Gold – Above $2400.00!
Commentary for Friday, May 17, 2024 (www.golddealer.com) – Today gold closed up $32.20 at $2412.20, and silver closed up $1.38 at $31.05. Another solid week for gold and silver as each metal moved to recent highs with conviction this morning. Gold challenged $2415.00 and silver broke through $30.00 overhead resistance with a few traders believing this is only the first inning. Still, caution is good stewardship. I don’t believe professionals can read these short term tea leaves well because updrafts are problematical over interest rate confusion. What the Fed may do between the summer months and the end of the year will be determined by how the US economy settles. Stock market euphoria has already factored in lower interest rates, which might also be the case with the metals. This is also a good time to dismiss the notion of a hyperbolic increase in the price of both gold and silver. Exaggerated stories reinvent themselves as record highs are approached, or the hyperbole becomes excessive. It is also a good time to fasten your seat belts and expect further price turbulence. Last Friday gold closed at $2367.39 / silver at $28.28 on the week gold was higher by $44.81 and silver was higher by $2.77.
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On Monday the price of gold dipped considerably on the open which is a bullish disappointment considering the big move higher last Friday. But so goes the trading reality in this supercharged market as continued higher interest rates point to more profit taking. Let’s just call today’s trade a cautionary pullback which could have further implications if fresh bargain hunting does not overrule this red flag. Today’s dip, under the circumstances, is large enough to get everyone’s attention, but not so great as to reverse solid bullish sentiment. The fact that gold is higher by $350.00 this past year supports this statement. Expect the Fed to turn dovish sooner than later in this high stakes poker game just to make sure the economy does not go off the rails. If the Fed remains overly hawkish $2300.00 could give way, but higher interest rates create the possibility of recession. I believe however that it is a mistake to overly concentrate on Fed thinking. There are other factors which may soon favor fresh safe haven demand and higher gold prices.
FXEmpire (Christopher Lewis) – Gold Pulls Back a Bit of Support – “The gold market has shown itself to be a little bit negative during the early hours on Monday, but it looks to me like it is going to continue to see plenty of support underneath, and therefore I think it’s probably more likely than not a buy on the dip opportunity. With this being the case, I think we’ve got a situation where traders will continue to look at this as an opportunity to get long occasionally on these dips. I don’t see why you would try to short this market, but there is always somebody out there willing to do it, I suppose. The $2,300 level is more likely than not going to be your floor, and therefore, that’s what I would really like to play off of assuming we even get that far. And it doesn’t look like we are. So short term dips that show signs of life are more likely than not going to end up being a buying opportunity for those trying to get long of gold. And let’s face it, there are plenty of reasons to think that gold should continue to go higher. The $2350 level looks to be an area of interest, but the $2450 level above, I think, is your gateway to much higher pricing. There are geopolitical concerns, interest rate concerns, central banks around the world getting ready to cut again, central banks around the world buying gold, and a multitude of plenty of other reasons why we continue to look at this through the prism of a bullish market.”
On the day gold closed down $31.20 at $2336.10, and silver closed down $0.06 at $28.22.
On Tuesday the price of gold was up nicely after yesterday’s dip in prices. This could be the result of changing and conflicting factors. The latest inflation numbers seem to suggest the Fed will remain hawkish – a negative for the gold scenario. Still, some insiders believe that the Fed could begin easing interest rates by September. Today’s higher numbers might as easily be the result of traders buying yesterday’s dip which would encourage the feeling that gold has room to move higher before the year end. Today’s pop to the upside might also suggest fresh safe haven demand as aggression continues in the Middle East. Traders expect this ebb and flow in the price gold, given these typical cross currents. But the longer gold remains above $2300.00 the stronger the bullish scenario becomes when viewed from the longer term perspective.
Reuters (Daksh Grover) – Gold inches up as traders eye key US inflation report – “Gold prices firmed on Tuesday as investors awaited the crucial inflation report this week, which can significantly influence the outlook on U.S. interest rates. Spot gold was up 0.4% at $2,345.39 2 per ounce by 1209 GMT, after dropping 1% on Monday. U.S. gold futures rose 0.4% to $2,351.20. “Gold’s relatively flat performance today shows that markets remain on tenterhooks and aren’t willing to take an outsized view of how the incoming U.S. data will pan out,” said Han Tan, chief market analyst at Exinity Group. Investors are now looking forward to the U.S. consumer price index report due on Wednesday. The Federal Reserve Bank of New York said in its latest Survey of Consumer Expectations that respondents project inflation a year from now at 3.3% from March’s 3%, while inflation three years from now is seen moderating to an expected 2.8% rise from the prior month’s 2.9%. Traders expect the U.S. central bank to start easing its cycle in September. Lower interest rates reduce the opportunity cost of holding non-yielding gold. “Signs of easing price pressures may further bolster hopes for Fed rate cuts in 2024, which could give gold fresh impetus to return closer to its record high,” Tan added. Spot silver rose 0.7% to $28.39 per ounce and palladium gained 1.1% to $1,007.35. Platinum was up 0.9% at $969.25, after hitting a near one-year peak of $1,016.40 on Monday.”We expect platinum to outperform on rising auto catalyst demand, greater potential for investment inflow and capex tightening in the South Africa PGM mining industry which could disproportionately impact platinum supply,” Deutsche Bank said in a note.”
On the day gold closed up $17.30 at $2353.40, and silver closed up $0.27 at $28.49.
On Wednesday the price of gold moved higher as April’s Consumer Price Index came in at 0.3% as opposed to the consensus of 0.4%. This may not seem like much but anything which suggests inflation is moving lower is used to sell the idea that the Fed will soon turn dovish and thus bolster the bullish gold scenario. And it’s hard to make a reasonable case that gold is stuck after today’s dramatic “pop” to the upside which must be a surprise even to dedicated followers of the yellow metal. You can make a case that traders fear the current high interest rates which have acted as kind of “governor” on the daily pricing equation. But what do you now do with the notion that gold has broken through overhead resistance and is again challenging $2400.00?
Of course, today’s big surprise was the combination of a significant drop in the dollar and the growing belief that the Fed will soon be forced to turn dovish. And the frosting on this gold cake is a solid technical picture. While well regarded analysts were waiting for something tangible from the Fed regarding interest rates, speculators, investors, and central banks beat everyone to the punch and today decided to jump into these bullish waters. The technical sharpies now claim that the next upside price objective for gold is $2450.00. Another record high.
FXEmpire (Christopher Lewis) – Gold Continues to See Pressures – “Gold initially surged a bit during the early hours on Wednesday, but it looks as if we are running into a little bit of noise near the $2,370 level. This is an area that was difficult previously, so it’s not a huge surprise to see momentum give it up a little bit here. That being said, I think any short-term pullback is more likely than not going to be thought of as a buying opportunity. And you can even make a little bit of an argument for a bullish flag being formed at the current trading block. The market certainly sees a lot of support underneath, regardless, with the 2300 level being a major support level and the 50-day EMA racing toward it being a potential backup to that support level. This isn’t even to say that we will fall that far, just that we could, and it really wouldn’t change much. If we were to break down below the 50 day EMA, then the next major support level is down at the $2,200 level. I think it’s more likely than not that we break out to the upside before it is all said and done, and if and when we do, we could very well go looking to the $2,500 level. The massive move higher as of late has slowed down, but that makes sense. We are just simply consolidating gains. Inflation, of course, will be front and center, but keep in mind, regardless, there’s a lot of geopolitical concern out there. And of course, central banks around the world have been buying gold, so that adds upward pressure as well.”
On the day gold closed up $35.30 at $2388.70, and silver closed up $1.02 at $29.51.
On Thursday gold gave up some of yesterday’s strong move to the upside but still managed to finish the day only slightly in the red. Today’s market settled a bit as jobless claims fell, and the Dollar Index recovered. It is good, in the long run, for this market to calm down at these elevated. Keeping in mind that gold still presents an upward bias and bullish sentiment is strong. The possibility of lower interest rates underpins recent gains and lays the foundation of eventual new highs perhaps this year. Across our trading desk speculative money is apparent this week and large sellers have disappeared. This optimism could reverse itself if interest rates do not move lower, but most are betting on higher prices for both gold and silver before year end.
Reuters (Harshit Verma) – Gold near one-month high on improved Fed rate cut bets – “Gold prices hovered near a one-month high on Thursday as signs of inflation stabilizing in the U.S. increased the likelihood of rate cuts by the Federal Reserve as early as September. Spot gold was little changed at $2,384.07 per ounce as of 1155 GMT, after hitting its highest since April 19 earlier in the session. Bullion rose over 1% on Wednesday. Meanwhile, U.S. gold futures slipped 0.3% to $2,388.70. “The combination of stabilizing inflation and softness in other economic data such as retail sales is really a good cocktail for gold and silver,” said Ole Hansen, head of commodity strategy at Saxo Bank. U.S. retail sales were unexpectedly flat last month, while cooling consumer prices and last week’s lackluster labor market data came as good news to Fed policymakers waiting to see renewed progress on inflation before reducing rates. Lower interest rates boost non-yielding bullion’s appeal. “Gold has been through a period of consolidation, but that consolidation has been very shallow compared to the big rally back in March and April…so it does indicate that there’s still underlying strength in the market,” Hansen said. The dollar index hovered near a more than one-month low, while benchmark 10-year Treasury yields were at its lowest since April 5. Meanwhile, spot silver fell 0.3% to $29.61 per ounce, having hit its highest since February 2021 earlier in the session. “Strong fundamentals amid rising gold prices are likely to spur investor interest in silver,” analysts at ANZ wrote in a note, adding that they expect the metal to trade above $31 by the end of 2024. Palladium lost 0.3% to $1,007.10, while platinum rose 0.2% to $1,066.30 after hitting a one-year high earlier in the session.”
On the day gold closed down $8.70 at $2380.00, and silver closed up $0.16 at $29.67.
On Friday the price of gold surprised everyone by surging to $2415.00. It was not that this happy event was not anticipated. It was by some technical experts, but I think few believed we would see such strong action this week. Which brings me to an interesting story. I smiled when an old customer walked in and asked for me. We have been doing business with this gentleman for a long, long time and he always knows what he wants to do in advance. But today his first words were: “Oy vey” (A popular Yiddish expression suggesting exasperation). What’s the matter was my response? I’m so confused – should I be buying or selling? I hope this educational story will prove helpful to the reader for at least the rest of this year.
James Stanley (Forex.com / Kitco) – $2,500 gold is in play this week – “Gold prices have broken out of a near-term bearish technical pattern and the yellow metal is poised once again to surpass its all-time highs, according to James Stanley, Senior Strategist at Forex.com. “Gold prices broke out of a falling wedge pattern in a very big way last week,” Stanley wrote. “Coming into April Gold prices were flying higher, eventually pushing weekly RSI into deeply overbought territory.” He said that when gold prices failed to hold above the $2,400 per ounce level, it triggered a strong pullback that drove gold down $100 in relatively short order. “But, just like Gold bulls failed to gain acceptance above the $2400 level, Gold bears struggled to gain acceptance below $2300,” Stanley said. “There was a single daily close below that price but in the days after, buyers returned to hold support above the level while also building in a backdrop of higher-lows.” Stanley said this price action is what created the falling wedge pattern on the daily chart “as sellers were showing more aggression at highs or near resistance but suddenly showed passiveness near lows or at support.” Turning to the price action seen this week, Stanley noted another technical pattern that he gleaned from the pullback: “a Fibonacci retracement that has continued to show inflections.” “Taking the April high down to the May low produces a 61.8% Fibonacci retracement at $2372.68,” he said. “That’s what helped to hold the highs on Friday before a pullback appeared.” Stanley said the pullback ran all the way down to the 38.2% retracement level. “That plots at $2336.31, and that price helped to hold the lows on Monday and into Tuesday, at which point bulls came back,” he said. “That then led to a run and a pause at the 61.8% level, followed by extension up to the 76.4% retracement at $2395.18, and that’s so far held the highs for this week.” He added that the pullback from this level “has so far held support on a re-test of support at prior resistance, at the same 61.8% retracement of 2372.68.” Moving forward, Stanley said “the big question is whether bulls have the drive to push a weekly close above the $2400 level,” something that XAU/USD has yet to achieve. “The two instances that we did have of price testing over that level were met with fast pullbacks, with the second test also showing a lower-high,” he noted. “This provides some context should continuation show, and gold bulls holding the bid above the big figure would illustrate a strong response to the pullback that started a month ago.” Above the 2400 level, Stanley pointed out the prior inflection points at the $2,417 and the $2,431 levels, after which there would be no prior barrier standing in the way of gold’s march to $2,500 per ounce. “Given that price would be at fresh all-time highs beyond 2431, a degree of projection would be required to set shorter-term resistance levels,” he said. “[T]his could put focus on spots such as 2450 or 2475 before a test of 2500 could come into the picture.” After forming a triple top pattern just below the $2,400 level shortly after 9 pm EDT Wednesday evening, gold prices have trended lower on Thursday. Spot gold last traded at $2,376.42, down 0.41% on the session at the time of writing.”
On the day gold closed up $32.20 at $2412.20, and silver closed up $1.38 at $31.05.
Platinum closed up $19.20 at $1084.60 and palladium closed up $12.40 at $1009.90.
Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the contract high of $2,448.80. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at this week’s high of $2,402.70 and then at $2,415.00. First support is seen at the overnight low of $2,377.80 and then at Wednesday’s low of $2,357.10. The silver bulls have the solid overall near-term technical advantage and have gained good power this week. Silver bulls’ next upside price objective is closing July futures prices above solid technical resistance at the April high of $30.19. The next downside price objective for the bears is closing prices below solid support at $28.00. First resistance is seen at $30.19 and then at $30.50. Next support is seen at Thursday’s low of $29.555 and then at $29.00.”
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