Wall Street sees gold prices challenging $2,500 next week, Main Street sentiment is more restrained

The gold market had plenty of significant economic data and in-depth Fed speak to digest this week, and the result was one of the most dramatic moves for precious metals markets this year.

Spot gold kicked off the week trading at $2,361.17 and spent Sunday and Monday treading water while eagerly awaiting the key inflation data to come. Tuesday morning brought a mixed PPI report, but markets took comfort in comments from Fed chair Jerome Powell two hours later when he told the Foreign Bankers’ Association that he was confident the central bank would not need to hike again. Gold prices turned positive on the week early Wednesday morning, and when the April CPI report showed month-over-month improvement, that was all traders needed to begin pushing the yellow metal higher still.

Wednesday evening’s triple top at the $2,400 level stalled momentum in the near term, with spot gold trending steadily downwards through Thursday's session. But by the North American market open on Friday, the bulls had returned in force, and once they propelled gold decisively through $2,400 per ounce around 10:00 am EDT, they never looked back.

The latest Kitco News Weekly Gold Survey has the overwhelming majority of industry experts believing gold prices could reach or surpass their all-time highs, while retail traders are a little more restrained on the precious metal’s prospects.

“I am bullish on Gold for the coming week,” said Colin Cieszynski, Chief Market Strategist at SIA Wealth Management. “The US Dollar appears to be backing off a bit along with treasury yields. Also, if it does break out over $2400 resistance, technically that could open the door to a potential run at the $2,500 big round number.”

James Stanley, senior market strategist at Forex.com, also believes gold has further to fly in the near term.

“Bulls put on a show this week and the move was pretty clean for the most part,” he said. “That continued the breakout from the falling wedge/bull flag in the prior week, and this week was all higher-highs and lows with a really strong move on Friday morning.”

“Chasing fresh highs is always a challenge but the 2400 level has quite a bit of reference given the tests last month, and so far on Friday there’s been indications of acceptance above that price,” Stanley added. “This keeps the door open for a possible run up to $2500.”

“Unchanged,” said Adrian Day, President of Adrian Day Asset Management, who expects gold will have trouble holding Friday’s lofty highs. “We shall likely see another attempt to cross $2,400 and then a small retreat. But gold’s resilience has been impressive, and sooner rather than later it will breach that level.”

“Dip buyers showed up in a big way over the past week, and the buzz around gold is building,” said Adam Button, head of currency strategy at Forexlive.com. “There are signs the US economy is slowing; more of that would bring rate cuts forward.”

Button said that this recent move is a continuation of the broader rally, and it’s being driven by the same source.

“This rally started in China, and China continues to show up,” he said, adding that recent data show Turkey and much of the Middle East are also buying bullion.

Button pointed out that this week’s meeting between Russian President Vladimir Putin and Chinese Premier Xi Jinping is also very bullish for gold prices.

“If you're a gold bull, the picture of Xi and Putin hugging is as good as it gets,” he said. “They're trying to create a multipolar world, and you can't do that if you're relying on the dollar.”

This week, 14 Wall Street analysts participated in the Kitco News Gold Survey, and after Friday’s breakout, the bullish sentiment was as strong as it’s been this year. Eleven experts, representing 79%, expected to see gold prices climb higher still next week, with only two analysts, or 14%, predicting a price decline. One lone expert, representing 7% of the total, saw gold trending sideways during the coming week.

Meanwhile, 144 votes were cast in Kitco’s online poll, with Main Street investors positive but not to the same degree. 83 retail traders, or 58%, looked for gold to rise next week. Another 30, or 21%, predicted it would be lower, while 31 respondents, representing 21%, expect the precious metal to remain rangebound during the week ahead.

After this week’s inflation data drama, markets will get a bit of a break next week. Wednesday will see the release of U.S. existing home sales for April, along with the FOMC minutes from the April/May monetary policy meeting. On Thursday, markets will receive the S&P Flash Manufacturing and Service Sector PMIs, weekly jobless claims, and April new home sales, and Friday will feature the April durable goods report.

Marc Chandler, Managing Director at Bannockburn Global Forex, sees evidence that gold prices are a little too high after this week’s breakout.

“Gold reclaimed the $2400 level ahead of the weekend and is poised to post a record high close (spot market),” he said. “The momentum indicators give the yellow metal scope to challenge the intraday high from April 12 near $2431.50. A note of caution is from the Bollinger Band, set two standard deviations above the 20-day moving average. Gold is trading above it. Also, I suspect that the US rate adjustment (lower with the 2yr yield bottoming near 4.70%) and softer dollar (euro is up for five consecutive weeks) is over or nearly so.”

Darin Newsom, Senior Market Analyst at Barchart.com, thinks gold may give back some of its recent gains.

“Purely a technical read as June looks to be nearing a potential top of its 5-wave short-term uptrend,” he said. “Daily stochastics indicate the contract is sharply overbought. As of early Friday morning, I have a reversal pattern telling me the trend is set to change, but there is a lot of week left today. We’ll see what happens through Friday’s close or possibly early Monday morning.”

Sean Lusk, co-director of commercial hedging at Walsh Trading, was watching the entire commodity complex catch fire on Friday, with precious metals leading the way.

“We're at $2,410, we're back up to high,” he said. “Silver's caught fire here, copper's caught fire as an industrial metal, platinum. It's really been a hell of a ride.”

“You can make an argument that crude's underperformed, still up a little over 10 on the year, nothing crazy,” he added. “But if that gets going that's going to bring everything else up. We’ll probably get a real hot summer here.”

Lusk told Kitco News that the combination of high inflation, massive debt issuance, and runaway central bank currency printing is pushing market participants into precious metals and other commodities.

“We've just printed too much money, and now you see the result of it,” he said. “Where are they putting all the money? Aside from, buying dips in equities, big money is going into metals as an inflation hedge. And not just us, but even economies around the world are doing the same thing. They're increasing their holdings, and nobody knows where to be.”

Lusk said that he can’t imagine a better situation than the current one to drive gold prices higher.

“It's a perfect storm of bullishness,” he said. “You have geopolitical worries. You had the pandemic. And what does our government do right after that? Prints more for all these funding projects that really haven't started yet. Now you're in a campaign year, so all those things, as they relate to gold, just create more uncertainties on the back end, and that's why you continue to run here.”

“It just goes back to the old adage, any time we create more of something, it's worth less,” Lusk said.

“Gold is headed higher, likely to take out $2,448.8 in the days ahead,” said Michael Moor, Founder of Moor Analytics. “We held exhaustion at $2,288.5 with a $2,285.2 low and rallied $138.5. The break back above $2,302 (+1.6 per/hour) has brought in $121.7 of strength. We took out final exhaustion at $2,385.3.”

And Kitco Senior Analyst Jim Wyckoff sees further gains for gold prices next week. “Higher, as charts firmly bullish,” he said.

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Ernest Hoffman

Time to Buy Gold and Silver

David

$2,500 gold is in play this week – Forex.com’s James Stanley

Gold prices have broken out of a near-term bearish technical pattern and the yellow metal is poised once again to surpass its all-time highs, according to James Stanley, Senior Strategist at Forex.com.

“Gold prices broke out of a falling wedge pattern in a very big way last week,” Stanley wrote. “Coming into April Gold prices were flying higher, eventually pushing weekly RSI into deeply overbought territory.”

He said that when gold prices failed to hold above the $2,400 per ounce level, it triggered a strong pullback that drove gold down $100 in relatively short order.

“But, just like Gold bulls failed to gain acceptance above the $2400 level, Gold bears struggled to gain acceptance below $2300,” Stanley said. “There was a single daily close below that price but in the days after, buyers returned to hold support above the level while also building in a backdrop of higher-lows.”

Stanley said this price action is what created the falling wedge pattern on the daily chart “as sellers were showing more aggression at highs or near resistance but suddenly showed passiveness near lows or at support.”

Turning to the price action seen this week, Stanley noted another technical pattern that he gleaned from the pullback: “a Fibonacci retracement that has continued to show inflections.”

“Taking the April high down to the May low produces a 61.8% Fibonacci retracement at $2372.68,” he said. “That’s what helped to hold the highs on Friday before a pullback appeared.”

Stanley said the pullback ran all the way down to the 38.2% retracement level. “That plots at $2336.31, and that price helped to hold the lows on Monday and into Tuesday, at which point bulls came back,” he said. “That then led to a run and a pause at the 61.8% level, followed by extension up to the 76.4% retracement at $2395.18, and that’s so far held the highs for this week.”

He added that the pullback from this level “has so far held support on a re-test of support at prior resistance, at the same 61.8% retracement of 2372.68.”

Moving forward, Stanley said “the big question is whether bulls have the drive to push a weekly close above the $2400 level,” something that XAU/USD has yet to achieve.

“The two instances that we did have of price testing over that level were met with fast pullbacks, with the second test also showing a lower-high,” he noted. “This provides some context should continuation show, and gold bulls holding the bid above the big figure would illustrate a strong response to the pullback that started a month ago.”

Above the 2400 level, Stanley pointed out the prior inflection points at the $2,417 and the $2,431 levels, after which there would be no prior barrier standing in the way of gold’s march to $2,500 per ounce.

“Given that price would be at fresh all-time highs beyond 2431, a degree of projection would be required to set shorter-term resistance levels,” he said. “[T]his could put focus on spots such as 2450 or 2475 before a test of 2500 could come into the picture.”

After forming a triple top pattern just below the $2,400 level shortly after 9 pm EDT Wednesday evening, gold prices have trended lower on Thursday. Spot gold last traded at $2,376.42, down 0.41% on the session at the time of writing.

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Ernest Hoffman

Time to Buy Gold and Silver

David

Gold, silver see strong gains following cooler U.S. inflation report

Gold and silver prices are sharply higher in midday U.S. trading Wednesday following a U.S. inflation report that came in just a bit cooler than expected. A drop in the U.S. dollar index and in U.S. Treasury yields today also worked in favor of the precious metals market bulls. June gold hit a three-week high and was last up $30.20 at $2,390.10. July silver was last up $0.998 at $29.70 and hit a four-week high today.

This morning’s U.S. consumer price index report for April saw CPI up 0.3% versus the consensus forecast of up 0.4% and compares to the March report showing a rise of 0.4%. The annual CPI April reading was up 3.4% and was forecast at up 3.6% and compares to up 3.8% in the March report. Traders and investors were thinking the CPI report might come in hot today, following the producer price index report for April that was out Tuesday morning and ran hot on inflation. Today’s CPI report falls into the camp of the monetary policy doves, who want to see the Federal Reserve cut interest rates sooner rather than later. That scenario is bullish for the precious metals, from a consumer and commercial demand perspective.

Asian and European stock indexes were mixed overnight. U.S. stock indexes are solidly higher at midday.

Comex copper futures today hit a new record high of $5.1280 a pound. Tighter global supplies, better world economic growth, smelter issues in China, as well as rampant market speculation, are driving the red industrial metal’s price sharply higher. Could copper be the next cocoa? Cocoa futures last year at this time were trading around $3,000 a metric ton. In April, cocoa futures reached a record high of $12,261 a ton.

The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are near steady and trading around $78.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching around 4.3% and down after the CPI report.

Technically, June gold futures prices hit a three-week high today. The bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,448.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at $2,400.00 and then at $2,415.00. First support is seen at $2,365.00 and then at $2,350.00. Wyckoff's Market Rating: 7.4.

July silver futures prices hit a four-month high today. The silver bulls have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the contract high of $30.19. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at $30.00 and then at $30.19. Next support is seen at $29.00 and then at today’s low of $28.675. Wyckoff's Market Rating: 8.0.

July N.Y. copper closed up 215 points at 491.65 cents today. Prices closed nearer the session low and hit a record high of 512.80 cents early on today. The copper bulls have the strong overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at today’s high of 512.80 cents. The next downside price objective for the bears is closing prices below solid technical support at 460.00 cents. First resistance is seen at 500.00 cents and then at 512.80 cents. First support is seen at today’s low of 481.40 cents and then at 475.00 cents. Wyckoff's Market Rating: 9.0

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

David

Gold futures fill gap with profit-taking, dropping $30 today

As of 5:15 PM ET, gold futures based on the most active June 2024 contract traded $32 lower, settling at $2,343. Today's price decline effectively filled the gap created between last Thursday's closing price and Friday's opening price. On Thursday, May 9, gold futures opened at $2,316.50 and closed at $2,340.30. On Friday, gold opened at $2,353.50 and closed just below $2,375, creating a price gap.

While Thursday's intraday high of $2,354.20 was above Friday's intraday low of $2,352, a true gap existed between the real bodies of those days' Japanese candlesticks. A candlestick's body represents the open and close, so last week saw a price void between Thursday's $2,340.30 close and Friday's $2,353.50 open. A gap "fills" when the price revisits the pre-gap level. It must be noted that the chart used for this analysis is based upon the closing settlement price in New York.

According to Investopedia, "In volatile markets, traders can benefit from large jumps in asset prices if they can be turned into opportunities…" Gaps offer enterprising traders’ chances to interpret and exploit price movements for profit.

Today's decline essentially filled last week's gap as market participants likely took profits ahead of Wednesday's April Consumer Price Index (CPI) report, awaiting further inflation data.

Piero Cingari of Benzinga notes, "Analysts foresee a drop in both the overall Consumer Price Index (CPI) and its 'core' component…" Wall Street economists anticipate the headline annual inflation rate will decline from 3.5% in March to 3.4% in April. The yearly core inflation rate, excluding food and energy volatility, is expected to fall from 3.8% to 3.6% year-over-year, the lowest since April 2021.

If the actual figures come in above predictions, the Federal Reserve may implement fewer than the currently projected two rate cuts this year. Conversely, lower-than-forecast CPI data could prompt the Fed to cut rates before September, as two-thirds of economists surveyed by Reuters currently anticipate.

However, the Fed seeks evidence of a sustained trend, so unless subsequent months corroborate Wednesday's report, policymakers are unlikely to drastically alter their stance based on a single data point.
 

Kitco Media

Gary Wagner

Time to Buy Gold and Silver

David

Dramatic' re-pricing across all financial assets coming as the Fed moves away from its 2% inflation target to this – Larry McDonald

Financial markets are about to witness one of the most epic migrations of capital in history as investors rush into hard assets, warned Larry McDonald, Founder of The Bear Traps Report and New York Times bestselling author of 'How to Listen when Markets Speak' and 'Colossal Failure of Common Sense.'

With the national debt approaching $35 trillion, there are only two ways out of the situation — defaults or printing more money, McDonald told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.

"The only way to get out of that kind of debt hole is if you keep inflation above interest rates. That's how you monetize the debt," McDonald said. "That is why [the Federal Reserve] needs a much higher inflation target. It'll [be] a slow, manageable default. But it's the only way out of this colossal debt hole."

In order to tame inflation back to 2%, the Fed needs to keep raising rates, but it can't do that without triggering a 2008-like financial crisis, McDonald pointed out.

"[Powell] should raise rates another 150 basis points. But if you push rates up from here, you will very quickly bring on a financial crisis much worse than Lehman," he said.

Fed will have to raise its 2% inflation target

The Fed will have to cut rates to avoid a banking collapse and a brutal recession. However, first, it must raise the no-longer-attainable 2% inflation target. "[The Fed] will start circulating the white papers and working with other central bankers worldwide to pitch this in a group setting," McDonald noted.

The inflation shift talk can start as soon as the Jackson Hole Economic Policy Symposium, which takes place yearly at the end of the summer, he added. "If you have a 35 trillion debt hole, you need interest rates below the inflation rate, where you are wiping out debt with inflation."

McDonald also weighed in on the state of the U.S. banking sector, warning of a massive M&A cycle coming. Watch the video above for details.

Move into hard assets

According to McDonald, the U.S. is in a world of persistent inflation, where all asset classes will see a "dramatic" re-pricing as capital flees from financial assets into hard assets.

"The moment [the Fed] tips its hand, this creates a really bullish scenario for hard assets," McDonald stated.

A commodity bull market will dominate the financial landscape, with several metals looking at significant upside. For McDonald's top commodity plays, watch the video above.

McDonald sees gold reaching $3,000-$3,500 an ounce in the next 12-18 months. But he is even more bullish on another precious metal, pointing to one ratio "screaming" to sell gold and buy this metal instead. For insights, watch the video above.

McDonald also shared his price outlooks for silver, platinum, oil, and natural gas. Watch the video above for price targets.

Kitco Media

Anna Golubova

Time to Buy Gold and Silver

David

Gold Price News: Gold Rises After US Jobless Figures

Prices rose as high as $2,338 an ounce on Thursday, compared with around $2,310 an ounce in late deals on Wednesday.

US initial jobless claims figures released Thursday came in at 231,000 in the week to May 4th, well above market expectations of 210,000. A higher-than-expected rise in the number of people seeking unemployment benefits strengthens the call on the US Fed to slash interest rates to stimulate the economy.

Recent bets among interest rate traders have begun to coalesce around September as the most likely start for US interest rate cuts, with a majority expecting no change to monetary policy at upcoming meetings in June and July.

Lower interest rates tend to support gold prices because they weaken the US dollar, making gold cheaper for buyers in other currencies, as well as reducing the opportunity cost of holding non-yield-bearing assets.

Elsewhere, the World Gold Council issued a report Wednesday that highlighted a number of factors behind the new all-time high prices seen in April:

Gold Market Commentary: Higher-for-longer: Inflation not growth | World Gold Council

The industry group cited a positive flip in North American gold ETF flows which combined with strong Asian ETFs. Moreover, increased geopolitical risk, positioning in the Shanghai futures exchange and strong central bank buying all contributed to the higher prices in March and April, it said.

Looking ahead, the markets will be watching out for several speeches by US Fed officials on Friday for clues on the central bank’s view on the outlook for interest rates, especially in light of the recent surprise rise in jobless claims numbers.

Time to Buy Gold and Silver

David

Gold investors watching inflation data next week to see if this new momentum will last

Kitco NEWS has a diverse team of journalists reporting on the economy, stock markets, commodities, cryptocurrencies, mining and metals with accuracy and objectivity. Our goal is to help people make informed market decisions through in-depth reporting, daily market roundups, interviews with prominent industry figures, comprehensive coverage (often exclusive) of important industry events and analyses of market-affecting developments.

Gold investors watching inflation data next week to see if this new momentum will last teaser image

After two weeks of consolidation, gold is attracting some new bullish attention after holding initial support at around $2,300 an ounce, according to some analysts.

Bouncing off its lows at the start of the week, gold is looking to end Friday near a two-week high. June gold futures last traded at $2,375.40 an ounce, up nearly 3% from last Friday’s close.

At the same time, silver has managed to push back above $28 an ounce after holding critical support levels. May silver futures last traded at $28,310 an ounce, up a solid 6% from last Friday.

Some analysts note that gold is benefiting from fluid interest rate expectations following disappointing economic data. Thursday, a jump in weekly jobless claims pointed to growing slack in the U.S. labor market and brought renewed focus to last week’s disappointing nonfarm payrolls report.

Friday, the Univerisity of Michigan’s preliminary consumer sentiment survey showed optimism falling to a five-month low, while inflation expectations rose to a nearly two-year high.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said that it is not surprising that gold is seeing a renewed push to the upside as the market’s bullish conviction has not been tested during the two-week consolidation period.

“Now we see a technical break to the upside, supported by signs the U.S. labor market is cooling. With inflation being controlled, the expected number of U.S. rate cuts has been lifted to two from one,” he said.

However, some analysts warn that although markets are now pricing in two rate cuts this year, these expectations are extremely fluid.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said he expects rallies in gold and silver to be sold in the near term.

“Traders do not have a clear signal from the Fed in relation to their monetary policy,” he said. “The job data and other economic numbers indicate that the economy is slowing down, but the Fed is still determined to keep rates higher for longer. All of this is bringing strength back to the dollar index and taking the shine away from the metal.”

Looking at the precious metals’ technical outlook, Alex Kuptsikevich, Senior Market Analyst at FxPro, said that the renewed momentum in gold and silver comes after both metals managed to hold key retracement levels.

“This week's upward momentum revives the idea that the decline in the second half of April was a corrective pullback,” he said.

However, Kuptsikevich added that although gold and silver are seeing robust moves higher, a lot of work still needs to be done to attract new capital and drive prices above the recent all-time highs above $2,448 an ounce.

“A further rise in the price of gold with high bond yields in developed countries, huge budget deficits in many countries, and the need to support the economy makes one think that the upside potential is limited,” he said. “Until gold and silver reach a new level, we doubt the success of a new attack on the highs and see the potential for a renewed decline.”

Although gold could continue to consolidate, Peter Granditch, renowned Financial Analyst and market strategist, said that risks for gold and silver remain to the upside as interest rates have peaked due to weakening economic activity. However, he added that investors should be patient.

“I’m hard-pressed to think gold can get much below its recent lows while the upside remains hundreds of dollars (if not more) higher,” he said in a comment to Kitco News. “I don’t think this leg up will be as hard and as fast as the one we saw earlier his year, but my long-standing target of $2,536 is most reachable this year.”

With renewed attention on economic fundamentals, some analysts note that next week will be critical to gold and silver’s potential recovery and drive to record highs.

Next week's main economic event will be the April Consumer Price Index after the Federal Reserve signaled that its fight against inflation has been insufficient as prices remain well above its 2% target.

“If [consumer] prices rise more strongly once more, the recent slight rise in interest rate hopes is likely to be dampened again. Gold should then fall back again,” said Barbara Lambrecht, precious metals analyst at Commerzbank, in a note Friday.

Along with U.S. CPI data, some economists have said that after the disappointing consumer sentiment data on Friday, U.S. retail sales data will also garner some market attention. Traditionally, consumers who are less optimistic about the health of the economy spend less, which will weigh on economic activity.

“The renewed slump in the University of Michigan consumer sentiment gauge to a six-month low is hard to explain given that gasoline prices are now falling again, the stock market is back close to a record high, and there is little evidence of any major downturn in the labor market,” Paul Ashworth, Chief North America Economist at Capital Economics, said in a note. “That leaves us wondering if we’re missing something more worrying going on with the consumer. We don’t think so, but next week’s April retail sales figures will provide more insight.”

Economic data to watch next week:

Tuesday: U.S. PPI, Federal Reserve Chair Jerome Powell to speak in Amsterdam, Netherlands

Wednesday: U.S. CPI, U.S. retail sales, New York Fed Empire State Survey

Thursday: U.S. weekly jobless claims, U.S. building permits housing starts, Philadelphia Federal Reserve manufacturing survey

Kitco Media

Neils Christensen

Time to Buy Gold and Silver

David