The bullish season for gold price begins, can gold tackle $1,850?

Gold price is looking to get a boost from a seasonably favorable time that began in mid-December. And analysts are eyeing whether the momentum will be strong enough to take gold above $1,850 an ounce — the next hurdle in the price trend.

"From a seasonal perspective, demand for physical gold is a big aid in driving prices higher from mid-December to Valentine's Day. In the next 6-8 weeks, gold and silver could thrive," Walsh Trading co-director Sean Lusk told Kitco News. "With the new variant coming in, easy money policies will remain. Granted, the Fed signaled that they would start rate hikes. But there is still a lot of uncertainty out there — global economic recovery and new geopolitical tensions."

This is why gold held the $1,780-$1,800 range, Lusk noted. At the time of writing, February Comex gold futures were ending the week at $1,809.50.

The Federal Reserve's more aggressive tapering and the potential of three rate hikes in 2022 have already been largely priced in. This means that any new fear could change the outlook and benefit gold.

"The trend is turning higher into next year. It seems like the new COVID-19 variant could give the Fed more pause on the aggressive taper and rate hikes. Geopolitical risks or a crude oil disruption could impact markets' perceptions," Lusk added.

Before committing one way or the other, investors need to make sure the current move higher in gold is not a head fake, warned RJO Futures senior market strategist Frank Cholly.

"The gold market keeps making these head fakes. It breaks out and rallies, but then the move fades quickly. I can't get too excited about gold until we hit $1,835 or maybe even above $1,850," Cholly told Kitco News.

From a technical perspective, funds don't have a strong long position in gold going into next year. And that might be changing, Lusk pointed out. Gold could challenge the $1,880 an ounce level last seen in mid-November.

"Head and shoulders could be forming, and we might start to shoot higher. We are getting higher lows. That ultimately brings about higher highs. In the near term, a spike up to $1,815 on the February contract could be hit. If we blow through that, it is clear sailing up to $1,833, and then $1,875," Lusk described.

If gold manages to close the year at $1,850, the next target would be up at around $2,000 an ounce, he added.

Tide will turn for gold price in 2022 as real yields remain low despite Fed rate hikes

Problematic inflation is one of the macro drivers that will finally kick in and help drive prices higher in 2022, said Cholly.

"There is going to be a point that gold begins to get a lift from the idea that this inflation is heating up. As we move into Q1 2022, we will see further price pressures. And when gold gets above $1,850 this time around, the path of least resistance will be higher," he noted.

Once gold is comfortably above $1,850, more people will jump in on the fear of missing out, Cholly added.

Even though the initial reaction to the Fed tapering and higher interest rates might be negative for gold, once processed, it could trigger another rally, according to Cholly.

"Often, higher rates will mean a stronger dollar. But the Fed's tightening cycle in 2022 could be bullish for gold. It may not be the initial reaction, but as inflation hits all other commodities, gold will be in demand," he said. "When prices go up, most commodities see a curb in demand. For gold, this creates demand — the fear of missing out. The inflation hedge narrative is something people are going to want."

Data during the last week of the year

It will be a fairly quiet data week because of the holidays. Some releases to keep a close eye on next week include Tuesday's CB consumer confidence, Wednesday's pending home sales, and Thursday's jobless claims.

 

By Anna Golubova

For Kitco News

 

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

David

Gold surges past $1,800 on dollar weakness and omicron fears

Both gold and silver had significant gains resulting from a combination of dollar weakness and continued fears regarding the economic effect of the Covid-19 variant omicron.

One simply needs to view both precious metals through the eyes of the KGX (Kitco Gold Index) to see the strong effect that dollar weakness had on the precious metals complex. As of 4:08 PM, EST spot gold is currently fixed at $1804.80, which is a net gain of $15.70 on the day. On closer inspection, we can see that dollar strength contributed approximately half of today’s price search. Dollar weakness accounted for net gains of $7.90, and normal trading added $7.80, which resulted in gold surging past $1800 per ounce.

Spot silver pricing also benefited from dollar weakness today. However, in the case of silver, normal trading accounted for two-thirds of today’s net gains. The KGX showed that silver gained a total of $0.31 today and is currently fixed at $22.80. Unlike gold, silver gained $0.10 as the direct result of dollar weakness and $0.21 as the result of normal trading.

Gold futures basis the most active February 2021 Comex contract is currently up $16.50, or 0.92%, and fixed at $1805.20. Gold prices are currently very close to the intraday high of $1806.30, well off the intraday low of $1785.80.

One interesting aspect of the financial markets over the last few days has been traders focusing on the Covid-19 variant, omicron. It’s almost as if equity traders and precious metal traders have been oscillating between concerns that the variant will result in major economic contractions during the trading session or completely disregard concerns which was the case today. Traders in the U.S. equity markets disregarded any concerns regarding the variant, and precious metals chose to focus upon it.

It must be noted that we are trading during a pre-holiday period, which will continue to create volatility due to the thin volume. Concern about the spiraling level of inflation continues to be a forefront concern. However, for the most part, traders and market participants in both the equities and precious metals markets have now baked the increased amount of rate hikes expected from the Federal Reserve. Currently, market participants have factored in a total of six rate hikes, three interest rate hikes in 2022 as well as three rate hikes in 2023.

Our technical studies indicate that although gold solidly traded above the key psychological level of $1800, current pricing at $1804.70 puts it right at the 61.8% Fibonacci retracement level at $1804.60. Our studies also indicate major resistance that occurs at $1815. The first level of support is currently fixed at $1788.80 which is based upon a support trendline created from the compression triangle which occurred over the last three months (see gold chart). Below that the next support level occurs at $1784.90 which is based upon a 78% Fibonacci retracement. Major support currently resides at $1770.30 which is the 38% Fibonacci retracement based upon the longest data set used in our studies. This data set begins at the highs of $1920 that occurred during the first week of June down to $1678, the low that occurred the first week of August.
 

By Gary Wagner

Contributing to kitco.com

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David

Only gold and Bitcoin will protect against what's to come – Alex Mashinsky's 2022 survival guide

2022 will be a year of heightened volatility from growing fears of the latest Omicron variant, as well as rising inflation, and the chance of monetary tightening from the Federal Reserve, said Alex Mashinsky, CEO of Celsius Network.

The key is to look at which economic scenario is most likely to play out and act accordingly.

“If there’s a lot of volatility because inflation is out of control [and go into] the double digits then gold and Bitcoin are going to become safe assets. But, if we have single-digit inflation and the Fed is fighting it, then all assets are actually going to lose value because everybody is going to be hurting,” he said. “And, if the opposite…if the Fed decides that inflation is not an issue and they can accommodate longer, then all asset prices are going to go up. So, we have several scenarios here and we have to watch very carefully what happens with each print each month and make decisions based on that.”

For Mashinsky’s outlook on gold, Bitcoin, the U.S. dollar, and the future of technological innovations, watch the video above.
 

By David Lin

For Kitco News

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David

Gold trades under pressure back below $1800 as investors focus on Fed

As of 4:10 PM EST gold futures basis, the most active February 2021 Comex contract is currently fixed at $1789.80 after factoring in today’s net decline of $15.10 (-0.84%). Gold opened at $1800.20, traded to a high of $1804.60, and is currently trading $0.90 off the intraday low of $1789.

U.S. equities were dragged down today by concerns of the new Covid-19 variant “Omicron.” The Dow lost 433 points (-1.43%), the S&P 500 gave up 1.06%, and the NASDAQ composite declined by 1.17%. However, it seems that market participants who trade and invest in gold did not have the same concerns as in the U.S. equities markets.

Instead, market participants continue to focus upon the Federal Reserve’s plan to accelerate the tapering timeline of their asset purchases and implement rate hikes next year. According to the most recent information from the Federal Reserve, their likely course of action will be to implement three rate hikes in 2022 and an additional three rate hikes the following year in 2023. Although the rate hikes the Federal Reserve will implement will be subtle and small steps of 25 basis points (1/4%) these hikes would raise the Fed funds rate to 1 ¾ % by the end of 2023.

Our technical studies indicate strong resistance at $1815 per ounce. This is based upon intraday highs that occurred in mid-October, the end of November, and last Friday. On Friday, gold traded to an intraday high of $1815 and closed at the 61.8% Fibonacci retracement of the November rally. During the November rally gold traded from a low on November 3 of $1758 to a high of $1870.60 on November 16. These technical studies confirm that $1815 is the current level of strong resistance. The next level below that occurs between $1804.60 (the 61.8% retracement point) and $1800 per ounce, a key psychological level.

Silver experienced a strong decline today, giving up 1.17%, or a total of 26.3 cents which takes the most active Comex contract to $22.27. Our technical studies indicate support at $21.50. This is based upon two significant lows that occurred first on September 29 and then on December 15. We currently see major resistance at $23. This is based upon the 78% retracement from a data set that begins at the highs achieved in silver of $28.88 that occurred on May 17 of this year to the double bottom we spoke about at $21.50.

With the holiday season underway, we would expect to see light volume and the choppy market as we get closer to the beginning of the Christmas holiday season commencing. Then between Christmas and New Year’s we expect to see very light participation from major traders as they celebrate the holiday season.
 

By Gary Wagner

Contributing to kitco.com

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

David

Can gold price keep its post-Fed gains?

In a surprising year-end move, gold rose to three-week highs after the Federal Reserve meeting. Is the tide turning for gold or is it another bull trap? Here's a look at Kitco's top three stories of the week:

 

3. Gold price hits daily highs as Powell explains 'real-time' policy making, inflation and maximum employment

2. Gold price rallies amid keener risk aversion Friday

1. Tide will turn for gold price in 2022 as real yields remain low despite Fed rate hikes

By Anna Golubova

For Kitco News

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

David

Is gold price in a bull trap? 'December is the hardest month to trade' – analysts

The gold market has responded very well to a more aggressive Federal Reserve tightening stance, rising around $40 since Wednesday. But what's next will be critical, according to analysts.

After the precious metal breached the $1,800 an ounce this week, the next important signal will be what gold does at this strong resistance level.

Gold rose post-Fed announcement, which saw its tapering schedule accelerated and three potential rate hikes priced in for 2022. Analysts said most of that was largely priced in.

"The environment leading up to the FOMC decision has been difficult for gold. The precious metal needed to have Wall Street come into agreement as far as what that tightening policy will be like over the short term. Once the markets were able to process Fed's accelerated tapering, which was well telegraphed, Wall Street knew about the massive shock you are going to see when Fed is done buying assets," OANDA senior market analyst Edward Moya told Kitco News. "For gold, once you saw that knee-jerk selloff towards $1,750, that was the time the majority of gold's short-term weakness was priced in."

Now, the market could be shifting into more of a safe-haven mode, with many remaining unconvinced that the Fed could pull off three rate hikes next year.

"There is some skepticism about whether the Fed will be able to follow through on what the FOMC and Powell indicated this week. Three rate hikes could be unlikely. There is an idea that the Fed is setting itself up to fall short of those expectations," said Gainesville Coins precious metals expert Everett Millman.

That's the classic playbook for the Fed — try to use rhetoric and public communications to influence market behavior without having to change monetary policy. And that's what might be happening with the three rate hikes. "That's the ideal situation for the Fed," Millman said. "And by anchoring everyone's expectation on hawkishness for next year, gold is up because there is still some market resistance."

Markets are also cautious as the COVID-19 Omicron variant continues to spread. "There are many risks next year, where the Fed could walk back this hawkishness and have very legitimate reasons to say that they're going to keep stimulus in place or they're not going to raise interest rates. So the possibility of that is part of why gold is up," Millman added.

There is a growing concern around how strong the economic recovery will be next year due to the Omicron variant and higher rates.

"When you look at the Treasury curve, the long end is not rallying. Yields are not going higher," Moya said. In 2023, we are back to around 2% growth and we still have several risks to the outlook. You already have a lot of people talking about potential recessions in 2023-24. That is something that will be supportive for gold."

Post-Fed is the time for gold price to take the reigns, says Standard Chartered

Tough December trading

December is one of the toughest months to trade, and with volatility extremely low starting next week, gold prices could be in for a wild ride.

"December is the hardest month to trade. The usual correlations can be thrown out the window. I would refrain from high-frequency data as it would not necessarily lead to a clear-cut reaction for gold. The rest of this year will be rather difficult. But risks to the outlook will attract inflows for gold because people will want that protection. Any hint of unbalanced economic recovery or delay in the tightening cycles would be supportive for gold," Moya noted.

Moya is neutral on gold for the rest of the year because of the thin market conditions noticeable starting next week. "One thing that could trigger a strong move in gold is if we see Omicron jitters settle in, could trigger panic selling. Traders might resort to selling gold," he said.

Millman warns of a potential bull trap for gold next week, citing timing. "We're at the end of the month, end of the quarter, and approaching the end of the year. I expect very low trading volumes next week with the holiday coming up," he said. "Gold could pull back below $1,800 just because there's going to be low volumes in volatility."

Once January begins, Millman is more bullish but does point out that gold could still be stuck in its trading range between $1,850 and $1,750 an ounce. "That will continue, but I'm leaning more toward gold holding its head above the $1,800 level," he said.

 

Data to watch next week

Next week, the releases to keep a close eye on are the U.S. Q3 GDP, PCE price index, and durable goods orders.

"The last couple of weeks of 2021 will see the release of durable goods orders, which are rebounding impressively. The core figure, which strips out volatile defence and aircraft orders, points to a very positive outlook for capital expenditure in the first half of 2022 while robust personal income numbers should allow consumers to continue spending aggressively," said ING chief international economist James Knightley.

 

Here's the schedule:

Wednesday — U.S. GDP Q3, existing home sales

Thursday — PCE price index, jobless claims, durable good orders

 

By Anna Golubova

For Kitco News

 

David

Gold is unable to hold $1800 after trading to a high of $1815

For the better part of the last 24 hours of trading, gold pricing has managed to trade above $1800. Gold futures traded to an intraday high today of $1815.70. However, with only 45 minutes left in Globex trading (New York trading has already closed) gold futures basis, the most active February 2021 Comex contract is trading up by $0.70 (+0.04%) and fixed at $1798.90.

Over the last two trading days, gold has challenged $1800 but has not effectively closed above that key psychological price point since mounting a strong rally yesterday, which took gold's close yesterday to $1798.10. Today gold opened at $1801.50 and traded to a low of $1796.50.

Currently, gold is being supported by several factors. First, there is risk-off market sentiment in regards to U.S. equities. All three major indices closed lower on the day, with the Dow Jones industrial average declining by 1.46%, the NASDAQ composite closing fractionally lower off by 0.07%, and the Standard & Poor's 500 declining by 1.03%.

Secondly, there is uncertainty in regards to an economic contraction based upon the recent surge of Covid-19 daily infections as well as the impact of the new variant "Omicron." The Delta variant accounts for the majority of new daily infections globally. However, according to the World Health Organization's Director-General Tedros Adhanom, Ghebreyesus 77 countries have now reported cases of the new variant "Omicron is spreading at a rate we have not seen with any previous variant. We're concerned that people are dismissing Omicron as mild. Surely, we have learned by now that we underestimate this virus at our peril."

Lastly, there are still concerns about inflation which is still at a 40 year high. In an interview with MarketWatch, Colin Cieszynski, chief market strategist at SIA Wealth Management, said that there is "increasing concerns about inflation," which was enough to push the Federal Reserve and European Central Bank to accelerate tapering of bond purchases and the Bank of England to raise interest rates."

Pressuring gold today was a solid gain in the dollar. The dollar index gained 60 points today (0.62%) and is currently fixed at 96.615. According to the Kitco Gold Index as of 4:10 PM, EST spot gold was trading down by one dollar and fixed at $1798.30. Although gold had a net gain of $11.20, dollar strength more than compensated for today's gains resulting in gold losing $12.20 in value.

Our technical studies indicate that the current resistance levels occur first between $1800 and $1804.60 (the 61.8% Fibonacci retracement), with major resistance at $1818 (the 50% retracement level). Additionally, the first level of support for gold occurs at $1758.30, with major support at $1732.60.

 

By Gary Wagner

Contributing to kitco.com

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

 

David

Gold, silver sharply up as USDX sinks, oil rallies, bond yields stable

Gold and silver prices are posting strong gains in midday U.S. trading Thursday. The metals market traders on this day reckoned rising inflation prospects are bullish, as is shown by market history. A lower U.S. dollar index today, higher crude oil prices and stable U.S. Treasury yields are also friendly for the precious metals bulls. The safe-haven metals rallyied today despite upbeat trader and investor risk appetite late this week. Trading in the metals markets this week is a prime example of the old trading adage, "markets can remain illogical longer than traders can remain solvent." February gold was last up $34.00 at $1,798.50 and March Comex silver was last up $0.955 at $22.50 an ounce.

Traders and investors Thursday were still digesting the U.S. Federal Reserve FOMC meeting results. The FOMC statement somewhat surprisingly said three interest rate increases are likely in 2022, and that U.S. inflation is rising but suggested it will back off in the coming months. The FOMC is accelerating its monthly asset purchases tapering, which will end in March. The marketplace correctly expected a hawkish lean from the FOMC, but the better clarity on timing and actions of the Fed appeared to assuage traders of many markets, as evidenced by the rally in U.S. stock indexes, stable bond yields and a weaker U.S. dollar index.

The pandemic never seems to stray too far from the front burner of the marketplace. Bloomberg today reports "the lockdown mentality turning London into a ghost town is starting to feel like the real thing as Europe resurrects stiff border controls and another Christmas looks set to be lost to the virus."

Post-Fed is the time for gold price to take the reigns, says Standard Chartered

The key "outside markets" today see Nymex crude oil prices solidly higher and trading around $72.50 a barrel. The U.S. dollar index is solidly lower today but still not far below its recent high. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.43%.

Technically, February gold futures prices hit a two-week high today. Bulls have regained the overall near-term technical advantage with today's big gains. 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 this week's low of $1,753.00. First resistance is seen at $1,811.40 and then at $1,819.30. First support is seen at $1,785.00 and then at today's low of $1,775.70. Wyckoff's Market Rating: 6.0

March silver futures saw short covering featured after prices hit another nine-week low Wednesday. The silver bears still have the firm overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $21.00. First resistance is seen at $22.635 and then at $23.00. Next support is seen at $22.00 and then at this week's low of $21.41. Wyckoff's Market Rating: 2.0.

March N.Y. copper closed up 1,225 points at 430.55 cents today. Prices closed nearer the session high today and saw short covering after prices hit a nine-week low on Wednesday. The copper bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 451.15 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 397.05 cents. First resistance is seen at today's high of 432.15 cents and then at this week's high of 433.30 cents. First support is seen at today's low of 422.10 cents and then at 420.00 cents. Wyckoff's Market Rating: 4.0.

By Jim Wyckoff

For Kitco News

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

David

How high can gold & silver go in 2022? Rates to rise, here's the impact on markets – Gary Wagner

The Federal Open Market Committee has announced a doubling in the pace of asset tapering on Wednesday.

The Dot Plots indicate that there will be an average of three rate hikes in 2022, three more in 2023, and two in 2024, all in increments of 25 basis points.

Gary Wagner, editor of TheGoldForecast.com discusses with David Lin, anchor for Kitco News, the impact that monetary policy next year will have on financial markets.

“I think that the Fed got it wrong. They underestimated the pace at which inflationary pressures would grow and how persistent they would be. Now that they’re acknowledging that we have persistent inflation, and taking out the word ‘transitory’, they are in my mind chasing inflation. In other words, they’re reacting to the inflationary level rather than being proactive about it. That to me, is not what the Federal Reserve is supposed to do,” Wagner said.

Wagner projects that gold will outperform silver in 2022.

For gold and silver’s price levels to look out for, watch the video above.

 

By David Lin

For Kitco News

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

 

David