Commentary for Friday, Dec 13, 2024 – Today gold closed down $31.50 at $2656.00, and silver closed down $0.57 at $30.66. This week the gold bulls were expecting a solid, no problems week because Monday, Tuesday, and Wednesday the price of gold was higher by $100.00. Thursday fate intervened, throwing a monkey wrench into the works as this powerful bullish market reversed direction and lost half of its early weekly gains. This sudden turnaround was unexpected enough to rewrite the bullish playbook in the short term, so traders are once again cautious. Trying to figure out how these conflicting ideas will change the price dynamic 2025 is not easy. Typical concerns will be the effect of a continued slide in European interest rates. What our new President might do with his tariff powers, even to friendly nations. And the growing concern over increasing tension in the Middle East. The World Gold Council believes gold may be caught in a tug of war next year creating a kind of neutral price action as investors gauge the health of the world economy. I’m not nearly as pessimistic. As soon as crosswinds resolve themselves – gold and silver will have set the stage for fresh record prices, with the usual proviso that patience will be rewarding. Last Friday gold closed at $2638.60 / silver at $31.19. On the week gold was higher by $17.40, and silver was down $0.53.
Please note that FedEx is no longer asking for delivery signatures. They are scanning IDs. We have complained to FedEx, but they remain resolute. Scanned identification is safer, but if you have a problem with this decision, please make your feelings known to FedEx. Unfortunately, the present delivery time for the USPS alternative is 2-3 weeks.
Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on a new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for understanding.
On Monday morning gold quickly moved higher on the open touching $2675.00 as the bulls returned from the weekend with a smile as safe haven buying once again moved to center stage. Rising tension in the Middle East and a weaker dollar also helped to create higher gold prices.
I believe, however, that this latest bullish note is short term. Gold and silver will likely continue to consolidate because the dollar may remain strong into the first quarter of 2025.
That being said, it is hard to believe that dollar strength will remain in place throughout next year. Especially because a quarter point decrease in interest rates is already baked into the cake this December. The experts believe that lower rates are in the cards as the Fed continues to “feather in” a soft landing. President Trump likes FOMC Chief Powell. Over the weekend the President said he would not replace him, so the world is breathing a little easier.
Reuters (Anjana Anil) – Gold hits 2-week high on renewed China buying, Fed rate cut hopes – “Gold prices hit two-week highs on Monday, climbing more than 1% on renewed buying of the metal by China’s central bank following a six-month hiatus, with bullishness amplified by anticipation of a U.S. Federal Reserve interest rate cut next week. Spot gold gained 1.5% to $2,673.87 per ounce, as of 9:55 a.m. ET (1455 GMT). U.S. gold futures added 1.4% to $2,697.30. “The most important factor is news that People’s Bank of China reported that it again resumed its gold purchases … the market is getting hopeful that we could see other central banks follow suit and we could see a resumption of record territory buying,” said Bart Melek, head of commodity strategies at TD Securities. Resumption of Chinese purchases may support investor demand in the country which in 2023 was world’s largest official sector buyer of gold, which has been muted since the PBOC paused its 18-month buying streak in May. Robust central bank buying has been a key pillar in supporting gold’s record rally this year, alongside monetary policy easing and geopolitical tensions. The U.S. Fed started its interest rate easing cycle with an unusually large 50 basis point cut in September, followed by a 25bp cut in November. Traders are pricing an 87% chance of another quarter-percentage-point rate cut from the central bank at its Dec. 17-18 meeting. “However, if the Fed pauses and the underlying messages turn out to be cautious, that would put some interim pressure on the gold price,” said StoneX analyst Rhona O’Connell. “For the medium term the geopolitical and bank-stress tailwinds exceed any headwinds.” Turbulence in the Middle East increased over the weekend as Syrian rebels took control of Damascus following a 13-year civil war, forcing President Bashar al-Assad to flee to Russia. Zero-yielding bullion thrives in a low interest rate environment and normally attracts investors during times of intense political and economic instability. Spot silver added 3.9% to $32.21 per ounce, platinum rose 2.8% to $955.40, and palladium jumped 4% to $994.27.” At 12:25 GMT, XAU/USD is trading $2677.05, up $16.73 or +0.63%.
On the day gold closed up $26.30 at $2664.90, and silver closed up $1.03 at $32.22.
On Tuesday the price of gold rose to recent highs this morning ($2695.00), a bit surprising really considering that at the same time the Dollar Index also made weekly highs (106.50). This suggests that the possibility of lower interest rates and increased safe haven demand is pushing traders to the bullish side of the metals question. The experts are suggesting that these higher prices are the result of technical buying and increased central bank demand. Which makes sense considering the growing local and geopolitical problems worldwide.
FXEmpire (James Hyerczyk) – Fed Rate Cut Bets and China Demand Propel Prices Higher – “Gold prices climbed sharply on Tuesday, breaching the 50-day moving average at $2668.59, a move fueled by trend-following traders and buy stops. This level now acts as support, alongside the 50% Fibonacci retracement level at $2663.51. Should the bullish momentum persist, gold prices may target the Fibonacci level at $2693.40. While initial selling pressure at this level is expected, a breakout could drive prices toward $2721.42, a key resistance marked by the November 25 peak. Conversely, failure to hold support at $2663.51 could trigger a correction, with prices likely retreating to the $2629.13-$2607.35 range. Fed Rate Cut Bets Lift Gold Prices – Gold’s appeal was buoyed by growing optimism for a Federal Reserve rate cut in December, reinforced by Friday’s U.S. jobs report. Traders now assign an 86% probability to a 25-basis-point cut, up from 73% last week, according to the CME FedWatch tool. The precious metal typically performs well in low-interest-rate environments, as lower yields reduce the opportunity cost of holding non-yielding assets like gold. Investors are closely monitoring the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data due Wednesday and Thursday, respectively. A stronger-than-expected CPI print could temper expectations for further Fed cuts beyond December, potentially capping gold’s gains. China Resumes Gold Buying – China’s central bank resumed gold purchases in November after a six-month hiatus, increasing its reserves to 72.96 million fine troy ounces. This move comes as Beijing signals a shift to an “appropriately loose” monetary policy, with plans for a more proactive fiscal approach in 2024. The resumption, following an 18-month buying streak that paused in May, suggests sustained interest from the People’s Bank of China (PBOC) despite gold’s elevated price levels. This renewed demand could bolster prices, particularly if Chinese investors follow suit. Geopolitical Tensions Drive Safe-Haven Demand – Geopolitical risks, including escalating tensions in the Middle East, provided additional support for gold. Reports of Israeli forces advancing in southern Syria and conducting strikes near Damascus underscored gold’s role as a safe-haven asset during times of instability. Bullish Outlook with Key Risks – Gold prices are expected to remain bullish in the short term, targeting $2693.40, with a breakout setting the stage for $2721.42. However, hotter-than-anticipated U.S. inflation data could challenge this outlook by curbing expectations for prolonged Fed easing. Elevated geopolitical risks and China’s renewed gold purchases are likely to provide underlying support. Traders should watch key support at $2663.51 for signs of a potential reversal.”
On the day gold closed up $32.70 at $2697.60, and silver closed up $0.14 at $32.36.
On Wednesday the price of gold dipped slightly on the open and then surged to session highs of $2720.00. This latest bit of bullishness is fueled by the notion that because the latest inflation data came in within expectations the Fed will follow through with a small interest rate reduction in December. So, the stage is set for a less aggressive interest rate policy for the FOMC, that may be the spark traders are looking for to further encourage bullish sentiment. This Thursday traders will also be looking at the PPI (Producer Price Index).
Higher prices are also the result of increased physical demand worldwide and are further supported by rising geopolitical tension in the Middle East. Keep in mind that higher gold and silver prices may also encourage profit taking as this trading year draws to a close. I would not over emphasize this factor because insiders see the possibility of fresh record highs for gold and silver in 2025. Finally, the number of bears looking for lower prices will decrease if interest rates move lower. If rates move higher the metals may turn defensive and weaken.
Reuters (Anusree Ashish Mukherjee – Anjana Anil) – Gold advances as inflation data fuels Fed rate cut optimism – “Gold gained on Wednesday after an inflation print came in line with expectations, boosting the likelihood of a Federal Reserve rate cut next week, while investors awaited U.S. Producer Price Index (PPI) data for further direction on monetary policy. Spot gold climbed 0.3% to $2,700.87 per ounce, as of 9:21 a.m. ET (1421 GMT). U.S. gold futures rose 0.6% to $2,733.60. The U.S. consumer prices rose 0.3% on a monthly basis in November, data from the Labor Department showed. Annually, it climbed 2.7% after increasing 2.6% in October. Economists polled by Reuters had forecast the CPI rising 0.3% and advancing 2.7% year-on-year. “Gold is higher on the back of the premise that CPI data coming in benign or certainly in line with expectations, inflation not rising any further but remaining steady will allow the Fed to almost certainly cut rates at the next FOMC meeting,” said David Meger, director of metals trading at High Ridge Futures. Traders predict a 96% chance of a further 25-basis-point cut at the Fed’s Dec. 17-18 meeting, compared with an about 86% chance seen before the inflation report, CME’s FedWatch Tool. All eyes are now on the PPI data, due on Thursday for further clarity on Fed rate cut path. “We expect gold to reach fresh new highs in 2025, with the elevated bond yields we have today easing over the course of the year and geopolitical risks remaining a supportive driver of gold sentiment,” Nitesh Shah, commodity strategist at WisdomTree, said. “We believe gold could reach $3,000/oz by the end of 2025.” Gold, traditionally reputed as a safe investment during times of geopolitical uncertainty, thrives when interest rates are low. In the Middle East, Israeli air attacks across the Gaza Strip killed at least 38 Palestinians on Wednesday. Spot silver shed 0.3% to $31.79 per ounce, platinum dropped 0.8% to $934.73 and palladium fell 1.2% to $956.75.”
On the day gold closed up $36.20 at $2733.80, and silver closed up $0.20 at $32.56.
On Thursday the price of gold crashed through $2700.00 support in a free fall which took traders by surprise and did not find much support until prices reached $2675.00. Not a good finish to a week which held great promise for the bulls as gold moved higher by almost $100.00 since Monday. So, everyone is suffering a bit of whiplash. And while the technical guys will reset today what happened will take some time to figure out. The spark to this latest round of selling came after today’s hotter than expected inflation report. Which is a bit counterintuitive. Most believe that the FOMC will cut interest rates anyway while the Fed buys time from now through the first quarter of 2025 to “tap the inflation brakes” and make corrections if necessary.
Still, today’s serious drop in prices for both gold and silver will leave the physical market in kind of a mess. Will investors buy cheaper gold and silver, or will they wait and see how this latest weakness unfolds? I guess this amounts to whether you think $2675.00 for gold and $31.00 for silver is cheap enough to at least put your toe in the water. If you tend toward the cautious side, it might be a good bet to wait until early next week and see if these markets calm down.
You might see some bouncing around with the holidays right around the corner, but keep in mind that even with today’s significant dip gold is only about 5% off all-time highs. Which suggests this market has plenty of gas in the tank. The ECB cut interest rates for the fourth time this year by a quarter of a percentage point and kept the door open to a number more next year. ECB chief Christine Lagarde spent a lot of her press conference pointing to the growing strains on the economy and how inflation is now coming down quicker than expected. The longer term changes this may create in Europe remains to be seen but will keep traders at least cautious.
Reuters (Chris Harris and Amanda Cooper) – Global equities retreat after ECB cuts rates; gold falls – “Global stocks were down and major Wall Street indexes fell on Thursday after the European Central Bank cut interest rates for a fourth time this year, and gold prices dropped. European stocks pared losses after the European Central Bank cut interest rates and kept the door open to further easing in 2025. The Swiss franc weakened after the Swiss National Bank cut rates by half a point, its largest reduction in nearly 10 years. Markets had priced a good chance of a half-point cut in the run-up to Thursday’s meeting. The U.S. dollar rose against a range of other currencies, though it weakened against the yuan . Oil prices eased as a forecast for ample supply in the oil market offset optimism stemming from rising expectations of a U.S. interest rate cut. Wednesday’s inflation reading showed the consumer price index (CPI) rose exactly in line with expectations in November, supporting bets for a Federal Reserve interest rate cut next week. “The market has essentially seen one of the last remaining obstacles that could derail sentiment out of the way”, said Chris Weston, head of research at Pepperstone.”Seeing the coast somewhat clearer for the illustrious seasonal chase of returns to play out into year-end.” Traders now place a 97% chance on a quarter-point Fed cut on Dec. 18. Traders were pricing in 125 basis points worth of interest rate cuts by the ECB end of 2025, according to data compiled by LSEG. “The ECB is on a direct path of consecutive quarter-point cuts until the deposit rate reaches 2%. This market expectation is now being reinforced by even lower economic forecasts,” said Jochen Stanzl, chief market analyst at CMC Markets. The yield on benchmark U.S. 10-year notes rose 2.3 basis points to 4.295%, from 4.271% late on Wednesday. The dollar fell against the Japanese yen after Reuters reported that BOJ policy makers were inclined to forgo a hike on Dec. 19 and wait for more data on wages at the start of next year. The Australian dollar surged on unexpectedly strong employment data, rebounding from Wednesday’s weakness following a Reuters report that Beijing is considering allowing the yuan to depreciate further next year. China is Australia’s top trading partner and the Aussie is often used as a liquid proxy for the yuan. Although economists were almost unanimous in predicting Thursday’s move by the ECB, many had acknowledged that a bigger cut would also be justified given a deteriorating growth outlook and rapidly retreating inflation. In commodities, spot gold fell 1.11% to $2,687.93 an ounce. U.S. gold futures fell 1.73% to $2,686.60 an ounce. Crude oil retreated after rallying this week on the threat of additional sanctions aimed at stifling Russian oil output. U.S. crude fell 0.77% to $69.75 a barrel and Brent fell to $73.10 per barrel, down 0.57% on the day.”
On the day gold closed down $46.30 at $2687.50, and silver closed down $1.33 at $31.23.
On Friday the price of gold continued to see momentum selling from Thursday, reaching $2655.00 in the early trade before traders bought the dip in prices. We also see continued profit taking and book squaring as the end of the year approaches. “We have reached the time of year when convictions are low, and positions are being held on a short leash, meaning any price reversal – in both directions – will quickly be met with position-squaring,” said Ole Hansen, head of commodity strategy at Saxo Bank. Gold is expected to consolidate through year-end before resuming its upward trajectory in 2025, potentially reaching the $3,000 target.
Reuters (Daksh Grover) – Gold poised for weekly gain ahead of potential Fed rate cut – “Gold prices fell on Friday but were still on track to finish the week higher as attention turned to the U.S. Federal Reserve’s December policy meeting at which it is widely expected to deliver its third interest rate cut this year. Spot gold was down 0.4% at $2,671.39 per ounce at 1257 GMT, as the U.S. dollar hovered near its highest in more than two weeks. U.S. gold futures fell 0.6% to $2,692.40. Bullion is still up more than 1% so far this week after a bout of profit-taking was triggered when prices hit a five-week high on Thursday. “We have reached the time of year when convictions are low, and positions are being held on a short leash, meaning any price reversal – in both directions – will quickly be met with position-squaring,” said Ole Hansen, head of commodity strategy at Saxo Bank. Gold is expected to consolidate through year-end before resuming its upward trajectory in 2025, potentially reaching the $3,000 target. Traders are now focused on the Fed’s Dec. 17-18 meeting, with markets predicting a 97% chance of a 25-basis-point rate cut, according to the CME Group’s FedWatch Tool. Fed Chair Powell’s commentary will be scrutinized to gauge the outlook for 2025 as inflation remains above the central bank’s 2% annual target. “Gold prices at $3,000+ or $2,500 is contingent on whether the Fed is ahead or behind the Trumpflation curve; we expect them to be behind, leading to falling real rates and a softer U.S. dollar in the latter half of the year,” Nicky Shiels, head of metals strategy at MKS PAMP SA, said. Spot silver fell 0.5% to $30.80 per ounce. Platinum rose 0.3% to $933.10, while palladium was 0.3% higher at $972.62. Both metals were set for weekly gains.”
On the day gold closed down $31.50 at $2656.00, and silver closed down $0.57 at $30.66.
Platinum closed down $15.30 at $921.30, and palladium closed down $29.90 $953.10.
Jim Wycoff (Kitco) – “Technically, February gold bulls have the overall near-term technical advantage but have faded. Prices are still in an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $2,761.30. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,629.70. First resistance is seen at $2,700.00 and then at the overnight high of $2,716.40. First support is seen at the overnight low of $2,683.00 and then at $2,665.00. March silver futures bulls have the overall near-term technical advantage but have faded. Silver bulls’ next upside price objective is closing prices above solid technical resistance at this week’s high of $33.33. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at the overnight high of $31.63 and then at $32.00. Next support is seen at $31.00 and then at $30.50.”
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