Gold sees slight gains, silver solidly up and hits 5-wk high

Gold and silver prices are higher in midday U.S. trading Tuesday, with silver sharply up and notching a five-week high. Gold prices have backed well down from the session high on profit taking by the shorter-term futures traders. A drop in the U.S. dollar index to a three-week low today and more bullish near-term chart postures for both metals invited buyers to step up. December gold futures were last up $3.00 at $1,768.70. December Comex silver was last up $0.601 at $23.865 an ounce.

Global stock markets were mostly higher in overnight trading. The U.S. stock indexes are higher at midday. The U.S. stock indexes have made solid rebounds from their recent lows and are now not far below their record highs. Yet, gold and silver markets were able to rally today, which is a good sign for the metals market bulls.

Still near the front burner of the marketplace is the global supplies shortage and transportation bottlenecks that have many of those supplies' prices rising, including energy. Many industrial metals prices are soaring, including copper, aluminum and magnesium. Nymex crude oil prices are higher and hit a seven-year high of $83.58 a barrel overnight. Natural gas prices are also at very elevated levels. As winter approaches in the Northern Hemisphere, amid the rising energy costs and worries in some countries about securing winter heating needs, it seems "Murphy's law" will almost certainly come into play: a much harsher-than-normal winter for many countries in the Northern Hemisphere.

The 10-year U.S. Treasury note yield is presently fetching 1.597%. For perspective, the U.K. 10-year gilt yield is presently 1.135% and the German 10-year bund yield is at -0.144%.

Technically, December gold futures bulls have the slight overall near-term technical advantage amid a price uptrend in place on the daily bar chart. Bulls need to show more power soon to keep it alive. Bulls' next upside price objective is to produce a close above solid resistance at the October high of $1,801.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the September low of $1,721.10. First resistance is seen at today's high of $1,786.00 and then at $1,800.00. First support is seen at this week's low of $1,760.30 and then at $1,750.00. Wyckoff's Market Rating: 5.5

December silver futures prices hit a five-week high today. The silver bulls have gained the slight overall near-term technical advantage. Prices are in a three-week-old uptrend on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.50. First resistance is seen at today's high of $24.18 and then at $24.50. Next support is seen at $23.50 and then at today's low of $23.22. Wyckoff's Market Rating: 5.5.

December N.Y. copper closed down 140 points at 471.15 cents today. Prices closed nearer the session low today on profit taking after hitting a five-month high on Monday. The copper bulls have the solid overall near-term technical advantage. Prices are in a steep four-week-old uptrend on the

daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the May high of 487.05 cents. The next downside price objective for the bears is closing prices below solid technical support at 440.00 cents. First resistance is seen at this week's high of 482.30 cents and then at 487.05 cents. First support is seen at today's low of 466.85 cents and then at 460.00 cents. Wyckoff's Market Rating: 8.0.
 

By Jim Wyckoff

For Kitco News

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Gold's technical problem –  'Massive resistance' at $1,800 keeps gold price down – analysts

Gold ran into "massive resistance" at the $1,800 an ounce level, triggering a $30 retreat Friday. And analysts say that gold won't commit to a rally until there is enough interest to take gold past its key technical barriers.

Weighing on gold was a better-than-expected economic outlook following strong retail sales, with December Comex gold futures tumbling to $1,769 an ounce, down 1.61% on the day.

The move down canceled out gold's mid-week rally to $1,801, which was triggered by hot inflation data that showed price pressures rising 5.4% year-over-year in September, matching the largest annual price gain since 2008.

Keeping gold down were higher U.S. Treasury yields, expectations of a more aggressive Federal Reserve, and risk-on mood in equities, Blue Line Futures chief market strategist Phillip Streible told Kitco News.

"Gold ran into massive resistance. Federal Reserve's funds rates models indicate a hike next year around November. There's taper talk, yields are up, and equities risk is back on. Other commodities are much better inflation plays. Cotton and copper are breaking out," Streible said. “Gold has so much overhead resistance at $1,800, $1,805, $1,815, etc. The critical level to hold is $1,750. If we break there, then we could see $1,720 and $1,685."

Bitcoin hitting $60,000 and nearing its all-time highs for the first time in six months was also adding pressure, with gold continuing to compete with the popular cryptocurrency as an inflation hedge asset.

"Bitcoin is going to get a lot of attention. Bitcoin became a dagger in gold's side when it started to get more publicity. For gold to do better, you need growth to stall more," Streible explained.

Many analysts watching the gold space remain quite optimistic despite gold's setbacks, noting that demand for gold will come.

"It was always going to be tricky for gold to get above $1,800. But this dip is a buying opportunity. Fear is building up, and a lot of people are looking for safety. Gold, crypto, and Treasuries are usually where they will go. I see gold north of $1,800 next week. This is based on inflation scares as well as supply chain issues," said RJO Futures senior commodities broker Bob Haberkorn.

Gold will learn to coexist with bitcoin, Haberkorn added. "Bitcoin looks shinier right now, but at the end of the day, gold is gold."

One of the bigger obstacles the precious metal is fighting against is market expectations that the Federal Reserve will be more aggressive when it comes to tapering its bond purchases and raising rates.

"Gold traders know that there are rate hikes coming. This is why it has been sitting sub $1,800 for so long. But rate hikes that will come will be minimal. With all the U.S. debt, Fed is not in a position to start aggressively raising rates," Haberkorn said.
 

Gold's technical issues

Much of the angst happening in gold right now can be attributed to technical developments, said TD Securities head of global strategy Bart Melek. Gold is reacting to retail sales advancing. There is the expectations of a more active Fed.

"The important thing, technically speaking, we didn't go past $1,800. Gold rose just above $1,796, which is the 200-day moving average but failed to clear it. And that gave people a license to sell again," Melek described. "This is a combination of failure to convincingly move above the key technical level and the yield curve steepening up, with 10-year yields rising. The U.S. dollar also bounced up."
 

Price levels to watch

Melek added that gold could breach $1,800 an ounce soon. But first, the market needs to understand that the Fed can't raise rates too high.

"The Fed is comfortable to have real rates where they are, and it is comfortable to have inflation at current levels," he said. "Market needs to believe the Fed will not tighten. The view now is that the Fed will respond to inflation pressures. But taper is one thing, and pulling the trigger on rate hikes as early as next year is another."
 

Data next week

Monday: capacity utilization rate, industrial production

Tuesday: building permits, housing starts

Thursday: jobless claims, Philadelphia Fed manufacturing index, existing home sales

Friday: manufacturing PMI

 

By Anna Golubova

For Kitco News

 

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Multiple factors create a perfect storm pressuring gold lower

A combination of events collectively has put tremendous bearish pressure on gold pricing. At least for today, the combination of all of these events has resulted in a perfect bearish scenario causing a $30 drop-in gold futures. As of 5:10 PM EDT, the most active December 2021 futures contract is currently fixed at $1768.10, a net decline

Philip Streible, the chief market strategist at Blue Line Futures, summed it up, “gold has everything going against it. Real rates are rising; equities are moving higher, so is bitcoin.”

Market sentiment regarding upcoming changes in the Federal Reserve’s monetary policy has continued to weigh on gold pricing. Market participants expect the Fed to begin to taper their monthly asset purchases of $120 billion as early as next month. Recently, the statement from the last FOMC meeting was released, clarifying the size of tapering each month. The Fed has discussed tapering $15 billion per month, divided between U.S. debt instruments (10 billion monthly) and mortgage-backed securities (5 billion monthly). The recent statement was the first time we got any discussion of the pace at which taper.

On the surface the tapering process still leaves the Federal Reserve’s asset balance sheet at over $8.4 trillion. Tapering will reduce additional purchases over time, but their asset sheet will be just shy of $9 trillion at the end of the tapering process.

Members of the Federal Reserve with a hawkish demeanor will use recent data regarding the September retail sales report to accelerate the date in which they will begin to taper. Economists polled by Dow Jones were forecasting that retail sales would actually decline by 0.2% from August. The actual numbers came in as a gain of 0.7%.

One direct result of the market sentiment convinced that the Federal Reserve would begin tapering as soon as next month is that yields in U.S. debt such as the 10-year Treasury note have seen yields once again rise. Currently, the 10-year note is yielding 1.574% interest. This makes gold pricing cost more to foreign investors, and as a fixed income asset becomes more attractive to investors worldwide.

 

The strong performance in U.S. stocks today was another factor adding to the bearish sentiment for gold. The Dow gained 1.09%, and after factoring in today’s gain of 382 points is currently fixed at 35,294.76. The S&P 500 gained 0.75% and lastly the NASDAQ composite gained 0.50%. Rising U.S. equities continue to create bullish market sentiment for that asset class.

 

Lastly the price of Bitcoin futures surged today up +8.57%, and after factoring in today’s gain of $4985 has taken the value to $63,180 per point. But that’s only the tip of the bitcoin iceberg. The education office of the U.S. securities exchange commission sent out a tweet yesterday inferring that they will approve an ETF for bitcoin futures as early as next week. The tweet included a link to a June bulletin containing a risk disclosure statement for an Electronically Traded Fund for bitcoinfutures. Many believe yesterday’s tweet and the link to the June bulletin by the S.E.C is an announcement that they will soon approve a Bitcoin ETF.

According to Bloomberg News, “The Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry, according to people familiar with the matter.”

 

Any of the components or events mentioned in this article would directly result in making gold less attractive as an investment vehicle or inflationary hedge. However, when you have so many factors creating bearish market sentiment for the precious yellow metal, the effect is cascading selling pressure, which we saw today.

 

By Gary Wagner

Contributing to kitco.com

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Gold, silver hit 4-week highs on improved charts, inflation worries

Gold and silver prices are higher in midday U.S. trading Thursday and hit four-week highs. The metals are being propelled up by improving near-term chart postures and lingering concerns about rising and even problematic price inflation. December gold futures were last up $4.30 at $1,798.80. December Comex silver was last up $0.34 at $23.51 an ounce.

The U.S. data point of the day Thursday saw the producer price index report for September come in at up 0.5% from August, compared to expectation of a 0.6% rise and compares to a 0.7% rise reported in the August report. The U.S. consumer price index report on Wednesday ran a little hotter than expected. Meantime, in China, its producer price index in September rose a record 10.7%, year-on-year. The August reading was up 9.5%. Recent inflation gauges from the major world economies are suggesting higher inflation may be more than just transient, as has been repeatedly suggested by Federal Reserve Chairman Jay Powell. It appears gold and silver traders may be finally realizing that rising inflationary pressures are bullish for metals, as history shows.

Global stock markets were mixed but mostly higher in overnight trading. The U.S. stock indexes are solidly higher at midday. The rally in the equities did temper gains in the safe-haven metals today. U.S. corporate earnings reports are featured this week.

The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil futures are higher and trading around $81.75 a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetching around 1.54%.

Technically, December gold futures bulls have the overall near-term technical advantage amid a fledgling uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the September high of $1,836.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,749.90. First resistance is seen at today’s high of $1,801.90 and then at $1,810.60. First support is seen at today’s low of $1,787.60 and then at $1,775.00. Wyckoff's Market Rating: 6.0

December silver futures bears still have the slight overall near-term technical advantage. However, gains this week have started a price uptrend on the daily chart and also suggest a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $23.75 and then at $24.00. Next support is seen at $23.00 and then at $22.50. Wyckoff's Market Rating: 4.5.

December N.Y. copper closed up 1,095 points at 462.60 cents today. Prices closed near the session high today and hit a 4.5-month high. The copper bulls have the overall near-term technical advantage and gained more power today. Prices are in a steep three-week-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the May high of 487.05 cents. The next downside price objective for the bears is closing prices below solid technical support at 430.00 cents. First resistance is seen at today’s high of 463.85 cents and then at 470.00 cents. First support is seen at 450.00 cents and then at 447.15 cents. Wyckoff's Market Rating: 7.5.

By Jim Wyckoff

For Kitco News

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Gold price sees double-digit jump as IMF cuts global growth outlook, cites 'dangerous divergence in economic prospects'

The International Monetary Fund trimmed its global growth forecast, citing rising risks from supply chain bottlenecks, price pressures, and threats from the delta variant.

In its World Economic Outlook, the IMF said its 2021 global growth forecast is now at 5.9% from the previous July estimate of 6%. The forecast for 2022 remained unchanged at 4.9%.

"This modest headline revision, however, masks large downgrades for some countries," the IMF said in the report. "The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions."

The 2021 growth forecast for the U.S. was slashed from 7% to 6% due to supply constraints. Also, the report warned that if the U.S. does not pass President Joe Biden's infrastructure package worth $4 trillion, it would cut the forecast for the U.S. even further.

China's growth forecast for this year was trimmed just by 0.1 percentage point to 8%. Growth projections for Japan, the U.K., Canada and Germany were also cut. Meanwhile, the euro area growth outlook for 2021 was raised to 5% from 4.6%.

After the report's release, gold prices saw double-digit gains as December Comex gold futures advanced more than $12 to $1,768.60, up 0.73% on the day. At the same time, increased safe-haven demand for gold was somewhat constrained by gains in the U.S. dollar index.

The IMF also warned that the COVID-19 recovery looks increasingly divided.

"Overall, risks to economic prospects have increased, and policy trade-offs have become more complex," Gita Gopinath, the fund's director of economic research, said in the report. "The dangerous divergence in economic prospects across countries remains a major concern."

The disparity in this economic recovery primarily comes from what the IMF calls the 'great vaccine divide,' noting that 96% of the population in low-income countries remains unvaccinated.

With rising stagflation fears worrying investors in the last quarter of the year, the IMF report stated that it sees inflation returning to 2% in advanced economies by the middle of next year. However, emerging and developing nations are still likely to see inflation at 4.9% next year.

For now, however, inflation risks are "skewed to the upside," while growth risks are "tilted to the downside," the report pointed out. "Inflation risks are skewed to the upside and could materialize if pandemic-induced supply-demand mismatches continue longer than expected," the IMF said.

For central banks, this means being ready to change tactics quickly and tightening monetary policies if inflation is more persistent.

"Although central banks can generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics, they should be prepared to act quickly if the recovery strengthens faster than expected or risks of rising inflation expectations become tangible," the report added.

By Anna Golubova

For Kitco News

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

 

David

Bullish sentiment in gold improves but prices are still stuck around $1,750

Sentiment continues to improve in the gold market even as the price spins in neutral, unable to get any sustainable traction following another month of disappointing labor market data.

The latest Kitco News Weekly Gold Survey shows that both Wall Street analysts and Main Street retail investors are solidly bullish on gold in the near term.

Ole Hansen, head of commodity strategy at Saxo Bank, said that the precious metal continues to walk a fine line even as the Federal Reserve is expected to shift its monetary policies and start reducing its monthly bond purchase before the end of the year.

"[The September Non-Farm Payrolls, was cold enough to support gold and still strong enough to support tapering," he said.

This week 14 Wall Street analysts participated in Kitco News' gold survey. Among the participants, eight, or 57%, called for gold prices to rise. At the same time, five analysts, or 36%, called for lower gold prices next week. One analyst, or 7%, was neutral on gold in the near term.

Meanwhile, A total of 841 votes were cast in online Main Street polls. Of these, 442 respondents, or 53%, looked for gold to rise next week. Another 265, or 32%, said lower, while 134 voters, or 16%, were neutral.
 

Kitco Gold Survey

Wall Street

Bullish57%

Bearish36%

Neutral7%

VS
 

Main Street

Bullish53%

Bearish32%

Neutral16%

 

Sentiment in the gold market among retail investors has improved steadily after falling to a multi-month low last month. However, the improved sentiment comes as gold prices remain shackled to support at $1,750 an ounce. The disappointing September employment numbers helped to push gold prices to a two-week high; however, the market was unable to break initial resistance above $1,780 an ounce.

December gold futures last traded at $1,759.20 an ounce, roughly unchanged from last week.

Some analysts have said that while it is inevitable that the Federal Reserve will reduce its bond purchases, the weak labor market data could provide some near-term momentum in gold as investors push back on when the Fed will eventually reduce its monthly bond purchases.

"Once the Fed actually starts its tapering—if it ever does—the market will see that it's too little too late, and—as it usually does once the Fed starts tightening—gold will bottom and reverse. It did this in 2005, 2013 and 2015," said Adrian Day, president of Adrian Day Asset Management.

Colin Cieszynski, chief market strategist at SIA Wealth Management, said that he could see gold prices rise in the near term as the U.S. dollar loses some momentum ahead of next month's Federal Reserve monetary policy meeting, particularly as uncertainty over tapering starts to rise.

However, not all analysts are convinced that gold is ready to break its chains just now. Mark Leibovit, publisher of VR Metals/Resource Letter, said he sees the current price action as a dead cat bounce.

Marc Chandler, managing director at Bannockburn Global Forex, said that he sees gold prices holding resistance between $1,780 and $1,800 in the near term.

"I do not think the jobs disappointment is material in the sense that I see still Fed tapering next month. The disappointment also really knocked U.S. long-term yields down, including in the Fed funds futures market, which is pricing in more 25 in Sept 2022," he said.

Adam Button, chief currency strategist at Forexlive.com, said that he is waiting for one more washout in gold before he looks to buy. He added that he doesn't expect to buy gold before November when the market sees strong seasonal factors.
 

Niels Cristiansen

For Kitco News

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David

Is $2k or $5k gold price still possible?

Even a big miss in the U.S. September job numbers couldn't trigger a much-needed rally in gold. And unless the precious metal can find a way to close above $1,780 an ounce, analysts say they will remain neutral on the metal. Here's a look at Kitco's top three stories of the week:

3. Bitcoin breaches $55,000 as bullish momentum grows in the crypto space

2. September U.S. job growth was the slowest this year, with the economy adding only 194,000 positions versus the expected 500,000

1. Gold price to 'revisit its peak' soon, says Bloomberg Intelligence + Gold price headed to $5,500 in the long term as central banks won't be able to exit unorthodox monetary policies – Jefferies

 

By Anna Golubova

For Kitco News
 

Buy and Sell Gold and Silver with Free Storage

David

'Bad news is good news for gold,' but why is the price stuck?

With gold unable to deliver a rally despite a disappointing U.S. September employment report, analysts weigh in on gold's sticky price levels.

The U.S. September jobs report surprised on the downside with just 194,000 positions added versus the expected 500,000. This is a big miss considering that Federal Reserve Chair Jerome Powell needed "a reasonably good report" to begin tapering as soon as November.

"We had a big miss on the jobs number. The bad news is good news for gold. That's because the market believes the Fed can't get as aggressive next month with tapering or future rate hike timeline," RJO Futures senior market strategist Frank Cholly told Kitco News. "It comes down to the Fed not being in a position to take away the punch bowl just yet."

In response to the employment report, gold jumped $20 to a daily high of $1,781. However, gold ended up giving up all of its gains as the U.S. Treasury yields began to climb.

"As have been true for past months, gold prices have been very sensitive to economic data," said Gainesville Coins precious metals expert Everett Millman. "The two areas pulling safe-haven demand away from gold have been the bond and crypto markets."

With economic data getting worse, gold could be in for a shift in sentiment. But it does need to find the appeal of new buyers as an inflation hedge, which so far has been the U.S. dollar and bitcoin.

"Economic data seems to be trending down. Inflation is still rather high. All of that is fairly gold positive. Especially because we are seeing inflation now outside of the U.S, it does seem that that train is not going to stop rolling even though Powell is saying price increases are transitory," Millman told Kitco News.

Will Powell keep his November tapering stance?

 

The critical question for gold is whether or not Fed Chair Jerome Powell will proceed with tapering in November.

A couple of weeks ago, Powell stated that the test for tapering has been "all but met." But is that still the case?

"Powell has painted himself into a corner with those comments. It seems unlikely that tapering could come in November, given the jobs numbers. They also can't raise interest rates as soon as they want to if data continues to be bad. If the Fed can't keep its timeline and it is forced to continue supporting the markets longer than expected, that doesn't indicate a strong economy and will drive safe-haven demand for gold," Millman explained.

The risk for gold here is the Fed choosing to stick to its tapering timeline for transparency reasons, said Cholly.

"Gold could continue to move sideways. Even if we had a big employment miss, yields are still ticking up. The Treasury market is telling us the Fed is going to stick to its timelines. The Fed is worried about being transparent. And if they have given us an indication that they will taper, they will be inclined to follow it," he said.

 

Key gold levels to watch

Gold will fail at creating bullish momentum unless it can close above Friday's high of $1,781 an ounce, Cholly pointed out.

"It's all about levels on a chart. This morning, December gold hit $1,782. Coincidentally, $1,781 is the 50-day moving average. If the market could manage a close of $1,781 or higher, it would be friendly for the gold bulls. Then we can start talking about $1,800," he said.

But for now, the market has rejected that level, and gold is back to trading flat on the day at $1,758.60 an ounce. Meanwhile, the $1,720 level continues to act as support, Cholly added.

Millman said he doesn't rule out a move to $1,800 next week if gold garners safe-haven interest. "Lately, I've been down on metals because I think the U.S. dollar and risk appetite have been strong. But the long pullback the gold market experienced is a temporary pause. Looking at $1,800 for next week," he said.

Millman is watching any additional comments from Fed members to clarify what the September job numbers mean for the central bank.

 

Data to watch

One of the important releases to monitor next week will be Wednesday's FOMC meeting minutes from September.

"Gold will react if there are any adjustments to the language surrounding tapering. If it seems Fed is trying to push back that timeline," Millman noted.

Also, on Wednesday, markets will be eyeing the U.S CPI report, with market consensus calls projecting for the annual inflation number to remain at 5.3% in September.

On Thursday, there are jobless claims and PPI reports. And on Friday, the markets will get a look at the latest retail sales numbers.

By Anna Golubova

For Kitco Newsa

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

 

 

David