The first trading day of 2022 results in strong declines in both gold and silver

The first trading day contained strong bullish market sentiment for U.S. equities and dollar strength. The dollar gained 0.632 points or a percentage gain of 0.66%. Concurrently U.S. equities all traded to higher ground, with all three major indices closing near their record highs. The Dow Jones industrial average gained 246.76 points, a percentage gain of 0.68%. The NASDAQ composite gained 1.2% or 187.83 points, and the Standard & Poor’s 500 gained 30.38 points taking the index to a record high close at 4796.49.

The combination of a strong performance in U.S. equities, U.S. dollar strength and rising interest rates vis-à-vis U.S. debt instruments pressured the precious metals lower across the board. Palladium had the largest percentage drawdown giving up 4.45% or $85.10, with the most active futures contract currently fixed at $1827. This puts the differential between gold and palladium approximately $26 apart. Silver lost 1.85% in trading today or $0.43 taking the most active March Comex futures contract to $22.92. Platinum also sustained a loss just over a full percentage point with the most active Comex contract currently fixed at $954.90 a decline of 1.17%.

With 2021 behind us, we can see that gold had a fairly strong decline in 2021 of 3.6%. It seems as though the recent rise in treasury yields has not affected U.S. equities with any negative market sentiment. Of course, the U.S. dollar rose as a direct result of higher yields in treasuries. This Friday when the U.S. Labor Department releases its nonfarm payroll report will be the next large catalyst that will move gold in one direction or the other. Currently, economists polled are forecasting a gain of 400,000 jobs and considering that the December report for November’s jobs came in roughly half of the projection. If the economist projections are correct, it will represent a tremendous rise in new jobs added last month.

As of 5:05 PM EST gold futures basis, the most active February 2022 Comex contract has sustained a decline of $27.30, or 1.49%. Gold futures are currently fixed at $1801.30. Gold opened in tradingthis morning at $1830, traded to an intraday high of $1833 before falling just below $1800 at $1798.20. Unquestionably gold has traded under dramatic pressure today but, at least for now, was able to close above the key psychological level of $1800 per ounce.

Our technical studies indicate major resistance at $1833.50, which corresponds to the 38% Fibonacci retracement from a short data set beginning at $1758.20. The lows occurred on November 3, which was the day the November FOMC meeting ended. Our Fibonacci data set includes November 16, when market forces took gold to an intraday high of $1879.80. Below that major resistance area is the next level which occurs at $1816, which is a price point that gold traded to before finding resistance on multiple occasions. And the last level of resistance comes in between $1800 and $1804.60 which is the 61.8% Fibonacci retracement level using the same data set as above.

Although gold sold off harshly today if it can hold the price point above $1800, it bodes well for that price point being a key and critical support level. Our studies also indicate a major level of support at $1785 which is based upon the 78% Fibonacci retracement level.

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

David

Retail Investor see gold hitting record highs above $2,000 in 2022

Retail investors remain significantly bullish on gold prices next year as the precious metal looks to end 2021 with nearly a 4% loss.

Gold prices have seen a solid push higher, moving above $1,800 an ounce on the last trading day of 2021. Spot gold prices last traded at $1,827.95 an ounce; however, the market started the year at $1,898 an ounce.

It has been a relatively disappointing year for the gold market, which saw some pretty volatile moves. Including a flash crash in August that saw the price drop below $1,700 an ounce. Gold prices have struggled to attract bullish attention even as real interest rates fell to historic negative territory, driven by extraordinary inflation pressure.

Analysts note that the rise in consumer prices this past year has been met with expectations that the Federal Reserve will tighten interest rates soon than expected. At its December monetary policy meeting, the U.S. central bank signaled that it would end its monthly bond purchase by March and could raise interest rate three times in 2022.

However, U.S. monetary policy is not scaring many retail investors who appear to be significantly bullish on gold heading into the new year. According to Kitco News' annual outlook survey, a clear majority of Main Street investors expect gold prices to push new record highs in 2022.

This year, nearly 3,000 people participated in Kitco's annual online survey. Of those 1,605, 54% said they see gold prices above $2,000. Meanwhile, 592 voters, or 20%, said that gold would trade between $1,900 and $2,000.

In last year's outlook price survey, 84% of retail investors expected gold prices to rise above $2,000.

The results show that only 352 retail investors or 12% see gold prices holding relatively steady in the current range between $1,800 and $1,900 an ounce.

Meanwhile, 158 or 5% of participants see gold prices trading between $1,700 and $1,800 an ounce.

On the outright bearish side, 109 voters or less than 4% see gold prices trading between $1,600 and $1,700 an ounce, and 130 people slightly more than 4% see gold prices dropping below $1,600 an ounce.

There have been a few bearish calls that have stood out in recent weeks. Analysts at J.P.Morgan Research said that gold prices could average around $1,520 by the fourth quarter of 2022.

Meanwhile, Georgette Boele, senior FX & precious metals strategist for the Dutch bank, said that she sees gold prices falling to $1,500 an ounce by the end of next year.

Wall Street analysts have no clear consensus regarding where gold prices will go next year. Many analysts have said that while the specter of rate hikes next year could weigh on gold prices, much of the bad news has been priced in.

Many banks see gold prices trading in a reasonably wide range between $1,800 and $2,000. The most significant factor to drive gold price in 2022 remains real interest rates. Although the Federal Reserve is looking to raise interest rates three times next year, many economists expect inflation to stay above 4%, which means real rates will remain deep in negative territory. Almost all economists predict that the Federal Reserve will remain well behind the inflation curve in 2022.

Among the bullish banks, Goldman Sachs is one of the most optimistic. In November, analysts said they see prices pushing above $2,000 an ounce by the end of the year.

Wells Fargo is also bullish on gold next year, looking for $2,000 an ounce as the precious metal plays catch up to the rest of the commodity complex. John LaForge, head of real asset strategy for Wells Fargo gold, will be sensitive to U.S. monetary policy in 2022; however, he added that it is unlikely the Federal Reserve will adopt overly aggressive monetary policies.

By Neils Christensen

For Kitco News

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

What does 2022 hold for Gold, Silver and Platinum?

Today ends 2021; the year in metals was not pretty. Gold, silver and platinum all closed lower from where they opened the year. None of them could seem to get a consistent trend. Silver had one of its tightest trading ranges in years.

As we look ahead to the new year, we would expect much of the same action. However, they appear to be setting up for a much bigger move – direction to be decided. A case can be made for either side and probably will make big moves in both directions.

We could see as low as $1,450 in Gold and see new highs; platinum could bring $800 and new highs, silver under $20 and $35. The compression we have watched suggests we could see either of these moves or all of them. We can confidently say that 2022 will bring a ton of volatility and big moves in both directions.

In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

On Monday, Jan. 23, 2022, we will resume the Monday Night Strategy Call at 4:30 EST.

2022-01-03 Monday Night Strategy Call

By Todd 'Bubba' Horwitz

Contributing to kitco.com

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

Gold Investors need to look beyond rate hikes in 2022 â State Street Global Advisors

Gold Investors need to look beyond rate hikes in 2022 – State Street Global Advisors

After a disappointing year, gold prices are ringing in 2022 on a solid note, trading at a five-week high. According to one precious metals analyst, gold should be on pace to resume its long-term bullish uptrend in the new year.

In a telephone interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that his base case scenario, with a 50% probability, is for gold prices to trade between $1,800 and $2,000 an ounce in 2022. He added that he sees a 30% chance of gold prices pushing above $2,000 to a new record high.

“We see an 80% chance of gold prices staying in the current range to moving higher next year,” he said. “Even with the Federal Reserve looking to tighten interest rates next year, we think gold has a pretty good chance of moving higher.”

On the downside, Milling-Stanley said that State Street sees a 20% chance of gold trading between $1,600 and $1,800 an ounce.

Milling-Stanley reiterated his stance that gold investors don’t have to fear the impending pivot in the Federal Reserve’s monetary policy. During the last U.S. central bank monetary policy meeting, the Federal Reserve signaled that it would end its monthly bond purchases by March and raise interest rates three times next year.

However, Milling-Stanley pointed out that during the last tightening cycle, between 2015 and 2019, the Federal Reserve raised interest rates nine times and gold prices rallied nearly 35%. He added this isn’t an isolated incident. Between 2004 and 2005 the U.S. central bank raised rates 17 times and gold prices rallied 70%, he said.

“Investors should look beyond nominal policy rates and examine other factors such as real interest rates and/or the gold market’s supply and demand dynamics that may impact gold price movement,” Milling-Stanley said in his 2022 outlook forecast.

Milling-Stanley added that investors also need to put the Federal Reserve’s monetary policy stance in a much larger perspective within financial markets. With inflation expected to remain elevated through 2022, real interest rates will remain in negative territory.

Milling-Stanley said that it is unlikely Federal Reserve Chair Jerome Powell will take an overly aggressive stance on monetary policy to combat inflation. He added that he forecasts that the Federal Reserve will only raises interest rates twice next year, an estimate below current market predictions.

“Raising interest rates tend to chock off economic growth and important sectors like the housing market,” he said. “That is the last thing the Federal Reserve will want to do next year. I think the Federal Reserve would tolerate inflation between 3% and 6.”

Looking past interest rates and U.S. monetary policy, Milling-Stanley said that gold will also remain an attractive safe-haven asset in 2022 as investors look to hedge their risky bets.

One reason investors shunned gold through 2021 is due to the unprecedented bullish fun in equity markets. The S&P 500 is looking to the year at record highs, up 27% for the year.

Although real interest rates are expected to remain low, Milling-Stanley said that inflation could weigh on elevated equity market valuations.

“Given the strong rally in financial markets in 2021, the potential for a cyclical correction, valuation-driven mean reversion, increased market volatility, or an exogenous tail risk has increased in 2022,” Milling-Stanley said in his outlook forecast. “This potential for higher volatility may push investors to gold as a potential hedge against heightened market risks. Historically, gold has served investors well against short-term volatility shocks.”

Milling-Stanley said that one final factor that should help support gold in the new year is a potential recovery in emerging markets.

“In China and India — two of the key emerging economies for the gold market — signs point to further consumer recovery throughout 2022,” he said.

By Neils Christensen

For Kitco News

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

David

J.P.Morgan sees gold price unable to withstand the Fed; falling to pre-pandemic levels in 2022

The gold market will not be able to withstand the Federal Reserve's plan to tighten its monetary policy in 2022, according to commodity analysts at J.P. Morgan Global Research.

In its recently published 2022 outlook report, the bank expects gold prices to fall to pre-pandemic levels by the end of next year.

"An unwinding in ultra-accommodative central bank policy will be most outright bearish for gold and silver over the course of 2022," the analysts said. "From an average of $1,765/oz in Q1, gold prices are set to steadily decline over the course of next year to a Q4 average of $1,520/oz."

The outlook comes as the Federal Reserve plans to end its monthly bond purchases by March and looks to raise interest rates three times. Currently, markets are starting to price in the first rate hike in May.

However, J.P.Morgan is looking for the U.S. central bank to raise interest rates in September. Weighing on gold prices is the bank's forecast for rising bond yields as long-term inflation expectations remain well-anchored.

"Given the resilient economic environment, the curve has room to steepen for a short period in early 2022, and 10-year yields are projected to rise to 2% by mid-year and 2.25% by the end of 2022. Finally, long-end yields are expected to rise as well, but only barely retracing to the highs observed earlier this year by late-2022," Jay Barry, Head of USD and Bond Strategy.

At the same time, J.P.Morgan expects the U.S. dollar to rise 1.6% next year.

Looking at economic growth forecasts, J.P.Morgan expects the global economy to 4.8% in 2022, with the U.S. economy expanding 3.8%.

While the U.S. bank is bearish on gold through 2022, the bank is bullish on the rest of the commodity complex.

"Commodities are on pace to deliver the strongest year of returns since the early 2000s. A constructive economic outlook, depleted inventory levels and supply still struggling to respond to resurgent demand point to a second consecutive year of positive double-digit commodity returns in 2022," said Natasha Kaneva, Head of the Global Commodities Strategy at J.P. Morgan.

The bank is extremely bullish on oil prices ahead of the new year.

"We believe that oil is set to remain a major beneficiary of a continued economic reopening over the course of 2022. The last time consumption was as high as we forecast next year, U.S. shale drillers were pumping flat out, and the Organization of the Petroleum Exporting Countries (OPEC) and its allies were locked in a battle for market share," said Kaneva in the report.

By Neils Christensen

For Kitco News

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

David

Gold price pushing higher following 2.2% drop in U.S. pending home sales

The gold market is holding above its session lows and attracting some new bullish momentum even as U.S. consumers start the process of buying a home.

U.S. pending home sales index dropped 2.25 to 122.4 in November, the National Association of Realtors (NAR) said Wednesday. The consensus forecast called for an advance of 0.6%.

For the year pending home sales are down 2.7%, the report said.

“"There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," said Lawrence Yun, NAR's chief economist. "While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability."

Gold prices are off their session lows and are testing resistances back at $1,800 an ounce. Spot gold prices last traded at $1,799.60 an ounce, down 0.37% on the day.

While the gold market is seeing some solid bullish price action, market analysts note that low trading volume during the holidays can create volatile moves in the marketplace.

Economists pay close attention to the pending home sales numbers because the index is seen as a forward-looking barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.

Looking ahead, Yun said that a countrywide surge of the omicron variant poses a risk to the housing market's performance, as buyers and sellers are sidelined, and home construction is delayed.

By Neils Christensen

For Kitco News

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

David

Gold, silver slightly up as near-term chart postures improving

Gold and silver prices are a bit higher near midday Tuesday, with gold notching a five-week high and silver a four-week high in the early going. The two precious metals markets are seeing the bullish traders working on near-term price uptrends for both. Sharp gains in crude oil futures recently are also supporting the precious metals markets. February gold was last up $3.60 at $1,812.40 and March Comex silver was last up $0.151 at $23.14 an ounce.

Global stock markets were mostly higher overnight. U.S. stock indexes are mixed near midday and are at or near their record highs. Traders and investors continue to exhibit general “risk-on” attitudes that are bullish for the stock markets, and that is limiting the upside in the safe-haven metals. The Omicron strain of the coronavirus is proving to produce less serious illness than the other strains, while new vaccines and therapeutics are rolling out to battle the virus. “Serious but manageable” appears to be how the marketplace is viewing the matter. The U.S. Center for Disease Control has just cut in half the quarantine time for those exposed to the virus.

The key “outside markets” today see Nymex crude oil prices higher, hitting a five-week high early on, and now trading around $75.85 a barrel. The U.S. dollar index is slightly up. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.472%.

Technically, February gold futures bulls have the overall near-term technical advantage and are working on a near-term price uptrend. Bulls’ next upside price objective is to produce a close above solid resistance at $1,840.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at today’s high of $1,821.60 and then at $1,825.00. First support is seen at $1,800.00 and then at last week’s low of $1,785.00. Wyckoff's Market Rating: 6.5.

March silver futures bears still have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. 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 today’s high of $23.48 and then at $23.75. Next support is seen at this week’s low of $22.655 and then at $22.44. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed down 310 points at 444.10 cents today. Prices closed nearer the session low and hit a four-week high early on today. The copper bulls have the overall near-term technical advantage as they are working on a near-term price uptrend. 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 425.00 cents. First resistance is seen at the November high of 451.15 cents and then at 455.00 cents. First support is seen at 440.00 cents and then at this week’s low of 434.50 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

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

David

Gold trades both sides of unchanged in quieter session

Gold prices are near steady in subdued midday U.S. trading Monday. Gains are being squelched by less risk aversion in the marketplace recently, while sellers of the precious metals are tepid amid rising inflation worries. February gold was last down $1.00 at $1,810.60 and March Comex silver was last up $0.115 at $23.035 an ounce.

Global stock markets were mostly weaker overnight in quieter, post-holiday trading. Some markets overseas remained closed for the Christmas holiday. U.S. stock indexes are higher and at or near record highs at midday.

There are still coronavirus worries, but there are also vaccines and drugs coming on line to battle the virus. One market analyst termed the marketplace’s present attitude regarding the coronavirus battle, “serious but manageable.”

Simmering on the back burner of the marketplace is a potential geopolitical crisis, as Russia’s troop buildup on the Ukrainian border has alarmed the U.S. and Europe.

The key “outside markets” today see Nymex crude oil prices solidly higher and trading around $75.75 a barrel. The U.S. dollar index is slightly up today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.482%.

Technically, February gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,840.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at the December high of $1,815.70 and then at $1,825.00. First support is seen at $1,800.00 and then at last week’s low of $1,785.00. Wyckoff's Market Rating: 6.0.

March silver prices hit a three-week high today. The silver bears still have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. 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 today’s high of $23.15 and then at $23.50. Next support is seen at today’s low of $22.655 and then at $22.44. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed up 965 points at 448.95 cents today. Prices closed near the session high and hit a four-week high today. The copper bulls have regained the overall near-term technical advantage. 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 425.00 cents. First resistance is seen at the November high of 451.15 cents and then at 455.00 cents. First support is seen at 445.00 cents and then at 440.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

Expect silver price to fall in 2022, but gold to rally, here’s why – Jeff Christian

Expect silver price to fall in 2022, but gold to rally, here's why – Jeff Christian

2022 will see silver and gold prices diverge once again, with silver falling by 2% while gold climbs in value, said Jeff Christian, managing partner of CPM Group.

“We think that gold prices will probably be flat or slightly higher, maybe 2% higher on an annual average basis next year, and silver prices might be 2% lower on an annual average basis next year. We do think that investors will continue to be buying large amounts of gold and relatively large amounts of silver, but not as much as they have in 2020 and 2021,” Christian told David Lin, anchor for Kitco News.

For Christian’s outlook on monetary policy by the Fed next year, watch the video above.

By David Lin

For Kitco News

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

Seasonally gold price looks strong, but analysts ask if it can hold above $1,800 through the new year?

Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

Sentiment remains bullish on gold as prices head into the Christmas holidays above $1,800 an ounce; however, the advice from markets analysts is: if you don't have to trade next week, don't.

Most Wall Street analysts note that gold is starting a strong season period; however, the next two weeks will see high volatility on extremely low trading volume. Many firms have already closed their books for the year ahead of the holidays.

The low-volume environment was also reflected in the participation rate of this week's gold survey.

This week 13 Wall Street analysts participated in Kitco News' gold survey. Among the participants, nine analysts, or 69%, called for gold prices to rise next week. At the same time, bearish and neutral views garnered two votes or 15% each.

Meanwhile, a total of 638 votes were cast in online Main Street polls. Of these, 343 respondents, or 54%, looked for gold to rise next week. Another 134, or 21%, said lower, while 161 voters, or 25%, were neutral.

Pic

The continued bullish sentiment comes as gold prices look to end the shortened trading week above $1,800 an ounce, relatively unchanged from last week.

Most analysts are bullish on gold in the near term as December and the early months of the new year are seasonally solid periods for the precious metal.

"Nine out of the last ten years, you would have made money buying gold on the last trading day before Christmas and selling by Jan. 11," said Phillip Streible, chief market strategist at Blue Line Futures. "There is always a lot of uncertainty at the start of the year, so investors probably feel comfortable holding a little bit of gold as a safe-haven hedge."

Along with bullish seasonal factors, analysts are also optimistic on gold as its technical outlook continues to improve, with prices holding above $1,800 an ounce. However, for some analysts, gold needs to break above initial resistance at $1,815 and long-term resistance at $1,835.

Can gold price rally 15% in 2022? Here are the triggers to watch

However, not all analysts are optimistic about gold in the near term.

David Madden, market analyst at Equiti Capital, said that while gold has room to move slightly higher next week, it is difficult to be bullish as the U.S. dollar remains strong.

"The U.S. dollar hasn't broken above its November highs, but it is still in a strong uptrend, and that will weigh on gold," he said. "I wouldn't want to short the U.S. dollar when the Federal Reserve is looking to raise interest rates three times next year."

Christopher Vecchio, senior market strategist at DailyFX, said that he is neutral on gold in the near term but said that he is not optimistic about the precious metal.

"Gold lacks fundamental news to drive prices sustainable higher," he said. "With the Federal Reserve looking to raise interest rates next year, real yields should rise and that will be negative for gold."

By Neils Christensen

For Kitco News

Buy Gold and Silver on Dips and earn monthly yields on holdings

David