Gold and silver push higher ahead of the European open

Gold and silver push higher ahead of the European open

Gold (0.19%) and silver (0.46%) have pushed higher ahead of the European open. Gold continues to trade around $1800/oz, while silver hovers at $22.50/oz. In the rest of the commodities complex, spot WTI is 0.60% higher and copper is trading flat.

In equities markets, Amazon and Snapchat performed well in the aftermarket sending risk sentiment positive. The Nikkei 225 closed 0.73% in the black and the ASX pushed 0.60% higher. Futures in Europe are also positive.

In FX markets, AUD/USD was the biggest mover losing 0.24% of its value. EUR/USD traded 0.17% following the ECB meeting on Thursday where the pair also climbed 1.19%. In the crypto space, BTC/USD rose 1.62% overnight

 

News from overnight:

Biden to boost project labor agreements for federal construction projects.

In the U.K., pressure is mounting on PM Johnson as four of his top aides quit the party.

It was reported overnight that the U.S. has intel on a Russian plan to fake a pretext for an invasion of Ukraine using a fake video that would build on recent disinformation.

BoJ Gov Kuroda says Japanese consumer inflation is weaker than that in the US and Europe.

The Japanese government is looking at diverting some supplies of gas to Europe.

Japan finance minister Suzuki says the country's fiscal position is severe.

Head of the IMF says its too early to say world is facing an era of sustained inflation.

Germany December factory orders +2.8% vs +0.5% m/m expected.

New Zealand – Building consents/permits for December 2021 +0.6% m/m ( prior +0.6% also).

Looking ahead to the rest of the session highlights include U.S. NFP data, U.K. and EU construction PMI, EZ retail sales, and the Canadian labor market report.
 

By Rajan Dhall

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold, silver see modest gains as bulls regaining momentum

Gold, silver see modest gains as bulls regaining momentum

Gold and silver futures prices are higher and nearer daily highs in midday U.S. trading Wednesday, on continued short covering and perceived bargain buying. A slumping U.S. dollar index and crude oil prices hitting seven-year highs earlier this week remain bullish outside market forces for the metals markets. April gold futures were last up $7.40 at $1,808.80 and March Comex silver was last up $0.08 at $22.675 an ounce.

The U.S. data point of the day Wednesday was the ADP national employment report for January, which came in at down 301,000 jobs. The report was forecast to show a gain of 200,000 jobs. Markets saw no major reaction to today’s report. The ADP report is the precursor to the more important Labor Department employment situation report that is due out Friday morning. That report is also expected to be downbeat, with its key non-farm payrolls number expected to come in up only 150,000 jobs in January.

Global stock markets were mostly higher overnight. U.S. stock indexes are mixed at midday. The U.S. stock index bulls are having a very good week and are gaining strength and momentum again. Generally good U.S. corporate earnings reports are boosting trader and investor confidence this week. China’s markets are closed all week for the Lunar New Year holiday.

Gold is 'prime candidate' to rally as stocks reverse in 2022 – Bloomberg Intelligence

The key outside markets today see crude oil prices a lower and trading around $87.50 a barrel. The OPEC oil cartel, as expected, raised its collective oil production level by 400,000 barrels per day. The U.S. dollar index is lower today. The U.S. Treasury 10-year note yield is presently fetching 1.797%.

Technically, April gold futures bulls have the slight overall near-term technical advantage. However, a bear flag pattern has formed on the daily bar chart. 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 December low of $1,755.40. First resistance is seen at $1,825.00 and then at $1,835.40. First support is seen at $1,800.00 and then at today’s low of $1,794.60. Wyckoff's Market Rating: 5.5

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 this week’s high of $23.06 and the at $23.48. Next support is seen at this week’s low of $22.25 and then at $22.00. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed up 425 points at 447.80 cents today. Prices closed nearer the session high 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 January high of 460.10 cents. The next downside price objective for the bears is closing prices below solid technical support at the December low of 419.95 cents. First resistance is seen at today’s high of 450.90 cents and then at 455.00 cents. First support is seen at today’s low of 443.00 cents and then at 440.00 cents. Wyckoff's Market Rating: 5.5.
 

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Biggest gold price losses to hit market in mid-2022, here’s why

Biggest gold price losses to hit market in mid-2022, here's why

Gold prices could be looking at sideways price action for the rest of the year. The biggest test comes in mid-2022 when inflation begins to stabilize and markets absorb higher interest rates, according to DailyFX.com senior strategist Christopher Vecchio.

After a quick rally above $1,850 an ounce, gold could already be running out of steam, Vecchio told Kitco News, pointing to a move in the U.S. Treasury yields.

"I don't necessarily have a lot of faith in gold's move higher," he said. "Underlying fundamentals remain a significant concern. We've seen the U.S. Treasury yields, both nominally and in real terms, move significantly higher at the start of 2022. Historically speaking, gold prices tend to go down when real yields go up. And in an environment defined by tighter monetary policy over the course of this year, real yields will continue to move higher."

Vecchio sees gold ending the year at $1,800 an ounce, which is about where it is trading now. At the time of writing, April Comex gold futures were last at $1,801.40, up 0.28% on the day.

"I don't see that gold has a legitimate path higher from here. The fiscal and monetary stimulus impulses are fading rapidly in the United States and in other Western economies. The UK, for example, has already embarked on austerity on the fiscal side. And the Bank of England is looking like they're going to move forward with three or four hikes this year. Here in the United States, we see that it's increasingly unlikely that the Democratic Congress is able to find consensus around a new fiscal stimulus plan, like the Build Back Better program," Vecchio described.

With tighter monetary policy and no major fiscal spending projected for the rest of the year, the outlook for gold looks very neutral.

"As we near those midterm elections, it's going to be increasingly difficult to expect a scenario where we get any sort of big fiscal stimulus out of the U.S. If Republicans do take back control of the House, of the Senate, we go back to a situation we had in the early 2010s when you had a Democrat in the White House and Republicans in control of Congress. Gold prices peaked in 2011. And then they were on a steady decline for about five or six years," Vecchio said.

This environment encourages investors to sell gold during rallies, especially if the Fed succeeds in controlling the four-decade high inflation. The senior strategist estimates inflation to balance out by the end of the year as the Fed proceeds with four rate hikes in March, June, September, and December.

Vecchio is not ruling out inflation returning back under 3% by the end of 2022. "As vaccination rates continue to pick up and more lethal strains of COVID are being replaced with more manageable strains, consumers should shift their spending back towards services and away from goods. And as that spending shift occurs, the supply chain bottlenecks will ease. It would not surprise me if by the end of 2022 we're looking at headline inflation in the U.S. back under 4% or perhaps even 3%," he said.

This macro outlook undercuts gold's appeal as an inflation hedge in the long term, with investors no longer looking for safe havens and opting for assets with exposure to global growth conditions.

"If gold couldn't rally in an environment where we had U.S. government debt surging year-over-year and the Fed pumping trillions of dollars into markets. Then why would it be able to do so in the exact opposite environment where we don't have that fiscal stimulus, where the Fed is tightening and withdrawing its asset purchase program," Vecchio noted.

 

Expect 'much higher' commodity prices if Russia-Ukraine crisis escalates – ING

Gold's Q1 potential

Despite the neutral long-term view on gold, Vecchio said there is a chance to see $1,870 an ounce levels in the first quarter.

"Market chatter of a potential 50 basis point hike in March is misplaced," he stated. "As the market relaxes those very extreme expectations, there is room for gold to continue to move up, which is why I am looking for a potential peak around $1860, $1870 before more selling kicks in."

The markets get jittery around the early stages of the Fed's tightening cycle, which could be bad for equities but good for the precious metals. "It does create a decent environment here for the first quarter. But as we make our way into the middle part of the year, particularly in the second half of the year, that's where I think that that gold could really see its losses accumulate," Vecchio clarified.

 

Risks to the outlook

One potential upside price risk to Vecchio's outlook is the Fed kicking off quantitative tightening too soon and walking into a policy trap.

"It's a three-step process. First, we taper QE, then we move on to rate hikes, and in the late part of the rate hike cycle, we begin quantitative tightening — the balance sheet reduction," he said. "For the Fed to do all three in a very short period of time, it could prove significantly de-stabilizing to financial markets. You could have a knock-on effect where you potentially see spikes in unemployment. The Fed is then forced into a policy mistake where, in the very short term, you still have relatively high measures of inflation and unemployment rates are going back up. That's when the stagflation fears begin to creep in."

Vecchio described this risk as an unlikely one, stating that he would be shocked to see the Fed move forward with balance sheet reduction at any point in 2022.

Another potential upside risk to the senior strategist's gold outlook is a new COVID strain that proves to be just as transmissible but more lethal than Omicron, causing more supply chain problems. "New lockdowns restrictions on social activity would push people into spending more money on goods than services," he said.

Also, escalating geopolitical tensions between Russia and Ukraine or China and Taiwan could trigger another rally in gold. "Any sense that it will be more than just a war of words and we see boots on the ground or ships at sea, that is something that could stoke significant demand for safe havens like gold and silver," Vecchio said.

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold is ‘prime candidate’ to rally as stocks reverse in 2022 – Bloomberg Intelligence

Gold is 'prime candidate' to rally as stocks reverse in 2022 – Bloomberg Intelligence

The sentiment in the gold market has reached its "maximum disdain," which means that gold is primed for a reversal and could be ready to rally past $1,900 an ounce, according to Bloomberg Intelligence.

As the Federal Reserve gears up to raise rates and reduce liquidity, the precious metal is a potential top performer this year, said Bloomberg Intelligence senior commodity strategist Mike McGlone.

And after a year of consolidation, gold has formed a solid price bottom at around $1,700 an ounce.

"The elongated stock-market rally, recent commodity bounce and competition from Bitcoin may have pushed the metal close to maximum disdain, solidifying gold's foundation vs. the 'there's no alternative' mantra," McGlone said in a report. "We see gold-bottoming parallels to the 2008 and 2018 foundations."

Gold's potential upside stems from the Fed's hawkish stance to fight inflation as the U.S. stock market gives up last year's gains.

"The fact that gold responded well when the Federal Reserve started the last rate-hike cycle in 2015 — and when it ended in 2019 — may favor the metal in 2022. Not since the 2008-09 financial crisis has the one-year-out fed-fund future priced for a similar extreme disparity of higher hikes as now. This dichotomy about 14 years ago coincided with a gold foundation of around $800 an ounce, on the way to the 2011 peak just above $1,800 — near the current price," McGlone explained.

All eyes are on the Fed's March decision, with the CME's FedWatch Tool pricing in a 92.5% chance of a 25-basis-point rate hike. If all goes according to plan, gold might be looking at a similar launchpad as December 2015, when gold rallied from $1,000 an ounce to above $1,300 an ounce within just six months.

"Gold is a prime candidate to follow the pattern of commodities that trade within narrowing wedge patterns — they have a tendency to break out to the upside. The 2021 range of about $1,700-$1,950 an ounce roughly matches the 50-week Bollinger bands, which are the narrowest since 2018," McGlone stated. "About $1,700 is a solid base for a potential breach of $1,900 resistance."

Expect 'much higher' commodity prices if Russia-Ukraine crisis escalates – ING

Gold is "a primary beneficiary" in response to the Fed's fight against four-decade high inflation. Other assets with a similar outlook are U.S. Treasury long bonds and Bitcoin. In the meantime, the U.S. stock market is looking at a significant reversal of 2021 gains, Bloomberg Intelligence added.

"The remainder of the year faces the potential for some sustained reversion of the about 600% advance in the S&P 500 since the 2009 bottom. The Federal Reserve fighting the highest inflation in about four decades and full employment suggest the party is over. If commodities, equities and bond yields don't reduce liquidity and revert some of the inflation-related advances of 2021, it's more likely the Fed will," McGlone said. "If the SPDR S&P 500 ETF Trust (SPY) continues to wobble, we see greater potential for gold, long bonds and Bitcoin to top the performance scorecard toward the end of 2022."

Gold is wrapping up January down almost 1.7%, trading very close to its key psychological level of $1,800 an ounce. February Comex gold futures were last trading at $1,796.80, up 0.67% on the day.

In the meantime, the S&P 500 is closing January down more than 6%, marking the biggest one-month decline since March 2020.
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Why did gold price just plunge $70?

Why did gold price just plunge $70?

As markets digested all of the Federal Reserve's hawkish signals, gold tumbled $70 from its two-month highs. Here's a look at Kitco's top three stories of the week:

3. Fed's Powell says inflation 'is slightly worse' than in December, signals March rate hike.

2. The International Monetary Fund cut its global growth outlook for 2022 to 4.4%. The U.S. and China saw the most significant downward revisions.

1. Goldman Sachs is long gold. The bank raised its 12-month price forecast to over $2,100 an ounce, advising investors to buy December 2022 gold futures.

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold’s strong decline results in a high probability of a death cross forming

Gold's strong decline results in a high probability of a death cross forming

Gold has declined dramatically this week opening at approximately $1841 on Monday, with the February 2022 Comex contract currently fixed at $1790.10. Gold declined by three dollars today taking the weekly price decline two $50.90. If you factor in the highest value gold traded which occurred on Tuesday at $1854 to today's low it equals a $78 differential between the highest and lowest price gold traded to this week.

Most alarming on a technical basis it seems as though a pattern called a "death cross" is imminent. Currently, the 50-day moving average is fixed at $1805.70 and the 200-day moving average is fixed at $1805.50. In other words, the current spread between the short-term and long-term averages is $0.20.

According to Investopedia, "The death cross is a technical chart pattern indicating the potential for a major sell-off. The death cross appears on a chart when a stock's short-term moving average crosses below its long-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and 200-day moving averages."

However, one needs to understand that this technical chart pattern is using extremely long moving averages which intrinsically converts to major lag when compared to real-time data. There are many examples where a "death cross" is not reliable in indicating a further price decline because it is created from lagging data that was formed. After all, a major selloff has already occurred. That being said, it can be a solid indicator revealing that the selling pressure could take gold to new lows.

Nonetheless, it is something to be acutely aware of considering the fundamental events that occurred this week. First, on Wednesday the Federal Reserve's FOMC meeting concluded and confirmed what many market participants had anticipated which is that a series of interest rate hikes are forthcoming beginning in March. Yesterday's release of the fourth-quarter GDP came in exceedingly strong indicating that the annual rate of GDP increased by 6.9%. This gives the Federal Reserve the data necessary to initiate liftoff and begin a series of rate hikes throughout this year and next.

Today the Commerce Department via the St. Louis Federal Reserve released the most recent data on inflation showing that the PCE index (the preferred inflationary index used by the Federal Reserve) joined its component the CPI coming in at the fastest rate in the last 40 years. The current PCE index jumped 5.8% in 2021 after factoring in a sharp increase in December. This puts even more pressure on the Federal Reserve to raise rates quickly, with some analysts projecting that the first-rate hike could be as high as ½% to1 ½% to compensate for the current inflationary pressures.

By Gary Wagner

Contributing to kitco.com

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

David

Gold is insurance against a hawkish Fed policy mistake

Gold is insurance against a hawkish Fed policy mistake

I hope all the gold investors out there are wearing their seatbelts because if this past week is any indication, the price action is going to continue to be a bumpy ride.

Gold bulls were once again caught on the back foot as the Federal Reserve struck a hawkish tone on Wednesday, setting the stage for a rate hike in March and a reduction of its bloated balance sheet before the end of the year.

Following the central bank's monetary policy decision, Fed head Jerome Powell added to the hawkish posturing, saying that the economy and the labor market are in good positions to stand up to potential rate hikes.

"I think there's quite a bit of room to raise interest rates without threatening the labor market," Powell said during this press conference.

The Fed has laid the groundwork and not it looks like the markets have already started to build a flimsy house of cards on it. Markets are now pricing the potential for five rate hikes this year and the potential for a 50-basis point move in March.

The only problem is some economists and analysts are now starting to wonder if the U.S. central bank and markets are being too aggressive, especially as economic conditions continue to weaken. The concern is that aggressively tightening could choke off economic growth this year.

"Fed Chair Jerome Powell fuelled fears of a Ratemaggedon with a hawkish performance in his press conference. But even with both wage and underlying price inflation running at near 40-year highs, we suspect that disappointing real economic growth this year will limit the Fed to 100bp of tightening," said Paul Ashworth, chief U.S. economist at Capital Economics.

Gold price down but not out as Fed looks to raise interest rates soon

Although equities have managed to climb out of a deep hole this week, it is clear that volatility is on the rise, making over-valued markets extremely vulnerable.

This is where gold comes in. While the precious metal has taken a big hit, falling roughly 3% since Wednesday's monetary policy meeting, many commodity analysts are not ready to give up on the precious metal.

Many analysts note that gold is not just a hedge against inflation, which the latest PCE data shows is running at a 40-year high. It is also more than a risk hedge against a wobbly equity market. It is now insurance against a policy mistake from the Fed.

We can see just how robust the gold market is. It is more than just the total sum of the ETF market. Thursday, the World Gold Council reported that despite dismal investor demand for gold-backed exchange-traded products, gold demand grew 10% last year.

While the gold market is down, it is certainly not out. Have a great weekend.

 

By Neils Christensen

For Kitco News

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

 

David

Gold price remains near $1,800 following 3.8% drop in U.S. pending home sales

Gold price remains near $1,800 following 3.8% drop in U.S. pending home sales

The gold market remains solidly in negative territory and can’t find any bullish traction even as fewer U.S. consumers start the process of buying a home, according to the latest data from National Association of Realtors (NAR).

U.S. pending home sales dropped 3.8% in December, following November’s drop of 2.2%, the NAR said on Thursday. The data was much worse than expected as consensus forecasts called for a decline of 0.9%.

For the year pending home sales are down 6.9%.

The gold market is not seeing much movement following the latest U.S. housing sales data. February gold futures last traded at $1,805 an ounce, down 1.35% on the day.

This was the second consecutive month pending home sales declined, the report said.

Fed in focus as IMF cuts U.S. growth outlook, cites tighter monetary conditions

"Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options," said Lawrence Yun, NAR's chief economist. "Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers."

Looking ahead, Yun said that the housing market could struggle as rising interest rates wil push mortgages higher.
 

By Neils Christensen

For Kitco News
 

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

 

David

Gold is hit hard even though the Fed’s updated monetary policy came in as expected

Gold is hit hard even though the Fed's updated monetary policy came in as expected

The FOMC meeting concluded today and as many expected, extreme volatility came into both the U.S. equities markets as well as gold. What was unexpected was the statement released by the Federal Reserve and how gold reacted to their updated monetary policy. Clearly, market participants had not factored in analysts' and economists' consensus of the outcome. The expectations were that interest rates would remain where they are, and the Federal Reserve would complete its tapering process in March and implement its first-rate hike immediately following the completion of the tapering process.

The updated monetary policy statement released by the Federal Reserve today announced its updated monetary policy, which was almost exactly what economists had anticipated. The Fed vowed to keep interest rates where they are, near zero for the time being. Although they did not specify an exact liftoff date, Chairman Powell used the word "soon" to describe the timeline for liftoff.

Many analysts interpreted the meaning of "soon" as a signal that they would begin to raise the Fed funds rate which is currently near zero in March. The new piece of information released by the Federal Reserve today was a document regarding its plan for its balance sheet reduction.

When the statement was released, gold was trading off by approximately $24 with the February contract trading around $1830. Gold prices remained steady until Chairman Powell began his press conference. However, as he began to speak the selling pressure reignited and took gold to a low of $1814.10. The same occurrence was seen in what will be the next front month, the April 2022 contract month.

Silver futures also traded lower in reaction to the FOMC meeting, basis the most active March 2022 contract. Silver lost $0.40 or 1.68% and is currently fixed at $23.49 ½.

However, there were two precious metals that continued to gain value, although based upon a completely different development. Palladium basis the most active April 2022 contract, gained $34.60 which is a net gain of 6.15% and is currently fixed at $2323.50. Platinum basis the most active April gained $5.70 or 0.56% and is currently fixed at $1031.40. Since the vast majority of palladium is mined in Russia and a large percent of platinum is also mined there. According to Provident metals, palladium is mined throughout the world but the vast majority comes from only two countries; Russia and South Africa.

Collectively these two countries account for 93% of the yearly output. Overall, Russia is responsible for mining approximately 40% of the yearly production. While the United States and Canada both mine palladium, their output is minuscule when compared to Russia.

With the increased tensions between Russia and Ukraine, there is the concern that there could be a shortage of the palladium supply needed for industrial users worldwide. Platinum is also mined in Russia, but they are only minor players when it comes to global production, with South Africa being the dominant force providing platinum used in industry.

 

By Gary Wagner

Contributing to kitco.com

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

 

David

Expert forecasts- what to expect from gold, silver, cryptos, and equities

Expert forecasts- what to expect from gold, silver, cryptos, and equities

2022 has kicked off with a hawkish Fed, inflation fears and the end of zero interest rates in sight. Will markets collapse under the weight of a more aggressive central bank or will financial assets and cryptocurrencies hit new highs?

Join us LIVE on YouTube at 3:00 pm ET, Jan. 25, 2022 for a special, interactive session as we discuss how best to position your portfolio with Lynn Alden, founder of Lyn Alden Strategy, and Gareth Soloway, chief market strategist of InTheMoneyStocks.com.

Combining Alden's breadth of macroeconomics knowledge with Soloway's powerful technical analysis tools, this panel will give traders and investors a complete top-down picture of where asset prices are headed and how to best execute on trade ideas.

Is 2022 the year we see capital rotation out of risk assets like cryptos and stocks into safe-haven assets like gold? Will the laggards of 2021 become the leaders of 2022 and vice versa? How much upside is left in the global equity markets? Will the global economy be plagued by stagflation, inflation, or deflation? Moderated by Kitco News' David Lin, this power panel will address these questions, and more, as well as take questions directly from the audience.

This event marks the first time Alden and Soloway join forces to dissect market action.

Don't miss this chance to participate LIVE. Subscribe to Kitco NEWS on YouTube.
 

By Kitco News

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

David