 10-year Treasury yield went from 1.53% to 1.75%."

Moya sees $1,770 an ounce as a good support level for gold next week. At the time of writing, February Comex gold futures were trading at $1,796.90, up 0.43% on the day.

Longer-term drivers are still supportive of higher gold prices, noted Gainesville Coins precious metals expert Everett Millman.

"Even if interest rates rise, high inflation still means that real rates are negative. That is positive for gold," said Millman. "Also, in the last two rate hike cycles, gold performed very well at the beginning of those hikes. We could see a replay of that when the Fed starts hiking rates later this year. It should push gold closer to $1,900."

Gold price tanked last year, can Fed make metal even worse in 2022?

Data to watch

Next week, one of the macro releases to pay close attention will be the latest U.S. inflation number, scheduled to be published on Wednesday. Market consensus calls are projecting that the consumer price index will rise to 7% on an annual basis in December.

"Next week's numbers are set to show headline CPI breaking above 7% year-on-year- fast approaching a 40-year high – with the core rate rising well above 5% YoY. This will only intensify the pressure on the Fed to start hiking rates," said ING chief international economist James Knightley.

Also, the U.S. PPI and jobless claims, scheduled for Thursday, as well as Friday's U.S. retail sales, will be key.

Markets will also be zeroing in on Fed Chair Jerome Powell's nomination hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. The testimony is scheduled for Tuesday.

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold and silver struggles continue

Today is jobs Friday. Equities and metals have been under pressure all week. The FED continues to be unable to recognize the problems they created. The question here is, what has the market priced into this job's number?

Based on recent price action, which has reversed our Gold and Silver positions to short, pushed the 10-year notes to 1.73%, and looks to be reversing the trend in equities, we can only assume a strong number is expected.

The first week of the new year has brought tumultuous results, there have been some heavy sell offs in all markets. This is the problem when the central banking system thinks they are smarter than the markets. Their history proves they are clueless.

We are short Gold, Silver and would be short Platinum. We would use these sell offs to buy physical metals as investments. While we are benefitting from the sell off with our short positions, we will be buying physical.

In all markets price action determines what will happen in the next day, week, or months. Keep the two strategies separate, the worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

 

By Todd 'Bubba' Horwitz

Contributing to kitco.com

Time to buy Gold and Silver on the dips

David