Commentary for Friday, Dec 20, 2024 (www.golddealer.com) – Today gold closed up $36.50 at $2628.70, and silver closed up $0.57 at $29.66. This week the price of gold drifted lower, but it was Friday’s $36.50 bounce to higher ground which got the attention. The bounce was an obvious plus for flagging bullish sentiment and was supported by a Dollar Index which looks like it has topped out, at least in the short term. The big question on everyone’s mind, however, is whether gold has finally found a solid short term bottom in a generally weaker market? What investors may be seeing here is three-fold. First gold had become oversold in a pessimistic marketplace. Second, bullion investors are reentering this market over safe haven concerns as world tensions rise. And third, central banks are restocking at lower prices while anticipating lower interest rates. There is a lot going on, but I believe the patient bullion investor will benefit by seeing less volatility next year and fresh new record highs over the next decade as world debt continues to expand. Last Friday gold closed at $2656.00 / silver at $30.66. On the week gold was lower by $27.30, and silver was down $1.00.
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On Monday morning gold moved between $2648.00 and $2665.00 in the early trade but settled with a mild drift to the downside, suggesting traders have a “wait and see” attitude early in the week. The last FOMC meeting this year will begin on Tuesday and end Wednesday with a statement and press conference from Chief Jerome Powell. Most look for a quarter point interest rate cut which is already factored into today’s pricing model. “China’s central bank restarted gold purchases in November after a six-month pause, and the Asian giant will likely continue to build up its bullion reserves ahead of Trump’s trade wars, according to Vladimir Zernov, Market Analyst at FX Empire.” Still, with the holiday season upon us I would not expect any surprises, higher or lower, relative to the current gold pricing model. With lower interest rates expected in 2025, however, look for higher prices in gold and silver and perhaps fresh record prices.
Reuters (Sherin Elizabeth Varghese) – Gold gains as US yields ease ahead of Fed policy meeting – “Spot gold prices gained on Monday, supported by ongoing geopolitical concerns and lower U.S. Treasury yields, as markets awaited the Federal Reserve’s policy meeting, where a third rate cut and clues on the 2025 outlook are expected. Spot gold was up 0.3% at $2,655.39 per ounce as of 9:56 a.m. ET (1456 GMT). U.S. gold futures slipped 0.1% to $2,674.10. “I think the continuous presence of geopolitical risks are contributing to gold’s strength,” said Nitesh Shah, commodity strategist at WisdomTree. Also, “China has resumed gold buying. So gold is reacting to a multitude of these things,” Shah noted, adding that top consumer China was likely to ramp up policy stimulus to revive its economy, which would further support gold. On the geo-political front, Israel agreed on Sunday to double its population in the Golan Heights, citing Syrian threats despite the moderate tone of rebel leaders who ousted President Bashar al-Assad a week ago. Bullion is considered a safe investment during economic and geopolitical turmoil, while a low-interest rate environment also makes the non-yielding bullion more attractive. The Fed is expected to cut rates by a quarter point at its two-day meeting starting on Tuesday, while updating its outlook for 2025 and beyond. “The economic and political background is generally supportive for gold – but the Fed may cap prices if it points to an extended pause in rate cuts after December,” said StoneX analyst Rhona O’Connell. U.S. 10-year Treasury yields dipped 0.2%, further supporting bullion. Citi projects strong gold and silver demand until U.S. interest rates stabilize, forecasting a peak for both metals in late 2025 to early 2026. Key data releases this week, including U.S. GDP and inflation figures, could further influence market sentiment. Spot silver rose 0.31 to $30.58 per ounce, platinum gained 1.6% to $939.20, while palladium was down 0.2% at $950.47.”
On the day gold closed down $4.60 at $2651.40, and silver closed up $0.04 at $30.70.
On Tuesday the price of gold moved between $2655.00 and $2635.00, with a slight downward bias as traders wait for Wednesday’s confirmation from the FOMC that they will lower interest rates by a quarter point. This is no surprise; the Fed has already signaled this drop, and the now expected lower rate has helped support gold in the process. The attention now turns to an older and more complex FOMC conversation which centers around whether a relatively solid economy will allow the Fed to delay further rate cuts if inflation numbers do not continue lower. Time will tell so patience is required but this scenario does allow the Fed to “have its cake” (controlling inflation) and “eat it too” (enjoy a solid economy with little threat of recession). This balancing act will work for a time, if all parties cooperate. But never really works well because it allows Congress to ignore its debt problem. Which lays the foundation for higher inflation numbers. If you include promised Presidential tariffs for countries who do not play ball you have a confused trade, at the higher end of its current range which is subject to bouts of profit taking. It is worth noting that other countries (the ECB for example) already see signs of recession and are lowering interest rates to counteract this danger. So how will gold react to these rather significant crosswinds? Expect a choppy market (as we have seen) and a bit more downside into 2025. But with generally lower interest rates expected next year look for firm to higher prices.
Reuters (Sherin Elizbeth Varghese) – Gold retreats as traders see slower Fed rate cuts in 2025 – “Gold slipped on Tuesday under pressure from a strengthening U.S. dollar and climbing Treasury yields as investors focused on the Federal Reserve’s final policy meeting of the year with growing expectations of a gradual pace of rate cuts in 2025. Spot gold was down 0.6% at $2,636.89 per ounce, as of 9:18 a.m. ET (1418 GMT). U.S. gold futures shed 0.7% to $2,650.50. The dollar rose 0.1%, making gold pricier for holders of other currencies, while U.S. 10-year Treasury yields hit a four-week high ahead of the Fed’s meeting, where a 25 basis-point rate cut is widely expected on Wednesday. Attention is also on the Fed’s updated economic projections and the dot plot, which could reshape expectations for the rate trajectory through 2025 and 2026. “So the question is, if the Fed going to be more hawkish or more dovish than what the markets are expecting right now. Because of Trump’s agenda, people are expecting the Fed to be more cautious in terms of being open to further rate cuts at this stage,” said Fawad Razaqzada, market analyst at Forex.com. According to CME’s FedWatch tool, the odds of a 25-basis-point rate cut this week stand at 97%, but the chances of a reduction in January are just around 17%. “Heading into the Fed meeting, risks for gold are actually tilted to the downside,” said Zain Vawda, market analyst at MarketPulse by OANDA. Bullion generally thrives in a low-interest rate environment. Meanwhile, U.S. retail sales increased more than expected in November, adding to warmer inflation readings in recent months and suggesting that the Fed could pause rate cuts in January. In other metals, spot silver was down 0.7% to $30.30 per ounce, platinum shed 0.3% to $932.93, and palladium fell 1.5% to $932.75. Traders are also eyeing key U.S. GDP and inflation data later this week for further cues.”
On the day gold closed down $7.00 at $2644.40, and silver closed down $0.13 at $30.57.
On Wednesday the price of gold drifted lower, trading between $2648.00 and $2636.00, so for now trades are marking time waiting for the latest information from the FOMC. While this time around the Fed has pretty much guaranteed that it will lower interest rates by a quarter point, the more important question is what do they have on their minds in 2025? The tea leaves are still a bit cloudy as to whether the Fed will continue dovish or turn bearish because this decision depends on whether rates will continue lower, flatten out, or move higher. My best guess is that the FOMC may want to keep rates only slightly elevated until there is some kind of confirmation as to which way inflation is moving. Not the best of outcomes but you must give Chief Powell credit for keeping his eye on the ball and not letting the Trump win upset the apple cart.
While gold closed at $2636.50 it was only down $7.60 on the day. And silver closed at $30.41, down $0.16. It was the bearish aftermarket which does not bode well for bullish sentiment. Gold took a nosedive of $50.00 testing recent lows of $2583.00, and silver lost $1.04 also testing recent lows of $29.20 in a matter of hours. This significant drop in prices was large enough to rattle the paper trade and provide a red flag to the physical market. What created this sand storm remains to be seen but Chief Powell’s may provide clues: ‘I think it’s pretty clear we have avoided a recession…the outlook is pretty bright for our economy’ – Federal Reserve chair Jerome Powell used the final FOMC rate decision of 2024 – and the last Fed meeting under Biden’s presidency – to carefully sidestep the implications of the inflationary policies proposed by the incoming Trump administration, while focusing on the positive gains the central bank has in fighting inflation and supporting employment.” This is another short term “snapshot”, but the bulls are off to a bad start, and there could be follow through selling on Thursday. Still, I’m not nearly as pessimistic as some: at today’s lows of $2586.00 gold is off 7.5% from all-time highs of $2788.00. During this transition compare the current price of gold to its all-time highs and you will see from a percentage standpoint it is not exactly falling out of bed over Powell’s most recent comments. Whether today’s price range turns out to be a good place to buy weakness remains to be seen. Prices may continue to drift lower in the short term, but in the long term, lower interest rates will confirm the still intact rising price trend through the next decade.
FXEmpire (Christopher Lewis) – Gold Continues to Wait For FOMC – “The gold market is slightly negative during the session on Wednesday in the early hours. However, I suspect that we are simply killing time between now and the FOMC meeting. We are still in an uptrend; the reality is that the market needs something to get it moving. Technical Analysis – The gold market has been very quiet in the early hours of Wednesday as we are hanging around the 50-day EMA. The 50-day EMA has been like a magnet for price most of the last couple of weeks, but I think really what’s coming into the purview of the psyche of the market would be the fact that the FOMC meeting is late in the day. The FOMC is expected to cut interest rates by 25 basis points in the United States, but you also have to understand that the market will be paying close attention to the press conference and the statement to get an idea as to where the Federal Reserve may go. This will have an outsized influence on the gold market and therefore, I think you’ve got a situation where we might get a lot of volatility late in the session. That being said, there is a lot of support underneath that comes into the picture, especially near the $2,600 level, and the uptrend line. So ultimately, this is a situation where I think if we do drop, there probably are going to be buyers willing to get involved. If we were to break down below the $2,500 level, then we’re talking about wiping out the 200 day EMA and dropping rather drastically. Gold is struggling at the moment, but I think what it’s trying to do is find some type of range in order to trade in. The FOMC, of course, will have a major influence, but we also have the Bank of Japan and the Bank of England, both having interest rate decisions, which will have an effect as well, not as drastic as the Federal Reserve, but it is still part of the puzzle. I’m still bullish on gold in the longer term. But as we drift into the end of the year, and wait for central banks, I’m not expecting a lot right here, at least nothing sustainable, but a break above the $2720 level then opens up the possibility of the longer term uptrend continue.” Silver Continues to Look For Support – The silver market has been drifting a bit lower in the early hours of Wednesday, as the world waits for the FOMC interest rate decision, press conference, and statement. The silver market is approaching $30, which has been very important more than once. Technical Analysis – Silver has fallen a bit in the early hours on Wednesday as we wait for the FOMC results. The interest rates are expected to be cut by 25 basis points in the United States, but the real question now is going to be, how does the central bank sound going forward? Are they going to be hawkish or dovish? The Fed funds futures rate market is suggesting that there’s about an 80% chance that the Federal Reserve sits still in January, which higher rates does tend to cause a little bit of an issue for metals. That being said, central banks around the world are cutting rates in general, so what you’ll probably end up seeing is precious metals moving higher against other currencies, not the US dollar as much. That doesn’t mean that we can’t rise here, it’s just that it might be a little bit more of a fight back and forth to the upside. We are approaching a significant support region right around the $30 level, which of course has been important support and resistance multiple times over the last several months, but it’s also a large round psychologically significant figure and right between the 50 day EMA and the 200 day EMA indicators, which typically is an area that you start to see a lot of volatility and you will eventually see the market escape from. Furthermore, we also have a trend line right there as well. So, it all ties together for it being a very difficult market to break down. However, if we were to break down below the $29.70 level, then you can make a strong argument for a head and shoulders pattern kicking off, perhaps opening up the possibility of a drop down to $25. So, pay close attention.”
On the day gold closed down $7.90 at $2636.50, and silver closed down $0.16 at $30.41.
On Thursday the price of gold initially rose to daily highs of $2626.00 but the market quickly turned around and tested fresh recent lows of $2590.00 as the last few days of bearish selling continues and investors become increasingly defensive. Wednesday’s significant $50.00 dip in the aftermarket has rattled this trade and opened the bearish door to the notion that the Fed has been turning hawkish since its last revelation. Consider the latest technical look from expert (Kitco – Jim Wyckoff) – “Technically, February gold futures bulls have the slight overall near-term technical advantage but are fading. A price uptrend on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close above solid resistance at $2,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $2,565.00.” So, is it time to jump out the window? I don’t think so but if you are a physical bullion investor you may want to consider adjusting your holdings.
Reuters (Daksh Grover) – Gold rebounds from one-month low after Fed’s hawkish signal – “Gold prices gained on Thursday, rebounding from a one-month low, as the market digested the U.S. Federal Reserve’s hint of a gradual policy easing next year, with investors awaiting more data to gauge the economy’s health. Spot gold gained 0.7% to $2,605.20 per ounce as of 1301 GMT, having hit its lowest since Nov. 18 earlier in the session. U.S. gold futures fell 1.3% to $2,619.50. Markets initially dropped after Fed Chair Jerome Powell hinted at fewer rate cuts next year, but quickly recovered as investors recognized this aligned with recent expectations, said StoneX analyst Rhona O’Connell. The Fed’s “dot plot” released on Wednesday forecast two quarter-point rate cuts next year, aligning with recent futures market trends. Powell said an interest rate hike does not appear to be a likely outcome as the Fed works to bring inflation down to its 2% target. The focus now will be on key U.S. GDP and initial jobless claims data later in the day, besides core PCE data — the Fed’s preferred inflation measure — on Friday. “Gold sold off, showcasing once more that it is not an inflation hedge per se, but regained some lost ground on a threatened U.S. government shutdown,” said Carsten Menke, analyst at Julius Baer. U.S. President-elect Donald Trump’s pre-inauguration push to sway Congress could complicate efforts to prevent a government shutdown, potentially disrupting air travel and law enforcement ahead of the Christmas holiday. Gold is considered a safe investment option during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment. “The short- to medium-term U.S. economic outlook might bring more headwinds than tailwinds for gold, extending the current consolidation,” Menke said. Elsewhere, the Bank of Japan held rates steady, but a dissenting call to raise borrowing costs signals potential policy tightening next year. Spot silver edged down 0.1% to $29.34 per ounce, platinum added 1.1% at $929.05 and palladium advanced 1.3% to $914.25.”
On the day gold closed down $44.30 at $2592.20, and silver closed down $1.32 at $29.09.
On Friday the price of gold opened flat but soon got a shot in the arm as prices rose dramatically ($2630.00). This rise was large enough for traders to consider whether we have a short term bottom in place, a bullish plus considering recent losses. This happy ending to a ho-hum week was created by what appears to be a shifting FOMC interest rate policy. “We’re seeing people come back into the gold market here and re-establish positions,” Phillip Streible, chief market strategist at Blue Line Futures, said. “Now all of a sudden going from two interest rate cuts which were priced in, that caused the dramatic selloff in gold, now comes back the possibility of three interest rate cuts in a more accommodative policy, but it’s still way too soon to tell.”
The Fed is now back to an old game plan, which adjusts its interest rate policy relative to the latest inflation data. What makes these next few months more difficult are rising Trump crosswinds, like the scramble to keep the US out of default. I would not worry about this aspect; it seems that regardless of which party is running the show the possibility of default has turned into a political tool which is used to aggravate the citizens. As far as our trading desk is concerned the safe-haven trade is back, we have been net sellers since Monday. Finally keep today’s close in perspective – the price of gold today is only about 6% below all-time highs.
Reuters (Sherin Elizabeth Varghese) – Gold climbs after soft US inflation data; still set for weekly loss – “Gold prices extended gains on Friday, supported by a softer dollar and Treasury yields after U.S. economic data indicated a slowdown in inflation, although the Federal Reserve’s hawkish interest rate outlook kept bullion on track for a weekly loss. Spot gold was up 0.8% at $2,614.67 per ounce, as of 9:42 a.m. ET (1442 GMT) and U.S. gold futures climbed 1% higher to $2,633.20. The dollar fell 0.4% from its two-year high, making gold less expensive for overseas buyers, while Treasury yields edged down from an over six-month high. The report showed that monthly inflation slowed in November after showing little improvement in recent months. The personal consumption expenditures (PCE) price index rose 0.1% last month after an unrevised 0.2% gain in October. “Not only the PCE data, the personal income data, and the personal spending data all came out weaker than expected. We’re seeing people come back into the gold market here and re-establish positions,” Phillip Streible, chief market strategist at Blue Line Futures, said. “Now all of a sudden going from two interest rate cuts which were priced in, that caused the dramatic selloff in gold, now comes back the possibility of three interest rate cuts in a more accommodative policy, but it’s still way too soon to tell.” Bullion is down 1.3% this week so far after the Fed’s “dot plot” on Wednesday showed only two 25-bps rate cuts by 2025, signaling less easing than projected in September. Higher interest rates increase the opportunity cost of holding gold, which does not yield any interest. “With physical demand holding a floor for now, this means we are now heading into a 2025 that has relatively low Fed cut expectations, something that could fuel gold gains if inflationary fears end up being overblown, allowing the Fed more maneuverability,” JP Morgan said in a note. Spot silver rose 1% to $29.30 per ounce but was headed for its worst week since late July 2024. Platinum gained 0.5% to $928.19 and palladium climbed 1% to $915.09.”
On the day gold closed up $36.50 at $2628.70, and silver closed up $0.57 at $29.66.
Platinum closed up $12.90 at $934.40, and palladium closed up $9.50 at $906.60.
Jim Wycoff (Kitco) – “Technically, February gold futures bulls have lost their slight overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,700.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $2,565.00. First resistance is seen at the Thursday’s high of $2,640.90 and then at $2,650.00. First support is seen at $2,600.00 and then at this week’s low of $2,596.70. March silver futures bears have the overall near-term technical advantage. A two-month-old downtrend is in place on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $31.00. The next downside price objective for the bears is closing prices below solid support at the August low of $27.39. First resistance is seen at $30.00 and then at $30.50. Next support is seen at this week’s low of $29.145 and then at $29.00.”
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