Gold’s most active contract switches to June which are flirting with $2000

Gold traded higher by low double digits today. The gains are the result of two factors and tomorrow’s PCE inflation report. Currently, the April 2023 contract of gold futures is trading up $14.20 and fixed at $1981.10. Concurrently, the June 2023 contract of gold futures is fixed at $1998 up $13.50. Today the June contract hit an intraday high of $2002.40.

The volume is diminishing in the April contract with an open interest of 88,563. The volume in the June contract has an open interest of 145,716. Traders are switching from the April contract to the June contract which is next in line to be the most active.

The dollar is currently trading lower by 0.43% and the dollar index is fixed at 101.86. The dollar has had a strong decline since October of last year when the index traded to an intraday high of 114. It seems that the days of extreme dollar strength have greatly diminished and we anticipate that the dollar index could break below 100.

Yields on government bonds are also lower which has greatly enhanced the demand for gold as a haven asset. Gains in U.S. equities did little to diminish demand for the haven assets and did not seem to have any detrimental effect on Gold pricing today.

As we spoke about yesterday, market participants who are anticipating a Fed pivot from raising rates to cutting rates have been largely disappointed. It is accepted by analysts and economists that the Federal Reserve will continue to either raise rates or pause rates at some point soon.

The CME’s FedWatch tool indicates that professional traders are almost split between anticipating a ¼% rate hike or a pause in interest rate hikes at the next FOMC meeting which begins around a month from today and concludes on May 3. According to the CME’s probability indicator, there is a 43.6% probability that the Federal Reserve will pause its hawkish monetary policy of raising rates at each FOMC meeting, and a 56.4% probability that the Fed will raise rates by ¼%. Yesterday the CME’s FedWatch tool indicated that there was a 67.4% probability that the Fed would pause rates with a 37.6% probability of a ¼% rate hike. This is a pretty dramatic shift in the last 24 hours.

Lastly, the preferred inflation indicator of the Federal Reserve, the PCE (Personal Consumption Expenditures Price Index) will be released tomorrow, March 31. Currently, forecasters believe that inflation levels will remain elevated. If the PCE does remain elevated as currently predicted it could strengthen the resolve of the Federal Reserve to raise rates rather than take a pause.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold remains solidly bullish even with today’s modest price decline

Although gold prices had a modest decline in trading today, the overall fundamental environment that had caused gold pricing to trade above $2000 last week remains solidly entrenched. Today’s modest single-digit decline in gold resulted from market participants once again focusing on risk-on assets with U.S. equities rising. Specifically, a major rise of 1.97% in the NASDAQ composite indicates solid interest in the tech-heavy index. The Dow Jones industrial average gained 1% and the S&P 500 increased by 1.42%.

Positive market sentiment for US equities coupled with minor dollar strength could have easily tipped traders to take profits on long positions in gold. As of 5:25 PM EST gold futures basis the most active April contract is down $7.30 or 0.37% and fixed at $1966.20.



However, June gold futures which will be the next most active contract is currently fixed at $1983.10 booking the same dollar decline of $7.30 but are priced almost $20 above the April contract. The large differential of almost $20 between the two contract months clearly illustrates market sentiment is exceedingly bullish long-term for gold.

Market participants who were anticipating a Fed pivot from raising rates to cutting rates have been largely disappointed. However, it must be noted that the CME’s FedWatch tool indicates that professional traders are anticipating a pause in rate hikes in 34 days when the Federal Reserve concludes its May FOMC meeting on May 3, 2023. According to the CME’s probability indicator, there is a 67.4% probability that the Federal Reserve will not raise rates and a 37.6% probability that they will implement another 25 bps rate hike.

Lastly, the preferred inflation indicator of the Federal Reserve, the PCE (Personal Consumption Expenditures Price Index) will be released this Friday, March 31. Currently forecasts believe that inflation levels will remain elevated. If the PCE remains elevated as currently predicted it could pressure the Federal Reserve to raise rates rather than take a pause at the May FOMC meeting.

By

Gary Wagner

Time to Buy Gold and Silver

David

Gold, silver gain on bargain hunting, bullish outside mkts

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(Kitco News) – Gold and silver prices are up in midday U.S. trading Tuesday on some perceived bargain hunting, and amid a lower U.S. dollar index and higher crude oil prices on this day. April gold was last up $15.00 at $1,968.70 and May silver was up $0.21 at $23.355.

The key outside markets today see the U.S. dollar index lower and continuing to trend lower on the daily bar chart. Nymex crude oil futures prices are up and trading around $73.50 a barrel. Oil prices have made a good rebound from the March low and bulls are working on a price uptrend on the daily bar chart. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.558%.

Global stock markets were mixed overnight. U.S. stock indexes are mixed at midday. The U.S. and European banking crisis appears to have stabilized, at least for now. That’s allowing risk appetite to creep back into the marketplace. Continued easing worries about the banking crisis, and a continued uptick in risk appetite, would very likely cap gains in gold and silver prices for the near term.

  Fed's 'Emergency rate cut' by June to precede 'controlled implosion' of banking sector, only 6 banks left as CBDCs rolled out by 2025 – Edward Dowd

It’s a busy week for U.S. economic data, but the highlight is Friday’s personal consumption and expenditures (PCE) data that will provide fresh clues on inflation and whether the U.S. economy is headed toward recession. It’s been said the PCE data is a favorite gauge of inflation for the Federal Reserve.

Technically, April gold futures bulls have the solid overall near-term technical advantage. Prices are still in an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the March high of $2,014.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at this week’s high of $1,984.00 and then at $2,000.00. First support is seen at this week’s low of $1,945.00 and then at last week’s low of $1,936.50. Wyckoff's Market Rating: 7.5

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May silver futures bulls have the firm overall near-term technical advantage. Prices are in a steep uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at this week’s high of $23.485 and then at last week’s high of $23.705. Next support is seen at today’s low of $22.96 and then at $22.50. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 105 points at 408.90 cents today. Prices closed near mid-range today. The copper bulls have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 435.90 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 382.20 cents. First resistance is seen at last week’s high of 414.85 cents and then at the March high of 417.85 cents. First support is seen at this week’s low of 402.35 cents and then at 400.00 cents. Wyckoff's Market Rating: 6.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold prices soften as concern subsides over banking meltdown

For the second consecutive day gold futures have traded lower. Today gold traded to an intraday low of $1945 and a high of $1984 after opening at $1982.60. As of 4:15 PM EST gold futures basis the most active April contract is currently fixed at $1958.50 after factoring in today’s decline of $25.30 or -1.28%.

Today’s decline of approximately 1.3% was the direct result of traders bidding the precious yellow metal lower, with dollar weakness providing tailwinds that softened the decline today. Dollar weakness also provided some relief for spot gold which is currently fixed at $1956.90 after factoring in a decline today of $21.30. However, before factoring in dollar weakness spot gold was trading lower by $26.60 with dollar weakness adding back $5.30 per ounce.

The primary factor that had increased demand for the precious metal diminished over the weekend. The concern was centered around a banking crisis involving Silicon Valley Bank and Signature Bank of New York spreading to other banks.

Over the weekend it was announced that First Citizens Bank reached a deal to purchase the Silicon Valley Bank in Santa Clara. The SVB was closed by California authorities on Friday, March 10. On Sunday, March 26 the FDIC (Federal Deposit Insurance Corporation) announced that the First Citizens Bank & Trust Company of Raleigh, North Carolina had completed a purchase agreement from deposits and loans of the Silicon Valley Bridge Bank.

The purchase of SVB greatly alleviated the fears that the banking meltdown would have a contagion effect leading to more banks becoming insolvent. This diminished the demand for safe-haven assets as investors reallocated funds from haven assets to risk-on assets such as U.S. equities. The Dow Jones Industrial Average gained 0.60%, and the S&P 500 gained 0.16%. However, bearish market sentiment continues in the tech-heavy NASDAQ composite which declined by 0.47%.

The two-day decline witnessed in gold could be short-lived as market participants focus on statements made by the Federal Reserve last week. For the first time since the Federal Reserve began raising rates, it indicated that its forward monetary policy is about to begin pausing interest rate hikes. Currently, it is anticipated that the Fed will initiate one more ¼% rate hike in May and then begin to pause rate hikes and assess the long-term impacts on inflation from their flurry of rate hikes which began in March 2022.

The Fed continues to maintain that its current terminal rate will remain elevated but a pause in hikes is the next best thing to a rate cut. Rate cuts were something which Chairman Powell emphatically stated is not something the Federal Reserve will implement without substantial data confirming that inflation is on a sustained downward trajectory towards their 2% target.

Gary S. Wagner

Time to Buy Gold and Silver

David

Gold exhibits extreme gains as traders digest the complex events of March

Gold as a haven asset has been the recipient of the financial uncertainty that has unfolded this month. Gold futures hit a low of $1814 on March 8 and traded to its highest yearly value on Monday when April futures traded to an intraday high of $2015. Although gold pricing wasn't able to sustain attempts to close above $2000 it remains solidly within reach.

As of 5:22 PM EST, the most active April contract is fixed at $1981 after factoring in a decline today of $14.90 or 0.75%. Gold traded to an intraday high of $2006.50 and a low of $1977.70. The demand for gold-based investments has magnified intensely resulting in a $200 range from the lows of March 8 to the highs witnessed this week.

Even with one week remaining in March 2023, this month has been pivotal in terms of the major events that have unfolded. These events will most certainly shape the direction and strength of the financial markets throughout this year.

Not since 2008 have we seen a global banking crisis of this magnitude. In the space of 10 short days, we saw the collapse of multiple United States banks including Silicon Valley Bank, Signature Bank of New York, and Silverton. In addition, Chairman Powell mentioned up to six banks that could require assistance to remain solvent at the FOMC press conference this week.

America's top banks ponied up a $30 billion rescue deal over a 10-day period in conjunction with the steps by the US treasury, the FDIC, and the US Federal Reserve to attempt to cauterize the economic calamity in the banking system in hopes that these recent failures will not lead to a contagion of more banks. However, we don't know if the steps taken by government entities and private sector banks will be enough to contain the damage.

Concurrently, the world watched as Switzerland's second-largest bank, Credit Suisse collapsed and was acquired by UBS. The acquisition of Credit Suisse by UBS allowed the collapsed bank to mirror the more flexible hybrid work model of USB which embraces the theme of adapting and innovating to remain current to meet the diversified needs of its clients and employees.

This week the Federal Reserve concluded its March FOMC meeting and as expected raised its terminal rate by ¼%. What was unexpected was a defined timeline before the Federal Reserve concluded the aggressive rate hikes. While Chairman Powell stated that they most likely will raise rates one more time by ¼% in May, and the rate implemented by the Fed will likely be held with no rate cuts this year. The chairman emphatically stated that "rate cuts are not in our base case" during the Q&A section of his press conference.

Collectively the global bank failures and the possibility of contagion and a pronounced change in the monetary policy of the Federal Reserve in which we are closer to the end of rate hikes have been the defining forces that moved gold prices roughly $200 higher this month.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold, silver rally amid less-hawkish Fed, weaker USDX

Gold and silver prices solidly higher in midday U.S. trading Thursday, boosted in the wake of the Federal Reserve raising its main interest rate by a quarter-point, but also suggesting rates will not continue to rise. A depreciating U.S. dollar on the foreign exchange market is also working in favor of the metals market bulls late this week. April gold was last up $47.70 at $1,996.90 and May silver was up $0.509 at $23.30.

While the Federal Reserve’s FOMC meeting produced a mostly expected quarter-point rate hike, Fed Chair Powell at his press conference leaned a bit more dovish than he had been in recent months. That boosted the precious metals and briefly rallied the U.S. stock indexes. However, what rattled the U.S. stock market late in the session Wednesday was comments from U.S. Treasury Secretary Yellen at a Senate hearing that the federal government has no plans to protect all bank deposits that are not FDIC-insured.

Global stock markets were mixed overnight. U.S. stock indexes are sharply higher at midday.

  Consumers cash in on unwanted gold as its price soars amid a spreading bank crisis

The key outside markets today see the U.S. dollar index weaker and at a seven-week low. Nymex crude oil futures prices are near steady and trading around $71.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.45%.

Technically, April gold futures bulls have the solid overall near-term technical advantage. Prices are in a fledgling uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $2,014.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,922.30. First resistance is seen at $2,000.00 and then at $2,014.90. First support is seen at today’s low of $1,967.30 and then at $1,950.00. Wyckoff's Market Rating: 8.0

May silver futures prices hit a seven-week high today. The silver bulls have the firm overall near-term technical advantage. Prices are in a steep, fledgling uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $23.50 and then at $23.75. Next support is seen at $23.00 and then at $22.50. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 795 points at 412.35 cents today. Prices closed near the session high and hit a three-week high today. The copper bulls have gained the overall near-term technical advantage. A two-month-old downtrend on the daily bar chart has been negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 435.90 cents. The next downside price objective for the bears is closing prices below solid technical support at the March low of 382.20 cents. First resistance is seen at 415.00 cents and then at 420.00 cents. First support is seen at 405.00 cents and then at 400.00 cents. Wyckoff's Market Rating: 6.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

David

Gold futures surge $32 higher after the Fed signals a pause in hikes is imminent

The rally in gold spot and futures returns after a small two-day correction. On Monday of this week, gold hit a new high value at $2015 per ounce. It was approximately one year ago to the day that gold futures traded above $2000 per ounce. Gold traded to a high of $2077 in March 2022. What followed was a multi-month correction that began a conclusion in September through November of last year. On November 3 a triple bottom was identified, the multi-month correction concluded, and a multi-month rally began.

As of 6 o’clock EST p.m. gold futures basis, the most active April contract has just opened up overseas in Australia. It is currently fixed at $1972.10 which is an increase of $22.50 based on the closing price in New York.

Market participants United States are now followed by overseas traders digesting what the Federal Reserve said and did after today’s FOMC meeting. As expected, they did raise their fed funds rate by ¼%. However, for the first time since they began their rate hikes they announced a pivot. That pivot is not rate cuts but rather that rate hikes will be paused with possibly one more rate hike of ¼% in May. They also confirmed that they would continue to keep this terminal rate elevated throughout 2023, a position they have maintained for quite some time.

While many investors had hoped to hear something about a rate cut the Federal Reserve made it clear that that is not something on the table right now and we can expect to see elevated interest rates throughout the remainder of the year. The pivot was that the Federal Reserve announced that they would not continue aggressive rate hikes and that a pause of rate hikes is imminent and soon.

It was this news that took gold prices higher and move the dollar lower. Currently, the dollar is down by 0.66% with the dollar index fixed at 102.195.

However, this FOMC meeting had a quite different tone than expected in that they announced a pause for the first since it began an aggressive period of rate hikes in March 2022 taking the Fed funds rate from near to its current rate which is 4 ¾% to 5.00%.

According to the CME’s FedWatch tool, there is a 38.8% probability that they will pause the rate hikes in May and a 61.2% probability that they will enact their last rate hike in this cycle of ¼% which would take their terminal rate to 5.00% to 5.1/4%.

Today’s announcement by Chairman Powell that a pause in rate hikes is imminent was solid news for the precious metals and disruptive for US equities and the dollar which traded lower.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

David

Gold prices decline after reaching $2000 yesterday as banking fears ease

Yesterday gold futures surged to the highest value of 2023, however after trading to a high of $2014 gold basis is most active April 2023 contract closed well below the intraday high. The high achieved yesterday was not only unsustainable on Monday but led to a deep price decline today. Gold futures are currently trading off by 1.98% or $39.20 taking the most active contract to $1943.60. The decline of $39 today can be attributed to market sentiment shifting regarding the banking crisis as fears diminished amongst traders, gold prices also eased ahead of Wednesday's rate hike decision by the Federal Reserve.

The Fed began its today FOMC meeting today which will conclude tomorrow. According to the CME's FedWatch tool, there is an 87.1% probability that the Federal Reserve will raise rates by 25-bps or ¼%, with a 12.9% probability that the Federal Reserve will pause and announce that they are not raising rates higher this month.

On Friday gold futures closed at $1972 in New York trading, however during the remainder of Globex trading which ends at 6:00 PM EST on Friday gold traded above $1990. This was a net gain of approximately $70 on the day. This was followed by yesterday's new record yearly high at $2014. However, the Japanese candlestick that formed yesterday contained a very small real body (the price between the open and closing price), with exaggerated upper and lower wicks (the vertical lines above and below the real body of a Japanese candlestick).

This type of Japanese candlestick is called a "doji" or a star when it gaps above the real body of the Japanese candlestick that occurs before it. If there is a gap between formed after the star it creates a Japanese candlestick pattern labeled as a "Three River Evening Star".

The "Three River Evening Star" is a Japanese candlestick pattern composed of three candles. The criteria for proper identification of this pattern occurs only when a stock or commodity is in an uptrend. This reversal pattern begins with a long green candle (a candle that closes above its opening price), followed by a star that gaps away from the green body, and the third day is a long red candlestick that must gap below the body of the star. The pattern can reveal a potential top or key reversal from bullish market sentiment to bearish market sentiment.

By

Gary Wagner

Time to Buy Gold and Silver

David