Gold encounters technical and fundamental resistance at $1980

Gold futures are definitely under pressure today, with the most active August 2023 contract down $8.70 or 0.44% and fixed at $1972.10. The root cause is dollar strength that overcame fractional buying and still was able to take gold prices moderately lower. While gold futures declined by 0.44% the dollar gained 0.56% with the differential indicating that market participants were lightly bidding the precious yellow metal higher. Currently, the dollar index has moved back over 100 and is currently fixed at 100.545.

This can also be seen in spot gold pricing which according to the Kitco Gold Index (KGX) is currently fixed at $1969 per ounce, down $7.50 on the day. However, on closer inspection dollar strength reduced an ounce of gold by $10.50, and normal trading bid gold prices $3.00 higher resulting in today's decline.

This is quite different from silver pricing today which is also trading lower. Currently, the most active September 2023 futures contract is fixing silver prices at $24.95 down approximately $0.44. Spot silver is currently fixed at $24.72 after factoring in today's decline of $0.39. However, unlike gold prices silver traded lower from both dollar strength and market participants bidding silver lower. Dollar strength accounted for a decline of $0.13, and selling pressure by investors took an ounce of silver $0.26 lower resulting in today's $0.39 price decline.

In the case of gold, the fractional buying was a sign that market participants still believe that there is upside potential based on positive market sentiment that the Federal Reserve might only raise interest rates ¼%, rather than their recent announcement that they would raise rates by ¼% two more times this year. According to the CME's FedWatch tool, there is a 99.8% probability that the Federal Reserve will raise rates at next week's FOMC meeting by ¼%. The FedWatch tool is predicting that after raising rates this month they will pause at the September meeting with the probability of that occurring at 83.9%, a 66.2% probability that they will continue to hold rates between 5 ¼% and 5 ½% in November, and a 60.8% probability that the Fed will do the same thing in December leaving rates where they will be after one more rate hike.

This differs from silver because the silver investors have implemented a round of aggressive profit taking moving both spot and futures prices back below $25. Silver futures traded to a double top Wednesday and today after hitting intraday highs at approximately $25.48. The editor of Kitco News, Neils Christensen interviewed Huw Roberts, the head of analytics at Quant Insight today where he said that “according to the firm's modeling, the silver price is about 5.7% overvalued." He said that fair value is around $23.86 an ounce. Adding that, “The signals we are starting to see in silver are getting interesting… The rally in silver has overshot its fundamentals."

Our technical studies have shown that it is highly probable that the recent decline in the dollar has concluded after the dollar index bottomed at 99.25 on Tuesday. In fact, since July the dollar index was trading well above 103. On July 6 the dollar hit an intraday high of 103.27 and began a strong decline in value trading lower for seven consecutive days resulting in recent lows in the dollar approximately 3% lower than the high achieved the first week of July. In other words, the dollar lost approximately 3% in value when compared to the basket of six currencies it is weighted against. We believe on a technical basis that the dollar index will increase short-term taking the index to approximately 101.50 before encountering any technical resistance.

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and silver

David

There is a reasonable probability the Fed will conclude its rate hikes this month

The CME Fed watch tool is predicting that there is a 99.8% probability that the Federal Reserve will implement a ¼% rate hike on July 26 when the next FOMC meeting concludes. It is also likely that this month's rate hike will conclude the series of hikes by the Federal Reserve that began in March 2022. The latest CPI (Consumer Price Index) and PPI (Producer Price Index) reports indicate that inflationary pressures are diminishing and getting closer to the Federal Reserve's target of 2%.

At its highest point, the CPI was at 9.1% and has now contracted to 3% in June. This combined with a decrease of 0.2% through June in the Producer Price Index (for all goods minus food and energy). A survey conducted by the University of Michigan revealed that consumer sentiment skyrocketed to 72.6% in July 13% above sentiment in June.

If the Fed is as they have long proclaimed "data dependent" then these recent reports demonstrate that the U.S. economy has contracted substantially bringing down the level of inflation.

The CME's probability indicator is forecasting an 87.9% probability that rates will be left where they are at the September FOMC meeting, a 71.8% probability in November, and a 64% probability in December.

An article penned by Avraham Shama an Opinion Contributor for THE HILL titled, "The Fed is raising interest rates again: it's a mistake that could spark a recession", warns that if the Fed wants the best serve the US economy it must stop raising rates to avoid a recession.

In his article, he addresses the fact that "the Fed and its Chairman Jerome Powell have been unable to recognize a heating or cooling economy in a timely fashion to take quarterly action to minimize the negative effects". He discusses a series of missteps beginning with monetary tightening by the Fed in 2019 prematurely which required a pivot to reverse that trend. He addressed the fact that the Federal Reserve waited too long before initiating the first rate hike in March 2022 when inflation was already above 8%.

Gold traded to its highest value this year during the first week of May when gold briefly touched $2083 and then corrected to a low of $1900 on June 20. Today gold futures basis the most active August contract is fractionally lower down $0.40 or 0.02% and fixed at $1980.40.

It is reasonable to assume that market sentiment will assume a much more bullish demeanor if it has clear knowledge that the series of rate hikes is over. More importantly, when the Federal Reserve does initiate its first rate cut which could occur as early as the first quarter of 2024 one would expect bullish market sentiment to return allowing gold to challenge the recent record highs just below $2100 per ounce.

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and silver

David

Gold rallies as empowered bulls set sights on $2,000

Gold prices are sharply up and hit a 2.5-month high in midday U.S. trading Tuesday. Silver prices are also sharply up and hit a nine-week high. The charts have recently turned more bullish for both precious metals, which is inviting the technically based speculators to the long side of those markets. A weaker-than-expected U.S. retail sales report this morning is also supporting ideas the Federal Reserve can take its foot of the gas sooner, regarding its interest-rate-increase cycle. August gold was last up $26.40 at $1,983.00 and September silver was up $0.347 at $25.365.

June U.S. retail sales were reported up 0.2% versus expectations of a rise of 0.5%, month-on-month. This report, along with the U.S. employment report for June released in early July, seem to fall into the sweet spot for those market watchers looking for a soft landing for the U.S. economy. No U.S. and/or global recession setting in would be a scenario for better global demand for metals. Yet, global growth is not so strong as to prompt major central banks to continue tightening their monetary policies and raising interest rates, which would crimp demand for commodities.

Asian and European stock markets were mixed in quieter overnight trading. U.S. stock indexes are higher at midday and hit new highs for the year. The U.S. stock index bulls are enjoying price uptrends in place on the daily bar charts, also reflecting the upbeat trader and investor attitudes at present.

The U.S. dollar 'will die' with BRICS new currency, warns Robert Kiyosaki

The key outside markets today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil prices are up trading around $75.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.777%.

Live 24 hours gold chart [Kitco Inc.]

Technically, August gold futures prices hit a 2.5-month high today. Bulls have gained the overall near-term technical advantage. Prices are in a three-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,900.60. First resistance is seen at today’s high of $1,988.30 and then at $2,000.00. First support is seen at $1,972.00 and then at today’s low of $1,958.10. Wyckoff's Market Rating: 6.0.

Live 24 hours silver chart [ Kitco Inc. ]

September silver futures prices hit a nine-week high today. The silver bulls have the firm overall near-term technical advantage. A three-week-old price uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $26.645. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at today’s high of $25.405 and then at $25.85. Next support is seen at this week’s low of $24.815 and then at $24.50. Wyckoff's Market Rating: 7.0.

September N.Y. copper closed down 85 points at 383.55 cents today. Prices closed nearer the session high today. The copper bulls and bears are on a level overall near-term technical playing field amid choppy trading. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 368.30 cents. First resistance is seen at 390.00 cents and then at the July high of 395.40 cents. First support is seen at today’s low of 380.30 cents and then at 374.25 cents. Wyckoff's Market Rating: 5.0.

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

David

It’s too early to call a bullish rally in gold, the Fed is still the biggest unknown

It's too early to call a bullish rally in gold, the Fed is still the biggest unknown

The gold market will remain very sensitive to the Federal Reserve's rate outlook, so it is too premature to call a bullish rally in gold after prices gained more than $30 on the week, according to analysts.

Gold got a boost after June's U.S. inflation report showed price pressures rising at the slowest pace in two years. The U.S. CPI was up 3% last month from a year ago, while the core CPI, which excludes volatile food and energy prices, was at 4.8%, both below estimates.

The August Comex gold futures last traded at $1,961.70, up just over $30 on the week, after firmly holding the $1,900 an ounce level.

"The fact that gold held above $1,900 despite everyone expecting the Fed to hike interest rates in July is a vote of confidence," Gainesville Coins precious metals expert Everett Millman told Kitco News. "The Fed will drive the gold market for the next few months. And higher for longer rates would be negative for the price. Gold's current reaction means that either all rate hikes are not priced in yet or maybe markets' expectations do not match reality."

The Fed is still planning on hiking rates at least twice this year, with market expectations for the July meeting pricing in a 96% chance of a 25-basis-point increase. The second rate hike is yet to be priced in, which is why analysts remain cautious about gold in the short term.

"If anything, people want to go bullish on gold on any feeble pretext, including the hope that the Fed will go accommodative quickly and end the tightening program," TD Securities global head of commodity strategy Bart Melek told Kitco News. "At this point, it is too early to get overly bullish."

Even though the inflation narrative is starting to look better, it is not a done deal, especially considering the spike in energy prices. "We have recently seen a significant rise in oil prices as OPEC continues to reduce supply. The big benefit we received from cheaper energy may reverse to some extent in the months to come," Melek warned.

Plus, it is not likely that the Fed will be quick to change its hawkish rhetoric as it impacts its credibility going forward. "I doubt that the Fed starts easing us as quickly as the market thinks. Data could surprise to the upside, and the Fed sticks to its guns. And that could be a problem for gold," Melek noted.

What the Fed does next is still a big mystery, Millman said, noting that it is difficult to predict how some of the lagging effects of such aggressive monetary policy tightening will affect broader markets.

The key question for markets is not by how much the Fed is yet to hike, but for how long will the rates remain elevated before the Fed starts to cut, Millman added.

"If they turn around and cut rates at the end of this year or beginning of next year, markets will have a strong reaction," he said. "It is important to know what the next step is — how long rates will stay high and when is the rate cut coming. That's what's keeping gold in place."

Based on previous statements, the Fed is likely to err on the side of tightening, which would mean rates will remain higher for longer, Millman noted. With inflation being elevated for 18 months above 2%, Fed Chair Powell believes markets need time below 2% to balance that out.

Gold price levels to watch

Melek described the latest move in gold as likely short-lived, with short-covering driving prices higher. "That is going to reverse to a great extent. The rally is too premature, and there are significant risks of unwinding," he said.

The immediate resistance is at $1,966 and $1,970, and support is at $1,930, $1,900, and then $1,896 an ounce, Melek added.

Millman said he is also not ready to move into the bullish camp yet. He sees the next big resistance at $1,975-80 and support at $1,900.

Next week's data

Monday: NY Empire State Manufacturing index

Tuesday: U.S. retail sales, U.S. industrial production, Fed Vice Chair for Supervision Barr speaks

Wednesday: U.S. hosting starts and building permits

Thursday: U.S. jobless claims, Philly Fed manufacturing Index, U.S. existing home sales

Anna Golubova

For Kitco News

Time to Buy Gold and silver

David

Gold, silver boosted on notions Fed tightening cycle near an end

Gold prices are modestly up and hit a three-week high, while silver prices sharply up and hit two-month high in midday U.S. trading Thursday. Another tame U.S. inflation report today has the marketplace thinking the Federal Reserve is likely nearer the end of its interest-rate-hiking cycle. That's bullish for commodity markets, including the metals. August gold was last up $3.30 at $1,965.00 and September silver was up $0.64 at $24.955.

The marketplace is basking in the glow of tame U.S. inflation reports that came out Wednesday and Thursday mornings. Today's producer price index for June also came in slightly lower than expected, following Wednesday tamer consumer price index for June.

Said analyst Nigel Green of the deVere Group: "The U.S. is now likely to pull off the perfect "soft landing,' with the world's largest economy avoiding a recession as the latest inflation data comes in cooler than expected. The U.S. CPI data raises hopes that the Federal Reserve is going to be able to bring down inflation without steering the U.S. economy into a recession. The battle on rising prices is being won, as the data suggests, meaning the pressure is off the Fed for future rate hikes. Cooling inflation and a strong and resilient labor market suggest that no recession will come in 2023.” That's a bullish scenario for commodity markets, suggesting better demand in the coming months.

Asian and European stock markets were mixed to firmer in overnight trading. U.S. stock indexes are firmer at midday.

In overnight news, China's exports in June fell a worse-than-expected 12.4%, year-on-year, following a drop of 7.5% reported in May. Imports in June dropped a worse-than-expected 6.8%, year-on-year. That dour news from the world's second-largest economy did not put a damper on raw commodity markets today, but it may in the near term.

Silver prices are up 4%; Is this the start of the rally? TD Securities says it is still three months away

The key outside markets today see the U.S. dollar index solidly lower and hitting a 15-month low. That's bullish for the raw commodity sector, as most raw commodities on world trade markets are priced in U.S. dollars. The weaker USDX makes those commodities less expensive to purchase in non-U.S. currency. Meantime, Nymex crude oil prices are slightly up and trading around $76.00 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching around 3.8%.

Technically, August gold futures prices hit a three-week high again today. Bulls and bears are on a level overall near-term technical playing field but the bulls have momentum. A nine-week-old downtrend on the daily bar chart has been negated and prices are now in a fledgling uptrend. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,900.60. First resistance is seen at $1,975.00 and then at $1,985.00. First support is seen at $1,950.00 and then at Wednesday's low of $1,937.50. Wyckoff's Market Rating: 5.0.

September silver futures prices hit a two-month high today. The silver bulls have the overall near-term technical advantage and have momentum. A three-week-old price uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the April high of $26.645. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at $25.00 and then at $25.50. Next support is seen at $24.50 and then at today's low of $24.31. Wyckoff's Market Rating: 6.5.

September N.Y. copper closed up 900 points at 394.30 cents today. Prices closed near the session high and closed at a 2.5-month high close today. The copper bulls have gained the slight overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the April high of 418.25 cents. The next downside price objective for the bears is closing prices below solid technical support at 368.30 cents. First resistance is seen at the June high of 396.40 cents and then at 400.00 cents. First support is seen at today's low of 384.20 cents and then at this week's low of 374.25 cents. Wyckoff's Market Rating: 5.5.

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

David

Gold, silver see strong rallies after tamer U.S. inflation report

Gold and silver prices are sharply up, nearer their daily highs and hit three-week peaks Wednesday, in the aftermath of a morning U.S. inflation report that came in a bit tamer than market expectations.August gold was last up $24.60 at $1,961.70 and September silver was up $1.014 at $24.295.

The U.S. data point of the week saw the consumer price index report for June come in up 3.0%, year-on-year, which is slightly lower than the expected rise of 3.1% and compares to the gain of 4.0% in the May report. The "core" CPI, which excludes food and energy, came in at up 4.8%, year-on-year, compared with expectations of up 5.0%. These numbers fall into the camp of the monetary policy doves, who want to see the Federal Reserve continue to stand pat on interest rate levels.

The U.S. dollar index sold off sharply, stock indexes rallied and U.S. Treasury yields dropped following the upbeat CPI data.

How to trade spot Bitcoin ETF: Lessons learned from gold ETFs – Florian Grummes

The key outside markets today see the U.S. dollar index solidly lower and hitting a two-month low. Nymex crude oil prices are higher and trading around $75.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.859%–well down from overnight levels.

Technically, August gold futures prices hit a three-week high today. Bulls and bears are back on a level overall near-term technical playing field but the bulls have momentum. A nine-week-old downtrend on the daily bar chart has been negated. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $1,900.60. First resistance is seen at today's high of $1,963.60 and then at $1,975.00. First support is seen at $1,950.00 and then at today's low of $1,937.50. Wyckoff's Market Rating: 5.0.

September silver futures prices hit a three-week high today. The silver bulls have gained the slight overall near-term technical advantage. A nine-week-old price downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at $24.50 and then at the June high of $24.835. Next support is seen at $24.00 and then at $23.50. Wyckoff's Market Rating: 5.5.

September N.Y. copper closed up 860 points at 385.20 cents today. Prices closed nearer the session high and hit a two-week high on short covering. The copper bears still have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at 368.30 cents. First resistance is seen at today's high of 386.05 cents and then at 390.00 cents. First support is seen at 380.00 cents and then at this week's low of 374.25 cents. Wyckoff's Market Rating: 4.0.

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

David

Gold firmer; key U.S. inflation report on deck

Gold is higher and silver is slightly lower in midday U.S. trading Tuesday. Gold is supported by bullish daily outside market forces that see the U.S. dollar index a bit weaker, crude oil prices higher and U.S. Treasury yields down a bit. Trading action was more subdued today ahead of a major U.S. inflation report out Wednesday morning. August gold was last up $7.20 at $1,938.10 and September silver was down $0.02 at $23.325.

Trading so far this week has been quieter ahead of the U.S. data point of the week: Wednesday morning’s consumer price index report for June, which is expected to come in at up 5.0%, year-on-year, compared to a gain of 5.3% in the May report. Trading action in many financial markets, as well as the precious metals, may heat up in the wake of the CPI report, especially if it’s a miss from market expectations.

Gold prices can still push to record highs at $2,100 an ounce by the end of the year – MKS' Shiels

The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are up and trading around $74.75 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.988%.

Technically, August gold futures were up $6.50 at $1,937.30 in afternoon trading and near mid-range. Bears have the overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,975.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $1,846.80. First resistance is seen at today’s high of $1,944.50 and then at $1,950.00. First support is seen at today’s low of $1,929.80 and then at this week’s low of $1,918.00. Wyckoff's Market Rating: 4.0.

September silver futures were down $0.035 at $23.31 at midday and nearer the session low. Prices hit a three-week high early on today. The silver bears have the slight overall near-term technical advantage. However, a nine-week-old price downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $24.835. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at today’s high of $23.595 and then at $24.00. Next support is seen at $23.00 and then at last week’s low of $22.72. Wyckoff's Market Rating: 4.5.

September N.Y. copper closed down 230 points at 376.15 cents today. Prices closed nearer the session low. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen at today’s high of 382.25 cents and then at 385.00 cents. First support is seen at last week’s low of 372.25 cents and then at 368.30 cents. Wyckoff's Market Rating: 3.0.

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

David

Gold prices can still push to record highs at $2,100 an ounce by the end of the year – MKS’ Shiels

Gold prices can still push to record highs at $2,100 an ounce by the end of the year – MKS' Shiels

Gold prices have room to move lower and retest support below $1,900 an ounce in the early part of the second half of the year; however, that doesn't mean investors should give up on gold, according to one market analyst.

In her mid-year outlook, published last week, Nicky Shiels, metals strategist at MKS PAMP, said that she is maintaining her 2023 year-end price average of $1,930 an ounce, even as prices could remain in a downtrend in the near term.

In what could be a volatile market, MKS sees gold prices trading in a range between $1,850 and $2,100 an ounce through the second half of the year.

"Stay core long Gold but remain tactically nimble, which hinges on the interplay between a relatively restrictive Fed & stronger US data," Shiels said in her latest report.

Shiels warned investors that gold could continue to struggle during the rest of the summer as the Federal Reserve looks to raise interest rates later this month. However, she added that there is a chance gold can still see record all-time highs by the end of the year.

"We do expect a bumpy 2H'23 as monetary policy starts to bite; Gold prices are then expected to print a new all-time-high in 2H'23 and pierce $2100/oz," said Shiels. "Our conviction lies in higher floors versus runaway upside repricing unless the Fed loses the inflation fight (not our base case) or breaks something more substantial in the economy."

Although the threat of a recession, caused by the Federal Reserve's aggressive monetary policies, is still in the marketplace, Shiels said that the fear has diminished, and investors are now chasing momentum in other assets.

"U.S. financial instability risks have materially subsided – there is just no macro fear – and fighting the Fed is usually a losing trade after they have, to-date, simply extremely complicated risks. However, underweight investors will continue to incrementally reengage in quality assets and safe havens like precious metals."

Bank of America downgrades gold, silver prices for 2023 as Fed rate hikes keep investors away

Along with gold, Shiels also remains bullish on silver, leaving her average price target unchanged at $24 an ounce. At the same time, MKS sees silver prices trading in a range between $21.50 and $27 through the second half of the year.

Shiels noted that silver's significant supply-demand imbalance continues to support the precious metal's long-term bullish outlook.

"Strong support lurks below $22/oz stemming from a mix of industrial & retail participation, which is expected to remain resilient into 2H'23 despite growing recession risks," she said. "There continues to be asymmetric upside risks in Silver which hinges on investor resubscription, the return of Chinese buying & restocking and the convincing rollover in the US$ once the Fed pauses and expectations shift to a consecutive rate cuts."

Neils Christensen

For Kitco News

Time to Buy Gold and silver

David

t’s a ‘tug of war’ for gold price next week as attention turns to inflation report ahead of July Fed rate decision – analysts

t's a 'tug of war' for gold price next week as attention turns to inflation report ahead of July Fed rate decision – analysts

Despite more than a $20 gain Friday, the gold market is yet to prove that its bearish downtrend is over, according to analysts, who are carefully monitoring next week's June inflation report as a potential trigger.

The gold market rebounded Friday on weaker-than-expected employment data from June, with the U.S. economy adding 209,000 new positions versus the expected 225,000. This marked the weakest gain since December 2020.

At the time of writing, August Comex gold futures were trading at $1,935.50, up 1.05% on the day, after trading at $1,915.4 earlier in the session.

Slowing employment growth is good news for gold as it could remove the need to hike twice this year — a promise made by Federal Reserve Chair Jerome Powell multiple times in June.

But last month's employment slowdown was not steep enough to prevent the Fed from hiking in July, which means that gold price gains could be limited in the short term.

"Although slowing employment growth will be welcomed by Fed officials – particularly following the alarming (and seemingly misleading) surge in the ADP measure reported yesterday," Capital Economics deputy chief U.S. economist Andrew Hunter. "It is unlikely to stop the Fed from hiking rates again later this month, particularly when the downward trend in wage growth appears to be stalling."

With just over two weeks remaining until the Fed meeting on July 25-26, the latest inflation numbers from June, scheduled to be released Wednesday, will be carefully monitored by markets.

The macroeconomics outlook is one of the biggest headwinds for gold in the short term, said Forex.com's senior technical strategist Michael Boutros.

"Markets are pricing a 92% chance of a rate hike in July," Boutros told Kitco News. "But only one rate hike is expected while the Fed telegraphs two. If that shifts, it may limit the upside for gold."

The U.S. dollar took a hit Friday, supporting gold prices at the end of the week, with the U.S. dollar index last at 102.27, down 0.87% on the day.

"It is going to be a tug of war for gold. Don't see a big downdraft," Boutros said.

The long-term outlook for gold is bullish as the labor market will weaken, ushering in a much weaker economy, OANDA senior market analyst Edward Moya told Kitco News.

"Eventually, it will turn bullish for gold. But with more rate hikes being priced in, it is difficult for gold right now," Moya said. "Next week's inflation report could be rather soft. Trading could be very choppy next week."

Gold price levels to watch

From a technical perspective, Boutros pointed out that gold can only break its bearish trend when it rises above $1,943 and $1,965 price levels.

The $1,903-10 range has been a rock-solid critical support zone. That level held on a close basis," he said. "The broader trend from April-May highs is still intact. But gold is not out of the woods until it gets a daily close above $1,943 and $1,965. Then, a broader uptrend can take root."

If gold sees a move lower, Boutros warned to keep an eye on $1,891. If that breaks, the gold market could see a major move down to $1,830, which would be just the initial support level, he added.

Data next week

Monday: Fed Vice Chair for Supervision Barr Speaks

Wednesday: U.S. CPI, Bank of Canada rate decision

Thursday: U.S. PPI, U.S. jobless claims

Friday: Michigan consumer expectations

Anna Golubova

For Kitco News

Time to Buy Gold and silver

David

Gold/Silver – New breakout levels in Gold and Silver with your buy level in Platinum

Precious Metals had a volatile week led by a fury of economic data that the Federal Reserve is closely monitoring. The upward surprise in the ADP figure on Thursday was enough to take Platinum, Palladium, and down 1.5-2%, pushing Platinum below the psychological $900 mark. Following the data release, the ISM Services number came in at 53.9 versus the expectation of 51.3 driving the odds of a July interest rate hike up to 93.6%. The sell-off in the market was not limited to Precious Metals but broadened, with the S&P and Dow having the largest one-day sell-off since May. A reversal of fortune occurred on Friday, with seemingly opposite data showing 209k jobs created versus the expectation of 230,000, leaving the Federal Reserve scratching their heads. Will the Fed raise one more time or two? Either way, a Fed pivot is near, and the bottom in Gold is closer.

Daily Gold Chart

After four straight weeks of losses, we have the first signs of "exhaustive selling," indicating the potential for "bottoming action" in Precious Metals. Gold briefly tested the 200 DMA at $1904, where bargain hunters are beginning to emerge. The critical level we will watch next week will be $1943, where Gold futures failed on July 5th. Any close above could trigger a short covering rally to $1985. You will want to watch the psychological $2000 level and ultimately $2008 as your breakout level. Any close over $2008 should trigger a wave of buying up to all-time highs and eventually extend to our long-term target of $2500/oz. We anticipate that the Fed's reckless acceleration in interest rates will ultimately catch up with them, leading to a reversal in policy once a contraction in U.S. GDP occurs in Q1 2024 while an acceleration in the Euro Zone and China pressure the U.S. Dollar and Interest Rates.

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Daily Silver Chart

Silver futures traded on either side of the 200 DMA for most of the week near $23, where new speculators are entering the market looking for a higher beta asset class to participate in once Gold breaks out. While a price setback would be temporary, our long-term thesis remains that tightness in the physical markets, a decline in mining supply, and solar and E.V. demand should offset any potential for prices to decline further. The new breakout level in Silver is $23.53, where traders will begin to cover shorts frantically. Our thesis remains that over the next 18-24 months, we expect Copper to make new all-time highs and Silver to break $35/oz.

Having the flexibility to enter and exit the market quickly makes it essential for Precious Metals investors to have a futures trading account alongside their core Physical Precious Metals holdings. If you are interested in speculating on the rise and fall of the price of Precious Metals on a shorter-term basis, such as two weeks or two months, or If you have never traded futures or commodities, check out this new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.

Phillip Streible

Contributing to kitco.com

Time to Buy Gold and silver

David