Gold is more than just a safe-haven asset and can fit in all portfolios – WGC’s John Reade

Gold is more than just a safe-haven asset and can fit in all portfolios – WGC's John Reade

Safe-haven demand is pushing gold prices to a three-month high but will rising geopolitical tensions create a sustainable bid in the precious metal.

On Monday editor Neils Christensen recorded a podcast with Phillip Streible, chief market strategist at Blue Line Futures. The guest was John Reade, chief market strategist of the World Gold Council. The three talked about the health of the global marketplace.

Reade said safe-haven demand is positive for gold, but prices could see a sharp correction if the conflict is quickly resolved.

Instead of looking at short-term price volatility, Reade said that the World Gold Council's research shows that gold plays a vital diversification role for any type of portfolio.

"We've issued various editions of the strategic case for gold in the U.K. and Europe and Australia, Russia, Singapore. Looking at the benchmark of assets that might be in a typical portfolio for each of those countries, you find very similar result," he said. "Somewhere between 4% and maybe the higher 10%, of gold in your portfolio seems to be optimal for increasing the risk-adjusted returns," he said.

CRU's top five commodities for 2022 – spoiler gold, silver didn't make the list

The comments come as the gold market saw an interesting trend last year as investment demand in exchange-traded products lagged physical demand. In its annual analysis of the gold market, the WGC reported that physical demand for the precious metal rose 10% to 4,021 tonnes in 2021 as 173 tonnes of gold were liquidated from ETFs.

Looking through the rest of 2022, Reade said that he thinks the gold market is in a good place, even as the precious metal faces the prospect that the Federal Reserve could raise interest rates seven times this year.

"If there were one or two mikes priced into the curve, I'd be a lot more nervous," he said. "I think we're in for some very interesting times in markets over the next, well, two months to two years."

As for gold versus Bitcoin, Reade said that the two assets are entirely different. He explained that while digital currencies have improved a portfolio's return, it has also added risk and volatility.

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Is gold price about to sprint?

Is gold price about to sprint?

Inflation in the U.S. is now at 7.5% — the highest level in forty years. For the U.S. stocks, this means more losses as markets price in a more aggressive Federal Reserve. But for gold, this means more demand as investors turn to the precious metal for protection.

Also, a warning from the U.S. that Russia could launch military action in Ukraine "any day" is pushing gold prices well above the $1,850 an ounce level. Here's a look at Kitco's top three stories of the week:

3. U.S. Mint sells 5 million ounces of silver in January, best start since 2017

2. From one of the worst to best-performing assets? Gold price to tackle $2,100 by year-end, says Wells Fargo

1. The U.S. makes 'largest financial seizure ever,' taking control of $3.6 billion in Bitcoin stolen in 2016
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold price looks to take $1,850 as markets fear emergency Fed move

Gold price looks to take $1,850 as markets fear emergency Fed move

Gold is catching a bid as markets worry the Federal Reserve could opt for an emergency rate hike before the March meeting to try and tame inflation.

Gold is up nearly 2% on the week as more investors turn to the precious metal amid a widespread risk-off sentiment in the marketplace. At the time of writing, April Comex gold futures were trading at $1,841.30, up 0.21% on the day.

This week's shockingly high U.S. inflation report has added more uncertainty regarding the Fed's tightening plan.

With consumer prices rising 7.5% in January, the highest in 40 years, Goldman Sachs is now projecting seven 25 basis points hikes this year. There is also growing consensus for a 50 basis point hike in March. And some are even not ruling out an emergency move by the Federal Reserve prior to the March meeting.

Federal Reserve Bank of St. Louis President James Bullard further encouraged these hawkish views, stating he supports the fed funds rate hitting 1% after just three meetings.

In the meantime, the 10-year Treasury yield surged further above 2%, a level not seen since August 2019.

"The gold price chart is looking constructive. The immediate cause was hot inflation data. The Fed is now losing some investor confidence. It looks like they are scrambling to fix what's already a policy mistake. And gold is benefiting from that panic," Gainesville Coins precious metals expert Everett Millman told Kitco News.

A 50 basis points hike is possible in March, but what's even more likely is the Fed choosing to do a rate hike in between the FOMC meetings.

"There is some precedent for that. The immediate reaction to either of those moves would be a selloff for gold. But overall, the beginning of a rate cycle will be bullish for gold," Millman said. "Based on historical observations, any time the Fed begins rate hikes after telegraphing them in advance, gold has performed well at the beginning."

While odds are increasing for the 50 basis points hike, RJO Futures senior market strategist Frank Cholly told Kitco News that an emergency pre-meeting rate increase is unlikely.

"The 50 basis points hike in March is more probable. But gold has not fully priced that in yet. Treasuries have done that, but gold still moved higher. Gold is still looking for the Fed to remain dovish," Cholly noted.

Gold price remains down as annual U.S. CPI rises 7.5% in January; another 40-year high

The level gold will be looking to breach next week will be $1,850 an ounce. The precious metal already attempted to approach this resistance numerous times in the past several weeks but was unsuccessful.

"Gold will be challenging $1,850, and we could see that breached on the next attempt," Cholly pointed out. "We had an impressive rally in light of all the inflationary data. Gold is starting to embrace the fact that rates are moving higher as inflation is lasting longer. This is real inflation, and gold is finally starting to come to terms with this. We are going to get that pop above $1,850. I'm getting more bullish now."

In the meantime, gold's safety range is between $1,800 and $1,850. Longer-term, Cholly is looking for the precious metal to move above $1,900 by the middle of the year.

FOMC meeting minutes and other data to watch

The big item on the agenda next week is the January FOMC meeting minutes. Markets will be looking for clues in terms of how aggressive the U.S. central bank could allow itself to be.

"The minutes of the January FOMC meeting, due out next Wednesday, will help to clarify whether officials would consider a 50bp hike. Assuming his nomination wins the approval of the Senate Banking Committee in the vote scheduled for 15th February, we also expect Fed Chair Jerome Powell to schedule his semi-annual 'Humphrey-Hawkins' testimony for some time later this month," said Capital Economics chief North America economist Paul Ashworth.

Powell's semi-annual testimony would be the more appropriate venue to deliver some major policy shifts, added Ashworth.

"We still think that the unusually flat yield curve will prevent the Fed from being able to hike too aggressively this year and will force it to lean more on using quantitative tightening to drive long yields up. Even though the 10-year yield finally climbed to 2% this week, the 10s-2s spread is down to less than 50bp now," he said.

Below are other data to keep a close eye on next week.

Tuesday: PPI, NY Empire State Manufacturing Index

Wednesday: retail sales, industrial production, FOMC meeting minutes

Thursday: building permits, housing starts, jobless claims, Philadelphia Fed Manufacturing Index

Friday: existing home sales

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold, silver sales are still being taxed, is that about to change soon? Jp Cortez

Gold, silver sales are still being taxed, is that about to change soon? Jp Cortez

Unlike traditional investments like stocks and bonds, retail investors who buy and sell precious metals must pay sales taxes, but that could soon change. So far, 42 states have removed some or all of the taxes from gold and silver transactions. “The last several years have been really promising in eliminating sales taxes in many states,” Jp Cortez, Policy Director, Sound Money Defense League explained. “Last year Arkansas and Ohio both decided to move forward with removing sales tax on precious metal transactions.”

Cortez continued, “This year Kentucky, Mississippi, Hawaii, New Jersey and Tennessee are all considering removing sales taxes on gold and silver purchases as well.”

The Sound Money Defense League is a public policy project in collaboration with money metals exchange to remonetize gold and silver.

Cortez spoke to David Lin, anchor at Kitco News on eliminating taxes on gold and silver transactions.

At this time, more states are considering eliminating sales taxes, Cortez revealed. “There are defensive battles right now. Alabama and Virginia are fighting sunset battles, hoping to extend their current existing exemption,” he said. “Oklahoma and West Virginia also want to eliminate capital gains taxes, so when you sell your assets in those states, you wouldn’t be charged a state income tax.”

Cortez discussed how sales taxes impact the sales and purchases of precious metals. “There are rules, restrictions and tax disincentives that surround the sale and purchase of gold and silver,” Cotez said. “Many people would like to invest in precious metals, because these are assets that have held their value since time in memorial. But very often investors are unable to, because of state tax disincentives, along with rules and regulations. It’s a very onerous process.”

Cortez emphasized the importance of eliminating sales taxes, because in some states you end up paying taxes three times. “Capital gains taxes are federally mandated. If you buy gold and silver, you are going to get hit with a state sales tax between 7% to 10%. This illustrates how criminal this is in nine states,” he pointed out. “Then a couple of years later whenever you sell the asset, you are going to be charged capital gains a second time now at the federal level. And all states except in two or three, you are charged again a third time.”

“As an investment it becomes completely untenable. It’s impossible to store your wealth in this way, because of all the taxes that burden investors,” Cortez added.

Explaining why transactions of precious metals are taxed while stocks and bonds are not, Cortez said the government and the IRS “classifies gold and silver as collectibles. In many cases, they are not deemed as investments. They are categorically put in the same group as beanie babies and baseball cards,” he noted. “There is special discriminatory treatment towards investors who want to store their money in precious metals.”

Cortez stressed why it is necessary to exempt gold and silver transactions from sales taxes. “There are lots of reasons why gold and silver should not be taxed, but an easy one is simply resale. When you buy a car, you are using the car,” he said. “It’s not being held for resale, but in the case of stocks, bonds, ETFs, gold, silver and Bitcoin, these are goods that are being held for resale. They are not consumable final goods. It’s inappropriate to charge a sales tax on them.”

For more on removing taxes on gold and silver transactions , please watch the full video above.
 

Time to buy Gold and Silver on the dips

 

David

Gold, silver bulls gaining a head of steam this week

Gold, silver bulls gaining a head of steam this week

Gold and silver futures prices are firmer and hit two-week highs in midday U.S. trading Wednesday, as the technical charts for both metals have seen improvement this week, which is inviting speculators to the long side of the markets. April gold futures were last up $7.90 at $1,835.70 and March Comex silver was last up $0.14 at $23.34 an ounce.

Metals traders are awaiting the U.S. data point of the week, which is Thursday morning’s consumer price index report for January, expected to come in at up 7.2%, year-on-year. That would be a hot reading if the CPI number meets market expectations.

Global stock markets were mostly up overnight. U.S. stock indexes are higher at midday. Attention remains on the release of corporate earnings reports. While the earnings reports have been generally upbeat, traders and investors are still wary about rising inflation and the timing of the Federal Reserve’s tightening of its monetary policy. Rising U.S. Treasury yields this week suggest the marketplace is placing its bets on a more aggressive path of rate hikes from the Fed over the coming months.

'Dramatic' improvement in Bitcoin and Ethereum sentiment as prices rally – analysts

The marketplace is still closely watching the Russia buildup of troops and weapons on the Ukrainian border. However, there are growing notions Russia may not invade Ukraine, amid a flurry of diplomacy from European nations.

The key outside markets today see crude oil prices a bit higher and trading around $89.75 a barrel. The U.S. dollar index is lower today. The U.S. Treasury 10-year note yield is presently fetching 1.925%.

Technically, April gold futures prices hit a two-week high today. Bulls have the firm overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,780.60. First resistance is seen at $1,840.00 and then at $1,850.00. First support is seen at today’s low of $1,825.50 and then at $1,816.00. Wyckoff's Market Rating: 7.0

March silver futures prices hit a two-week high today. The silver bulls and bears are now on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the January low of $21.985. First resistance is seen at $23.48 and then at $23.75. Next support is seen at $23.00 and then at Tuesday’s low of $22.77. Wyckoff's Market Rating: 5.0.

March N.Y. copper closed up 1,435 points at 460.50 cents today. Prices closed near the session high today and hit a 3.5-month high. The copper bulls have the firm overall near-term technical advantage and gained fresh power today. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the October high of 477.70 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 428.20 cents. First resistance is seen at today’s high of 461.40 cents and then at 465.00 cents. First support is seen at 455.00 cents and then at 450.00 cents. Wyckoff's Market Rating: 7.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold, silver rally as traders buy the early dip

Gold, silver rally as traders buy the early dip

JGold and silver futures prices are modestly up in midday U.S. trading Tuesday. Overnight losses were deemed by the precious metals bulls to be a bargain buying opportunity. Otherwise, some routine backing and filling on the charts has been featured as fresh fundamental inputs are awaited. April gold futures were last up $6.70 at $1,828.50 and March Comex silver was last up $0.154 at $23.23 an ounce.

Global stock markets were mixed overnight. U.S. stock indexes are higher at midday. Corporate earnings reports are in the spotlight at present. While earnings reports have been mostly upbeat, some have not, including a few big companies. That and inflation worries are making the U.S. stock indexes wobbly. More and more, it’s looking like the Federal Reserve will be aggressive and raise the Fed funds rate by 0.5% at its March meeting. Historically, rising interest rates and rising inflation have been bearish for stock markets and bullish for the metals markets.

The U.S. data point of the week will be Thursday morning’s consumer price index report for January, expected to come in at up 7.2%, year-on-year. That would be a hot reading if the CPI number meets market expectations.

From one of the worst to best-performing assets? Gold price to tackle $2,100 by year-end, says Wells Fargo

The key outside markets today see crude oil prices lower and trading around $89.50 a barrel after prices last Friday hit a seven-year high. The U.S. dollar index is firmer early today. The U.S. Treasury 10-year note yield is presently fetching 1.954%, which is near a three-year high.

Technically, the April gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the December low of $1,755.40. First resistance is seen at this week’s high of $1,824.60 and then at $1,835.00. First support is seen at this week’s low of $1,807.50 and then at $1,800.00. Wyckoff's Market Rating: 6.0

March silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at this week’s high of $23.11 and then at $23.48. Next support is seen at this week’s low of $22.50 and then at $22.25. Wyckoff's Market Rating: 3.0.

Technically, April gold futures prices hit a two-week high today. Bulls have the overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at the January high of $1,856.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the January low of $1,780.60. First resistance is seen at $1,835.40 and then at $1,850.00. First support is seen at today’s low of $1,816.00 and then at this week’s low of $1,807.50. Wyckoff's Market Rating: 6.5

March silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at $23.48 and then at $23.75. Next support is seen at $23.00 and then at today’s low of $22.77. Wyckoff's Market Rating: 4.0.

March N.Y. copper closed down 140 points at 444.85 cents today. Prices closed near mid-range today. The copper bulls have the slight overall near-term technical advantage amid recent choppy trading. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the January high of 460.10 cents. The next downside price objective for the bears is closing prices below solid technical support at the January low of 428.20 cents. First resistance is seen at today’s high of 448.40 cents and then at this week’s high of 451.95 cents. First support is seen at today’s low of 439.50 cents and then at 437.00 cents. Wyckoff's Market Rating: 5.5.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold price advances as inflation fears grow even with hawkish Fed

Gold price advances as inflation fears grow even with hawkish Fed

Gold futures had respectable gains in New York trading today. The most active April 2022 contract gained $14.20 and as of 4:47 PM, EST is currently fixed at $1822. Considering the Federal Reserve’s updated monetary policy, which is more hawkish and the most recent statement from last month’s FOMC meeting and last week’s strong jobs report, gold has been extremely resilient and continuing to gain in value.

Gold was trading at approximately $1830 before the release of last month’s Federal Reserve monetary policy statement and traded to a low of $1814 during Chairman Powell’s press conference. During the week beginning on January, 24 gold opened at approximately $1835 and closed on Friday, January 28 at $1784. However, over the last two weeks, gold has had significant gains closing at $1808 last week and gaining over $14 today, taking it to $1822. At current pricing gold has almost fully recovered from the declines of the week beginning January 24.

Gold’s resilience is apparent in light of last Friday’s jobs report which came in well above the forecast from economists polled by the Wall Street Journal which was expecting 150,000 new jobs. The actual number of new jobs added according to the U.S. Labor Department was an additional 467,000. Gold continues to rise against strong headwinds resulting from the current demeanor of the Federal Reserve and a strong jobs report.

The strength in gold pricing is based upon two primary factors. First, gold has been buoyed by real concerns and fears about inflation levels. Second is the uncertainty of the current geopolitical risks between Ukraine and Russia.

Inflationary fears grow

Currently, the CPI index is at 7% based on last month’s report which is at a record 40 year high. On January 28, the Bureau of Economic Analysis reported that the PCE index grew to 5.8% in December; this level is now also at a 40 year high. On Thursday of this week, the BEA will release its most current report for January on the CPI index. According to analysts polled by Bloomberg, Thursday’s report is expected to rise to an epic level of 7.3% over last year.

If the forecasts are correct and the inflationary pressures vis-à-vis the CPI come in at 7.3%, it will only strengthen the resolve of the Federal Reserve to be more aggressive on raising interest rates in March. According to Reuters, “U.S. inflation figures for January are due on Thursday, with markets now pricing in a one-in-three chance the Fed might hike by a full 50 basis points in March.”

That forecast is very close to the CME’s Fed watch tool that is predicting that there is a 25% likelihood that the Federal Reserve will raise rates by ½ % in March.

On the Russian front

The current geopolitical tensions between Russia and Ukraine continue to grow, with NBC News reporting that Russia is pessimistic about a resolution resulting from diplomacy. “Entering a critical week in the standoff over Ukraine, neither Russia nor the United States sounded optimistic about intensifying diplomatic efforts to de-escalate tensions.” According to the NBC News article titled Russia has massed 70 percent of forces needed to invade Ukraine, “Russia has already assembled 70 percent of the forces it would need to launch a full-scale invasion of Ukraine, a U.S. official with direct knowledge of the latest government assessment said late Friday amid spiraling tensions in the region.”

These two factors have been ultimately supportive of gold pricing and will continue to not only support gold pricing but move them higher in the upcoming weeks ahead.

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David

‘Clash’ coming: expectations vs. reality

'Clash' coming: expectations vs. reality

he gold market will remain stuck in a choppy trading pattern until the FOMC March meeting, with markets starting to price in a 50-basis-point rate hike. Here's a look at Kitco's top three stories of the week:

3. Shockingly strong U.S. employment report

2. A major policy pivot from the ECB

1. Markets are underpricing how 'aggressive' the Fed will have to be — Ray Dalio's hedge fund Bridgewater Associates

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold price holds $1,800, but can Fed’s 50-point hike trigger selloff?

Gold price holds $1,800, but can Fed's 50-point hike trigger selloff?

The gold market is stuck at its all too familiar $1,800 an ounce level as markets start to price in the potential of a 50 basis points rate hike in March. The focus next week is on the latest U.S. inflation numbers.

The most anticipated data point of the week shocked the markets on Friday as investors digested the U.S. economy reporting strong hiring and higher wages, with 467,000 jobs created in January.

"Many on Wall Street were expecting a negative number. Instead, we saw robust hiring, higher wages, and more Americans returned to the workforce. Treasury yields skyrocketed alongside the dollar," OANDA senior market analyst Edward Moya told Kitco News.

In response, gold tumbled, but strong buying interest below the $1,800 an ounce level has helped gold recover. The April Comex gold futures were last trading at $1,806.20, up 0.12% on the day.

In light of strong employment data, markets are starting to price in a 50-basis-point rate hike in March.

"For gold, the biggest headwind has always been how aggressive the Fed will have to be with tightening policy," said Moya. "With a couple of hotter inflation reports coming before the March FOMC meeting, the base case is quickly becoming for the first-rate hike to be a half-point interest rate increase."

And an environment with surging global bond yields is never good for gold. But what the recent trading pattern shows is that with gold and bond yields, it is no longer a one-way trade. "If we are talking about Treasury yields going up another 30 basis points, that would usually mean gold at $1,650. But that's not the case and is not what's happening now," Moya said.

Gold to take on $1,900 by year-end but 'boring' $1,800 level will be sticky – StoneX

The good news for gold is that there are buyers below the $1,800 level. However, if that changes, the precious metal could be in trouble.

"It will be a choppy period for stocks and gold going into March. We are probably going to see more inflows into gold just because of significant geopolitical risks and inflation pressures. Bitcoin is starting to compete with gold again as institutional money is trying to catch a bid," Moya said. "But gold buyers do emerge on dips, showing that for a lot of investors, gold is still an inflation hedge and a safe haven."

On top of the Fed uncertainty, markets are also dealing with a hawkish tilt from the European Central Bank and the Bank of England.

Despite keeping its key rate unchanged at -0.5% this week, the ECB president Christine Lagarde told reporters that she is growing more concerned with the recent surge in inflation.

Her comments come after the euro zone's inflation data showed the cost of living jump a record 5.1% in January.

That Bank of England also stepped up its fight against three-decade high inflation in the U.K. with its first back-to-back rate hike since 2004, increasing the policy rate to 0.5 %.

"Financial markets are pricing in the BoE raising by 50 basis points in March. A lot of tightening is difficult for gold," Moya pointed out.

Gold remains stuck with sideways price action, for now, said RJO Futures senior market strategist Frank Cholly. "A 50-basis-point hike could hurt gold. Yields are moving higher right now, but gold is holding above $1,800, and that's encouraging. Gold should be able to move higher because of global price pressures, but I won't get too bullish until gold makes it above $1,900."

Geopolitical tensions between Russia and Ukraine along with surging energy prices should help gold along, Cholly added.

"Inflation will eventually benefit gold — the high price of energy ripples through the entire economy. Everything requires energy to produce it and to mine it. I expect that the higher costs of energy will inflate the cost of precious metals," he explained. "Geopolitical tensions with Russia could have a big impact on energy prices."

Markets could be looking at $100 Brent oil next week, Moya stated. "This trajectory is getting traction. Geopolitical tensions are heightened again," he said. "The energy story is the biggest risk right now."

A critical gold level to watch is $1,780 an ounce, Moya highlighted. Gold is likely to trade between $1,780-$1,820 next week. If we break below $1,780, it can get ugly. I would be very concerned as far as potential bearish momentum selling."

 

Next week's data

All eyes are on the latest inflation numbers for the U.S., scheduled to be released on Thursday. Market consensus calls are projecting a 7.3% annual headline print for January.

"The narrative of intensifying labor market inflation pressures and strong employment growth when Omicron is supposedly depressing activity only makes it more likely that the Fed will embark on an aggressive series of interest rate increases. We are doubtful on the idea of a 50bp hike in March as a signal of intent to get inflation under control, given comments from officials, but fully expect five 25bp hikes this year, starting in March," said ING chief international economic James Knightley.
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold shows resilience gaining value in light of an extremely strong jobs report

Gold shows resilience gaining value in light of an extremely strong jobs report

Volatility continues to be a prominent factor in gold pricing today. The volatility revolved around the release of the Labor Department’s jobs report for January. Earlier this week ADP released its private-sector jobs report. Economists polled by the Wall Street Journal were expecting an additional 200,000 jobs to be added in January. The ADP report came in well below forecasts indicating that over 300,000 jobs were lost in January, the largest single-month drop since 2020.

The ADP report brought into question the projection for the Labor Department’s jobs report released today. Estimates for today’s report predicted that 150,000 jobs were added last month. Because of the ADP report, economists stated that we could see a negative number in today’s report. In the case of the last two reports economists polled by various new sources were way off the actual numbers. Today’s jobs report revealed that there were 467,000 new jobs created in January, with the unemployment rate remaining unchanged at 4%.

Reuters news service reported today that, “The U.S. economy created far more jobs than expected in January but despite the disruption to consumer-facing businesses from a surge in COVID-19 cases, pointing to underlying strength that should sustain the expansion as the Federal Reserve starts to raise interest rates.”

These factors created volatility in gold pricing over the last couple of days. As of 4:40 PM EST gold futures basis, the most active April 2022 contract is currently fixed at $1807.90, after factoring in today’s net gain of $3.80. That being said, gold opened at $1805.40, traded to a high of $1815.80 and a low of $1792.10.

What is noteworthy is the resilience of gold prices to remain above $1800 in light of such a strong jobs report today. Today’s moderate gain was accompanied by the largest weekly gain since November of last year. Even with the perception that the Federal Reserve continues to maintain a hawkish tone in regards to adjustments made to its monetary policy gold has shown resilience. This indicates that market participants continue to focus upon inflationary pressures above the monetary tightening by the Federal Reserve.

Gold’s resilience to remain above $1800 per ounce was highlighted in a Bloomberg article released two days ago which was titled, “Looks like there’s a whale snapping up gold bullion below $1800”. The article reported, “Spot gold is again bobbing along near $1,800 an ounce, as it has been since mid-2020. The stickiness of that level, particularly as fundamentals turned more bearish, suggests there’s a big buyer somewhere in these waters…Since breaking above the round number in July 2020, the gold price dipped below it 19 times on a closing basis, only to regain its footing.”

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David