Gold – Bullish Excitement Builds
Commentary for Friday, August 16, 2024 (www.golddealer.com) – Today gold closed up $45.50 at $2498.60, and silver closed up $0.44 at $28.78. While the price of gold this week was typically choppy, this “up and down” trade finished on a bright bullish note as gold promised a close about the vaulted $2500.00 mark in the near future. The promise of lower interest rates, increased safe haven demand, and a positive technical picture have the bulls smiling into the weekend. In my mind if gold moves above $2500.00 it will bring in fresh investors but at the same time it could turn “frothy”, in a kind of back and forth action which may induce profit taking in the shorter term. If you are new to buying gold and silver bullion, consider taking smaller steps into this market over a longer period of time. Ignore the usual “get rich quick” schemes from telemarketing hustlers. Shop prices carefully before making decisions and save yourself some money. Last Friday gold closed at $2432.10 / silver at $27.49. On the week gold was up $66.50, and silver was up $1.29.
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 the price of gold moved to daily highs ($2470.00) in a dramatic climb from the open. This is a great start to the week and should continue to support bullish sentiment as safe haven demand gets a boost from growing problems in the Middle East and the Ukraine.
The Consumer Price Index (CPI) for July will be out Wednesday but traders are not expecting any inflation surprises. What we are looking at this morning is not new; it is a predictable market supported at the higher end of its current range. The price of gold is still capped because of an aggressive Fed interest rate policy which may not change much before the election. Investor patience should eventually pay dividends but be prepared to wait until early next year.
FXEmpire (James Hyerczyk) – Will U.S. Inflation Data Trigger a Gold Rally? – Gold Prices Firm Ahead of U.S. Inflation Data Release – Gold prices edged higher on Monday, driven by growing anticipation of a U.S. interest rate cut and escalating geopolitical tensions. Investors are now closely watching the upcoming U.S. inflation data, which could provide critical clues for future Federal Reserve monetary policy decisions. At 11:05 GMT, XAU/USD is trading $2443.40, up $12.13 or +0.50%. Market Awaits Inflation Data for Fed Cues – Traders are currently pricing in a 49% probability of a 50 basis points rate cut by the Federal Reserve in September, according to CME Group’s FedWatch tool. The U.S. Producer Price Index (PPI) and Consumer Price Index (CPI), scheduled for release on Tuesday and Wednesday, respectively, will be scrutinized for indications of inflationary pressures. Expectations are that the PPI will show a modest increase in wholesale prices, while the CPI is anticipated to maintain its recent downward trend, reflecting an annual inflation rate of around 3%. UBS analyst Giovanni Staunovo highlighted the importance of the inflation figures, noting that the data will likely influence whether the Fed opts for a 25 or 50 basis points cut, potentially driving higher volatility in gold prices. Geopolitical Tensions Provide Additional Support – Geopolitical risks are also bolstering gold prices. Heightened military activity near Ukraine’s border and ongoing tensions in the Middle East, particularly involving Hamas and Israel, are adding to market uncertainty. Mike Ingram, a market analyst at Kinesis Money, remarked that gold’s technical position remains strong, with major resistance levels approaching near all-time highs at $2,468. Treasury Yields and Economic Data in Focus – On the economic front, U.S. Treasury yields increased on Monday as investors braced for the latest inflation data. The 10-year Treasury yield rose slightly to 3.953%, while the 2-year yield was up at 4.063%. The PPI and CPI releases this week are expected to shed light on whether the Fed might shift its stance on interest rates, especially after a recent softer jobs report that stoked recession concerns. Market Forecast: Bullish on Gold – Given the mix of geopolitical tensions, anticipation of U.S. inflation data, and potential rate cuts by the Federal Reserve, the outlook for gold prices appears bullish. If inflation data aligns with or falls below market expectations, gold may see a significant boost, potentially challenging previous record highs. Traders should watch for heightened volatility in the short term as the market reacts to these key events. Technical Analysis – XAU/USD is edging higher on Monday, solidifying its position above the new support level at $2,418.47. Major support remains at the 50-day moving average of $2,373.23. The daily chart suggests the market has a clear path to test resistance at $2,477.73 and $2,483.74. However, if the 50-day MA fails to hold, prices could drop by as much as $100.”
On the day gold closed up $30.30 at $2462.40, and silver closed up $0.43 at $27.92.
On Tuesday the price of gold dipped in early trading, reaching $2458.00 but quickly reversed direction moving to session highs of $2472.00 as traders bought the weakness. The July PPI (Producer Price Index) suggests that inflation may be cooling to some degree. This of course would give the Fed more latitude with interest rate decisions. But the sudden push from daily lows to daily highs today underlines a rather fidgety market. This reflects a great deal of uncertainty and subjects the price of gold to price swings based on short term perception.
Not the best way of approaching the physical market but investors and speculators across our trading desk are consistent in buying weakness in both gold and silver. The general feeling being that sooner or later the Fed will be forced to lower interest rates and metal prices will benefit. There was even insider talk today that the Fed, already behind the inflation curve, will be forced to lower rates by half a point in September. I think this is unlikely, because we are on a reliable course to lower interest rates. But this kind of sensationalism pumps up bullish sentiment and is great at bringing those patiently waiting on the sidelines back into the action.
Reuters (Polina Devitt) – Gold edges lower on profit-taking, US inflation data in focus – “Gold prices fell on Tuesday as investors locked in profits after the metal closed at an all-time high in the previous session and ahead of key U.S. inflation data that could influence bets around the Federal Reserve’s monetary policy path. Spot gold was down 0.2% at $2,468.33 per ounce by 1259 GMT. Prices on Monday rose 1.7% to $2,472, a record high for the closing price. Non-yielding gold is up 20% so far this year, after spot prices touched a record high of $2,483.60 on July 17 on improved market confidence that the Fed would cut interest rates in September. “There is for sure some taking money off the table as we got close to $2,480. If the selling does not go below $2,430, then we have a solid base to try $2,500 as volatility in the geopolitical spectrum is still quite high,” a trader said. Fears that the conflict in Gaza could turn into a broader Middle East war have escalated after the killing of Hamas leader Ismail Haniyeh in Iran last month. U.S. producer prices increased less than expected in July, indicating that inflation continued to moderate, data showed on Tuesday. Traders now await U.S. July consumer price index (CPI) data on Wednesday and the retail sales data on Thursday. Both sets of the data are a major risk event for gold that are likely to shape expectations around what the Fed does in September, said FXTM senior research analyst Lukman Otunuga. Analysts at ANZ raised their year-end price target for bullion to $2,550 betting that the start of the Fed’s cutting cycle would attract strategic investment in gold. With the expected nearing of rate cuts, global physically backed gold exchange-traded funds (ETFs), a crucial category of demand, started purchases again after several years of outflows and so far have seen three consecutive months of inflows. Gold ETFs, storing bullion for investors, saw net inflows of 48.5 metric tons ($3.7 billion) in July, the largest monthly inflow since March 2022, according to the World Gold Council. Among other metals, spot silver fell 1.1% to $27.71 per ounce, platinum rose 0.4% to $940.10, and palladium added 1.1% to $929.61.”
On the day gold closed up $4.30 at $2466.70 , and silver closed down $0.22 at $27.70.
On Wednesday gold held the $2470.00 / $2475.00 range in the early trade but dipped to session lows of $2440.00 as US inflation numbers cooled. Higher interest rates have created strong headwinds for the metals, yet safe haven demand grows over the troubled Middle East. These two factors oppose each other and so we may be in for further volatility.
The large dip in the price of gold today is likely the result of another profit taking round. And frankly I’m surprised we are not seeing more sellers at these lofty prices in gold and silver. Especially within our customer base from people who have been planning for higher prices over the past several decades. But this is not the case, we still see few bullion sellers. So, the average bullion buyer may see even higher prices down the road and is willing to “wait and see”.
Reuters (Ashitha Shivaprasad) – Gold hovers near all-time high, US inflation data on radar – “Gold prices hovered near record highs on Wednesday, steered by expectations of a Federal Reserve rate cut and persistent Middle East tensions, while the spotlight shifted to U.S. inflation data. Spot gold was up 0.4% to $2,474.04 per ounce by 1051 GMT, shy of the record high of $2,483.60 scaled last month. U.S. gold futures rose 0.2% to $2,513.20. U.S. producer prices increased less than expected in July, data showed on Tuesday, ahead of U.S. consumer price index data due later at 1230 GMT. Economists expect consumer prices to have risen 0.2% month-on-month in July, with year-on-year core inflation seen slowing slightly to 3.2%. If the data confirms the slowdown in U.S. price growth, bets of a 50 bp rate cut in September will increase and it is very possible that the price of gold will reach an all-time high, said Ricardo Evangelista, senior analyst at ActivTrades. Markets currently see a 55.5% chance of 50 basis point U.S. rate cut in September, according to the CME FedWatch Tool. Bullion is traditionally considered a hedge against geopolitical and economic risks, and lower interest rates reduce the opportunity cost of holding the asset. “I think that economic indicators will continue to drive Western investors towards the asset of gold,” said World Gold Council market strategist Joseph Cavatoni. In the Middle East, Iran has vowed a severe response to the killing of the leader of Hamas late last month. Israel has neither confirmed or denied its involvement. Concerns about the fallout of a potential Iranian strike on Israel is playing into investors’ minds and feeding demand for safe-haven gold, Evangelista added. Spot silver gained 0.3% to $27.92 and platinum rose 0.7% to $942.65. Palladium gained 0.5% at $943.58.”
On the day gold closed down $27.30 at $2439.40, and silver closed down $0.45 at $27.25.
On Thursday the price of gold moved higher in the early trade reaching $2470.00 in the early trade, reversed direction moving to session lows of $2435.00 and finally finished the day in the green around $2450.00. This “up and down” pricing model has been consistent of late as traders try to piece together a more precise picture of the current FOMC interest rate policy. Not an easy job as there are many opposing US economic forces creating cross winds.
And the inflation number is still a big loose end. But today we may be able to see some light at the end of this tunnel. Two Fed officials joined the chorus suggesting that an interest rate cut at the upcoming September meeting is a good possibility. This fresh news reverses previous skepticism. This is a semi-big deal, the catch being that most governors will not go for the more dramatic 50 point reduction in interest rates. Insiders figure a modest 25 point reduction may be the concession. Any reduction, however, in the short term will improve bullish sentiment.
Reuters (Rahul Paswan) – Gold pares gains as dollar, bond yields climb after strong US data – “Gold prices pared gains on Thursday as the dollar and Treasury yields rose after stronger-than-expected U.S. economic data that could influence the size of interest rate cuts from the Federal Reserve. Spot gold was flat at $2,445.67 per ounce, as of 10:18 a.m. EDT (1418 GMT), after rising as much as 0.9% earlier in the session. U.S. gold futures rose 0.2% to $2,484.10. “Retail sales being so positive that shows the economy is strong and that has kind of turned the markets, and the dollar is regaining some of its strength and gold’s losing some of its luster,” said Chris Gaffney, president of world markets at EverBank. U.S. retail sales increased 1.0% last month after a downwardly revised 0.2% drop in June, the Commerce Department’s Census Bureau said. Separately, a Labor Department report showed the number of Americans filing new applications for unemployment benefits came in at 227,000 for the week ended Aug. 10, compared with an estimate of 235,000. Following the U.S. data, the dollar rose 0.4% against its rivals, making gold more expensive for other currency holders, while benchmark 10-year Treasury yields also jumped. Meanwhile, two Fed officials on Thursday lined up behind the possibility of an interest rate cut at the U.S. central bank’s policy meeting next month, reversing their previous skepticism about lowering borrowing costs too soon. Markets see a 100% chance of a U.S. cut rate in September, according to the CME FedWatch Tool. However, strong data has taken 50 basis point cut off the table. A low interest rate environment tends to boost non-yielding bullion’s appeal. “The political uncertainties will continue to be positive for gold prices, but they’ll also add to the volatility,” said Jeffrey Christian, managing partner of CPM Group. Among other metals, spot silver gained 2.1% to $28.15 per ounce. Platinum jumped 4.1% to $956.80 per ounce and palladium rose 0.7% to $941.49.”
On Thursday gold closed up $13.70 at $2453.10, and silver closed up $1.09 at $28.34.
On Friday the price of gold has everyone’s attention as traders anticipate a move above the vaulted $2500.00 level in the near future. Fed Chairman Powell’s comments at Jackson Hole a week from now will give everyone a better idea of what the FOMC has in mind, but the general feeling is that bullish sentiment will continue to improve. And higher prices in the metals is only a matter of time. I’m my usual cautionary self when everyone is happy and expecting higher prices. I consider the downside losses if the latest scenario balloon loses altitude. But there is no arguing with success so there are not many bears in the woods these days. Which usually means a bit of caution regardless of the fireworks is a good idea. Whatever your decision be prepared to buy low premium physical bullion and hold it for the long term.
Reuters (Brijesh Patel and Rahul Paswan) – Gold hits record high on softer dollar, rate-cut hopes – “Gold prices rose to an all-time high on Friday as a cocktail of factors ranging from a weaker dollar, growing expectations for a U.S. interest-rate cut in September to geopolitical tensions in the Middle East bolstered demand for bullion. Spot gold was up 1.3% to $2,487.66 per ounce by 09:30 a.m. EDT (1330 GMT). Gold gained 2.5% so far this week. U.S. gold futures rose 1.4% to $2,526.40. The dollar index fell 0.3% and was on track for a fourth week of losses, making gold more appealing for buyers overseas. “Gold surged to a fresh all-time high after two weeks of extremely choppy trading as bulls finally impose their will,” Tai Wong, a New York-based independent metals trader, said. “The $2,500 hurdle is likely to fall soon though attention will shortly focus on Fed Chair Powell’s speech at Jackson Hole a week from today to provide direction for a more detailed outlook on the upcoming rate cuts.” The July releases of the producer price index and consumer price index this week indicated inflation was subsidizing, which could keep the U.S. Federal Reserve on track to start its monetary easing cycle with a 25-basis point rate cut next month. Traders look forward to minutes from the Fed’s previous policy meeting and Fed Chair Jerome Powell’s outlook of the U.S. economy next week. In other news, the Israeli army on Friday ordered a fresh evacuation of areas in southern and central Gaza previously designated as a humanitarian safe zone, saying they had been used by Hamas as a base to attack Israel. Bullion is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low-interest-rate environment. Elsewhere, silver fell 0.2% to $28.32 per ounce and platinum rose 0.1% to $953.75. Palladium eased 0.2% to $942.25. All metals were on track for weekly gains.”
On the day gold closed up $45.50 at $2498.60, and silver closed up $0.44 at $28.78.
Platinum closed down $2.70 at $957.30, and palladium closed up $6.10 at $941.70.
Jim Wycoff (Kitco) – “Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,537.70. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,400.00. First resistance is seen at this week’s high of $2,519.70 and then at $2,524.00. First support is seen at the overnight low of $2,488.20 and then at Wednesday’s low of $2,476.20. September silver futures bears have the overall near-term technical advantage. However, a nearly three-month-old downtrend on the daily bar chart has stalled out. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the August high of $29.355. The next downside price objective for the bears is closing prices below solid support at the August low of $26.505. First resistance is seen at this week’s high of $28.58 and then at $28.815. Next support is seen at $28.00 and then at this week’s low of $27.23.”
Brothers and Sisters, thank you for your friendship. If you have unusual circumstances, need cash or a special favor – talk to Harry or Eric or Ken Slater. We are now back to our traditional business model. Thank you for your patience. Blessings. Richard Schwary
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