Gold – Continues to Find Support
Commentary for Friday, May 31, 2024 (www.golddealer.com) – Today gold closed down $20.00 at $2322.90, and silver closed down $1.09 at $30.30. This was a short week considering the domestic markets were closed for Memorial Day. Gold prices did spike higher on the open but reversed direction and finished the day mildly in the red. Still, insiders are encouraged as inflation and geopolitical worries keep the base support focused. The Fed’s preferred inflation measure Personal Consumption Expenditures came in flat for April suggesting a cooling trend might be in place, but this is still an open question. Rates will likely not be lowered this year if inflation does not weaken. This may cap higher gold prices in the short term. The Fed is now hinting, however, that some easing might be in the cards before year end which supports the current pricing range for gold. Last Friday gold closed at $2335.00 / silver at $30.28 on the week gold was down $12.10 and silver was up $0.02. A lot of chop for such tight spreads.
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On Monday May 27th the domestic markets and CNI were closed for Memorial Day.
On Tuesday the price of gold was firmly higher reaching $2365.00 in the early trade before settling somewhat on the day. The price of gold finished solidly in the green after the long Memorial Day weekend. Helping the bulls was a continued weaker dollar which is reflected in the Dollar Index, moving from 105.00 on Friday through 104.25 on Tuesday.
While a short week might suggest subdued action, the metals began with a bang. This coming Friday’s fresh inflation data will have everyone’s attention. And could be the key that opens the lock to even higher prices in the near future. Silver prices were also firmly higher today, up $1.75 this morning so the silver bulls remain optimistic even at these higher numbers.
Reuters (Brijesh Patel) – Gold steadies on lower dollar, focus shifts to US inflation data – “Gold prices held steady on Tuesday, buoyed by a slight pullback in the dollar as investors look forward to U.S. inflation data due later this week for more clarity on interest rate cut timings. Spot gold was flat at $2,349.78 per ounce by 10:16 a.m. ET (1416 GMT), after rising 1% on Monday. U.S. gold futures were up 0.7% at $2,350.20. “The dollar index is down and we are seeing the yield curve rates drop a little bit. Gold is coming off a correction and is hovering around resistance levels and now it’s bouncing again,” said Bart Melek, head of commodity strategies at TD Securities. “We continue to be fairly optimistic on gold. I still think that ambiguity of Federal Reserve monetary policy may very well keep gold from taking off and moves be very much data dependent going forward.” The dollar slipped 0.1% to a more than one-week low, making gold less expensive for other currency holders. Focus this week will be on the U.S. core personal consumption expenditures price index (PCE), the Fed’s preferred inflation gauge, due on Friday. Fed meeting minutes released last week showed that the policy response would involve maintaining the benchmark rate at its current level. Traders are pricing in a 63% chance of a Fed rate cut by November. Lower interest rates reduce the opportunity cost of holding non-yielding gold. “Gold prices are likely to remain fairly supported by buying-on-dips demand and central bank diversification,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International. Demand from global central banks for gold has been elevated for two years as they diversify their foreign currency reserves. Meanwhile, global physically backed gold exchange-traded funds (ETFs) saw net outflows of 11.3 metric tons last week, according to the World Gold Council. Silver eased 0.1% to $31.64 after a 4.4% jump on Monday. Platinum fell 0.8% to $1,045.56. Palladium slipped 1.7% to $972.”
On the day gold closed up $22.70 at $2355.20, and silver closed up $1.64 at $31.97.
On Wednesday the price of gold dipped in the early trade touching $2336.00 as interest rates continue to rise and Wall Street once again worries about this trend. Minneapolis Fed President Kashkari said Tuesday that US interest rates will remain steady as long as needed, adding that they might be raised if inflation numbers continue to rise.
I think the recent floor for gold above $2300.00 is established in the short term. Higher interest rates, however, will continue to pose a significant obstacle to the bullish scenario. We may now see a reasonable downdraft in prices reacting to these higher interest rates as traders rethink the popular notion that interest rates would be moving lower by the summer months.
There are other issues which support safe haven buying. The war between Israel and Hamas has created a million displaced refugees this past 3 weeks according to the United Nations Relief and Works Agency (UNRWA). The notion of seized, claimed and rightful ownership of this ground has been a confused and deadly mess since the state of Israel was recognized in 1948. Brokered truce arrangements made by 3rd parties have all been tenuous as peacemakers now wonder if a two-state solution which involves the establishment of an independent State of Palestine alongside that of the State of Israel is even a possibility in what seems like a never ending war which demoralizes the most vulnerable on both sides.
FXEmpire (Christopher Lewis) – Gold Continues to Look For Footing – “The gold market fell a bit in the early hours of Wednesday, as the market is currently looking for some kind of floor in this market. You can see that gold fell quite a bit during the early hours on Wednesday, as we continue to see a lot of volatility in markets around the world. Gold won’t be any different. And at this point, I think we are trying to determine whether or not there is a floor. Underneath, the $2,300 level should continue to be an important level as it not only is a large round psychologically significant figure, but it’s also an area where we’ve seen buyers jump in. We also have the 50 day EMA in that area. So, I think it all comes together for a potential value area. A lot of confusion seems to be raining out there, and I just don’t see how that changes anytime soon. However, when you look at this chart, it’s pretty easy to see that this is in an upward trend, and it would take quite a bit of downward pressure to change that. We did during the previous week, we saw a lot of nasty selling pressure, but still it was from an extraordinarily high level. So, with this, I think you’re waiting to see whether or not we can get some type of bounce from here. And if we do, then you’re a buyer the market should continue to enjoy central bank buying, geopolitical concerns pushing gold higher and of course countries like the United States borrowing money hand over fist should continue to drive the demand for gold higher.”
On the day gold closed down $14.90 at $2340.30, and silver closed up $0.23 at $32.20.
On Thursday the price of gold moved higher as the real estate market weakened and the latest inflation numbers (Consumer Price Index) came in hot (3.6%). There are two ways of looking at this latest data. The first is that because inflation remains problematic the Fed will not be lowering interest rates anytime soon and this will eventually pressure gold lower because of opportunity costs. The second, and likely the stronger of the two possibilities is that gold moved higher in reaction to climbing inflation numbers which will prompt more investor interest. Still, this early rally in gold eventually fizzled as it closed only mildly in the green for the day.
The price of silver moved lower over profit taking as its technical picture weakened over a bearish double top trading pattern. Analysts on the other hand are generally bullish on higher prices for silver over the longer term because of its growing use in environmental projects.
FXEmpire (Christopher Lewis) – Silver Plunges on Thursday – “The silver market fell rather significantly during the early hours of Thursday, as we have seen a lot of noise overall. The market has been bullish overall, but at the same time, has to acknowledge gravity sooner or later. Silver fell rather significantly during the trading session on Thursday, as it looks like we are going to continue to struggle to stay above the $32 level for a meaningful move. This isn’t to say that we won’t see the market break out above the $32.50 level and continue going higher. It just shows that we are going to have to build up enough momentum to finally take off to the upside. Underneath we have the $30 level that could offer quite a bit of support and I do think that is important to pay attention to as it is not only an area that had been held previously, it’s also a large round psychologically significant figure that a lot of people will be paying close attention to. The 50 day EMA currently sits at the $28.50 level and is rising. So with that being the case, I think you have to assume that buyers would be more willing than not to come in there as well. Keep in mind that silver is an industrial metal, so it’s not just gold and it doesn’t just follow gold. It has its own scenario that it has to pay attention to. In general, this is a market that I think will continue to attract a lot of buyers on dips as the uptrend should continue to go higher, but we may have some work to do before we can make the next move. Once we do, I would expect to see a lot of momentum back into the market again.”
On the day gold closed up $2.60 at $2342.90, and silver closed down $0.81 at $31.39.
On Friday the price of gold surged higher in the early trade in what some are calling a “relief rally” but soon reversed direction, finishing mildly in the red on the close. This may suggest that bullish sentiment is cooling to some degree, but physical bulls believe that the inflation genie is already out of the bottle and continue to buy weakness. Our volume numbers are solid and new accounts are growing, which is a good sign, suggesting continued safe haven demand.
The bulls still buy low premium silver bullion with both hands. My feeling is that their patience in this confused, inflationary world of fiat currencies will eventually prove rewarding. It is an additional plus that silver’s bullish technical picture while volatile remains strong.
FXEmpire (Christopher Lewis) – Gold Continues to Find Support – “The gold market continues to find support underneath, as the market is well supported. This is a market that will continue to have a lot of different reasons to continue higher over the longer term. The gold market has gone back and forth during the early hours on Friday, as it looks like we are going to continue to see plenty of support underneath the 50 day EMA, since it is just above the 2300 level, an area that recently had been a swing low. Ultimately, this is a market that I think given enough time will find buyers, but I think you also have to keep in mind that it’s likely that the 2400 level above is a massive ceiling. All things being equal, I think we are still in the midst of trying to work off a lot of the froth that we have seen over the last couple of months. And I do think at this point, it’s likely that we will continue to see more choppiness than anything else. But I do believe in the upward trajectory. Therefore, I don’t have any interest in shorting gold. If we break down below the $2,300 level, then we could drop as far as $2,150 and still be in an uptrend and just then start to test the 200-day EMA. If we break above the $2,400 level, then $2,450 would be targeted, followed by $2,500, after that, market participants will continue to look at each dip as a potential opportunity to pick up cheap gold, at least as far as I can tell and as far as history shows on the chart. And until something massively changes, geopolitics, profligate spending, profligate borrowing, it’s hard to imagine a scenario where gold doesn’t continue to at least have a certain amount of appeal.”
On the day gold closed down $20.00 at $2322.90, and silver closed down $1.09 at $30.30.
Platinum closed up $4.80 at $1037.70 and palladium closed down $45.10 at $899.20.
Jim Wycoff (Kitco) – “Technically, August gold bulls have the overall near-term technical advantage but have faded. A bearish double-top reversal pattern has formed on the daily bar chart to suggest a near-term market top is in place. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,477.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the May low of $2,308.70. First resistance is seen at this week’s high of $2,388.00 and then at $2,400.00. First support is seen at $2,350.00 and then at this week’s low of $2,343.30. July silver futures bulls have the solid overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the May high of $32.75. The next downside price objective for the bears is closing prices below solid support at $29.00. First resistance is seen at $32.00 and then at $32.28. Next support is seen at the overnight low of $30.94 and then at $30.50.”
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