Gold – All Time Highs!
Commentary for Friday, April 12, 2024 (www.golddealer.com) – Today gold closed up $1.40 at $2356.20, and silver closed up $0.08 at $28.26. You would not think now is the time for the price of gold to become unstable, but reading the tea leaves correctly always requires a bit of wisdom and good fortune. Gold soared on the open, reaching $2430.00 and dropped just as quickly, reaching $2350.00 in a flash, before recovering to almost unchanged on the day. Too much bullishness and the fresh talk of only one rate cut this year has created an unstable market. It will be interesting to see if the bulls can stabilize pricing and recover next week. This latest oversize drop was large enough to cool this market down, allowing time for consolidation. Still, today was likely not the end of higher highs for the metals. There is more than enough bullish sentiment to go around for the longer term. It is unlikely, however, that we will see significant selling in gold or silver bullion even with this latest turbulence. There are too many reasons which support higher prices in the longer term. Last Friday gold closed at $2325.70 / silver at $27.40 on the week gold was higher by $30.50 and silver was down $0.86.
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On Monday gold dipped on the open but recovered and finished the day in the green. I would not necessarily call this a slow start, but it was a bit on the tepid side when compared to last Friday when gold made all time new highs and finished the day up $36.90! The number of traders looking for price consolidation at these lofty levels is growing. But with hedge funds and central banks buying gold I don’t see much downside. Unless the Fed gets nervous and decides it needs higher interest rates to overpower rising inflation.
Ernest Hoffman (Kitco) “Gold appears overbought and due for an imminent correction, while silver is seeing support from both the investment community and industrial demand, according to precious metals analysts at Heraeus. In the company’s latest report, the analysts noted that gold prices are continuing to rise despite the fact that rate cut expectations have been moderating. “The gold price has risen by 12.6% year-to-date, and this is without the aid of a Fed monetary policy pivot, a markedly weaker dollar, or a meaningful resurgence in institutional investment demand via ETFs,” they wrote. “This may leave the door open to a move even higher later in the year when the Fed finally decides to drop interest rates, which in all likelihood will weaken the US dollar.” They pointed out that gold prices have appreciated by nearly 4.7% in the last two weeks, even as Fed speakers have been working overtime to talk down frothy markets. “Although Jerome Powell’s words in a speech last week maintained the same message of data dependency and a cautious approach to making cuts to interest rates, swaps markets are still pricing in three cuts to the Federal Funds Rate by year-end (down from six at the start of the year), with a cumulative interest rate reduction of ~75 bp,” they said.”
Reuters (Ashitha Shivaprasad) – Central bank demand propels safe-haven gold to record peak – “Gold prices hit a record high for a seventh straight session on Monday, fueled by central bank purchases and geopolitical tensions, while strong economic data failed to dull bullion’s allure. Spot gold was steady at $2,330.83 per ounce, as of 9:45 a.m. ET (1345 GMT), after hitting a record high of $2,353.79 earlier in the session. U.S. gold futures gained 0.3% to $2,350.80. China’s central bank added 160,000 troy ounces of gold to its reserves in March, it said. Turkey, India, Kazakhstan, and some eastern European countries have also been buying gold this year. “The market is pricing rate cuts by June despite strong economic data. But, if we continue to see strong data, which indicates that Federal Reserve is in no hurry to cut rates, then gold will not be able to sustain the gains,” said Bart Melek, head of commodity strategies at TD Securities. “Central bank buying and geopolitical tensions are other supportive elements,” Melek added. Traders are pricing in a 52% prospect of a first 25 basis point cut in June, CME Group data showed. However, data on Friday showed U.S. job growth blew past expectations in March, calling into question the timing of rate cuts. Lower interest rates reduce the opportunity cost of holding bullion. COMEX gold speculators raised their net long positions by 20,493 contracts to 178,213 in the week ended April 2, data showed on Friday. pot silver was up 0.4% at $27.59, its highest in nearly three years. With the latest move up in prices, there is upside potential for silver, UBS analysts said in a note, projecting their forecast endpoint at $32/oz. India’s silver imports hit a record high in February, as lower duties encouraged large purchases from the United Arab Emirates, officials told Reuters. Platinum rose 3.2% at $956.60 and palladium firmed 3.9% at $1,042.52.”
On the day gold closed up $6.00 at $2331.70, and silver closed up $0.31 at $27.71.
On Tuesday the price of gold was again aggressive, challenging $2364.00 on two occasions in the early trade but both attempts were sold suggesting a continued test of overhead resistance. On the day gold managed to finish in the green and the aftermarket was higher by another $10.00. It is true that there are some now looking for profit taking. Which makes sense considering that gold is up by $150.00 this past month and more than $300.00 year over year. This “profit taking scenario” will likely grow in popularity as prices move higher, but the basic underpinnings of this market remain solid and upbeat. We saw mild selling across our trading desk today but buyers still outnumber sellers by a wide margin – another plus for the bulls.
Reuters (Ashitha Shivaprasad) – Gold hits record high on buying momentum, geopolitical risks – “Gold extended its record run on Tuesday fueled by buying momentum and geopolitical risks, while the spotlight shifted to the Federal Reserve’s policy meeting minutes and U.S. inflation data for insights into U.S. rate cut timeline. Spot gold was up 0.8% at $2,357.19 per ounce by 9:36 a.m. ET (1336 GMT) after hitting a record high of $2,365.09. U.S. gold futures gained 1.1% to $2,376.00. “Technical buying momentum will continue in the gold market unless the CPI data comes out much hotter-than-expected. A cooler inflation report could take prices to $2,400,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. The U.S. central bank’s policy meeting minutes and U.S. Consumer Price Index (CPI) data are due on Wednesday. Bullion is considered a hedge against inflation and geopolitical uncertainties, but higher interest rates tend to dull the appeal of holding the non-yielding asset. “The fundamentals underpinning the current rally include growing geopolitical risk, steady central bank buying and resilient demand for jewelry and bars and coins,” the World Gold Council said in a note. “With the prospect of lower interest rates ahead, the suggestion is that (gold exchange-traded-funds) ETFs have missed the rally and are now under-allocated.” CME Group data showed that the market is pricing in a 53% chance of a rate cut in June. “Despite my long-term bullish outlook on gold, given the current conditions, I anticipate a bearish reversal, perhaps even a minor one,” said Fawad Razaqzada, market analyst at City Index in a note. Spot silver rose 1.7% to $28.29 per ounce, its highest level since June 2021. Platinum firmed 3% to $986.75 and palladium rose 2.9% to $1,073.39. “Given the lack of production discipline, we are particularly concerned about palladium, which will likely continue to underperform platinum whose demand is less exposed to the auto industry,” BofA analysts wrote in a note.”
On the day gold closed up $11.80 at $2343.50, and silver closed up $0.18 at $27.89.
On Wednesday the price of gold dipped on the open and remained defensive all day after CPI inflation numbers came in hot, the idea here being that the much talked about bullish notion that interest rates will heading lower sooner than later, now looks like a busted flush. Still, recent higher highs in gold prices are extraordinary and while insiders’ figure that consolidation must be in the cards somewhere the idea that $2400.00 gold may be right around the corner is becoming more common with a larger, worldwide audience. Why? World debt continues to grow at alarming rates, safe haven demand has reinvented itself, even at these lofty levels. And what other asset class can protect least a portion of your wealth from obtrusive government intervention. I have used this reasoning before but I’m afraid that safe haven physical bullion gold and silver is becoming more and more important to a wider audience.
Reuters (Ashitha Shivaprasad) – Gold slips from record levels after hot US inflation data – “Gold prices slipped from record-high levels on Wednesday as the U.S. dollar and Treasury yields firmed after a stronger-than-expected inflation print softened expectations of an early U.S. rate cut. Spot gold fell 0.6% to $2,338.19 per ounce, as of 8:58 a.m. ET (1258 GMT). U.S. gold futures lost 0.1% to $2,360.7. The U.S. dollar index rose 0.5% and U.S. Treasury yields spiked after the data, making non-yielding bullion less attractive. A Labor Department report showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected by economists polled by Reuters. Gold prices stumbled with the stronger-than-expected CPI data contributing to expectations of later and fewer cuts by the Fed, said Tai Wong, a New York-based independent metals trader. “However, let’s wait and see; as gold has been resilient in the face of strong data during this remarkable run,” Wong added. Despite being known as an inflation hedge, bullion’s appeal tends to fade in an elevated interest rate environment. Bullion prices hit a record high of $2,365.09 on Tuesday. HSBC said in a note that it expects to see a wide trading range of $1,975-$2,500 for gold prices in 2024. “Escalating geopolitical risks significantly bolster gold as hot and cold conflicts, and a record number of elections this year, keep the risk thermometer high,” the note added. The Shanghai Futures Exchange on Wednesday said it will impose trading limits on its gold contracts, following a sharp price rally. Strong buying from Chinese households is “due to the lack of alternative options that (these) households have for investment at the moment with the property sector in crisis and the stock market in the doldrums,” said Kieran Tompkins, commodities economist at Capital Economics. Spot silver fell 0.5% to $28.01 per ounce, after hitting a near three-year high on Tuesday. Platinum edged 1% lower to $969.05 and palladium fell 1.9% to $1,071.75.”
On the day gold closed down $13.90 at $2329.60, and silver closed up $0.07 at $27.96.
On Thursday the price of gold dipped in the early morning trade to $2325.00 and then reversed direction and climbed to highs on the day as softer inflation numbers increase rate cut chances, Middle East tension escalation boosts safe haven demand and interest rates moved lower. I would feel more comfortable with these higher prices if gold consolidated for a time, but all things considered this trade is upbeat and the number of bears looking for a seismic shift in the solid bullish sentiment continues to decrease. My usual wisdom is worth repeating when gold prices get crazy…this always brings out telemarketing hustlers with bad intensions. When buying gold or silver bullion, choose coins or bars with low premiums. Avoid anything else.
Reuters (Ashitha Shivaprasad) – Gold edges higher after softer US PPI data – “Gold prices firmed on Thursday after softer-than-expected U.S. producer prices data boosted hopes for U.S. rate cuts this year, while persistent geopolitical concerns added to the metal’s shine. Spot gold rose 0.6% at $2,346.23 per ounce, as of 1347 GMT. On Tuesday, bullion prices hit an all-time high for an eighth straight session. U.S. gold futures was up 0.6% at $2,362.20. Helping bullion, the U.S. dollar and Treasury yields ticked lower after the data. A Labor Department report showed the Producer Price Index (PPI) rose 0.2% month-on-month in March, compared with a 0.3% increase expected by economists polled by Reuters. “The PPI data came a bit cooler than expected and this keeps alive the hopes of possible rate cuts by year-end – as a result gold is up,” said David Meger, director of metals trading at High Ridge Futures. “Central bank buying and geopolitical uncertainty continue to be the pillars of support for the gold market,” Meger added. The Fed could start interest-rate cuts as early as its late-July meeting, traders bet, after the inflation data. Gold is traditionally known as an inflation hedge but higher interest rates reduce the allure of holding non-yielding gold. Meanwhile, data on Wednesday showed that showed U.S. consumer prices increased more than expected in March. “For the next leg higher (in prices), we still need to see a return of gold exchange-traded-fund (ETF) demand and that requires the Fed indicating a rate cut,” said UBS analyst Giovanni Staunovo. Spot silver edged 0.6% higher to $28.14 per ounce. Platinum rose 2.2% to $981.10 and palladium lost 0.5% to $1,045.75. Elsewhere, diversified miner Sibanye Stillwater said it could cut over 4,000 jobs as it restructures its South African gold operation. It has already cut about 2,000 jobs at its platinum group metal (PGM) operations.”
On the day gold closed up $25.20 at $2354.80, and silver closed up $0.22 at $28.18.
On Friday the price of gold initially reached new highs, further encouraging the bullish scenario and then, out of nowhere reversed direction, and finished the day only mildly in the green. Of course, this has even veteran traders scratching their heads. But this turn of events is a good reminder to everyone that it does not pay to completely rely on the general trend or the latest technical picture when it comes to the metals. They, even in the best of times, have always been subject to violent changes in direction. It is probably a good bet to say that 10 years from now even these prices will seem cheap. But keeping your seat belt secured makes good sense in the meantime. The phones across our trading desk are quiet, what a change from yesterday when you could not get into the parking lot. How aggressively investors buy this dip will give veteran traders a better idea of where we are in this latest pricing cycle.
Reuters (Ashitha Shivaprasad) – Gold scales record peak as geopolitical risks boost appeal – “Gold prices hit a record peak on Friday as investors rushed to safe-haven investments amid Middle East tensions and Chinese economic challenges. Spot gold was up 1% at $2,397.84 per ounce as of 9:29 a.m. ET (1329 GMT) after hitting a record high of $2,400.35. Prices were up nearly 3% for the week. U.S. gold futures gained 1.8% to $2,414.80. “The positive factors for gold outweigh the negative. The heightened tensions in Middle East is the main driver for gold’s recent surge,” said Chris Gaffney, president of world markets at EverBank. The United States expects an attack by Iran against Israel but one that would not be big enough to draw Washington into war, a U.S. official said on Thursday. “Gold continues to go from strength to strength as we are witnessing fear of missing out on clear display,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note. “Fear of missing an ongoing rally creates a strong buy-on-dip mentality, in the process reducing the risk of recently established longs being challenged.” Elsewhere, Thursday’s U.S. Producer Price Index (PPI) came in softer than expected, a day after March’s hot Consumer Price Index (CPI). “Gold has pushed back against some data that should have typically been negative. It will be somewhat healthy to see a correction in the bulls market, but the trend will continue to be positive,” Gaffney added. Bullion also got a boost from data that showed China’s exports contracted sharply in March while imports unexpectedly shrank. On the physical side, China’s physical gold premiums rose this week, driven by strong demand to shore up a depreciating yuan while soaring prices dulled activity in India. Spot silver rose 3% to $29.33 per ounce, its highest level since early 2021. Platinum rose 2% to $999.00 and palladium firmed 3% to $1,077.50.”
On the day gold closed up $1.40 at $2356.20 and silver closed up $0.08 at $28.26.
Platinum closed up $14.40 at $990.50, and palladium closed up $18.80 at $1057.70.
Jim Wycoff (Kitco) – “Technically, the gold futures bulls have the strong overall near-term technical advantage. A seven-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $2,500.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,300.00. First resistance is seen at today’s contract high of $2,418.20 and then at $2,435.00. First support is seen at the overnight low of $2,388.60 and then at $2,350.00. The silver bulls have the strong overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing May futures prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at $27.00. First resistance is seen at the overnight high of $29.315 and then at $29.50. Next support is seen at the overnight low of $28.485 and then at $28.00.”
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