Gold – Cross Currents
Commentary for Friday, August 2, 2024 (www.golddealer.com) – Today gold closed down $9.30 at $2425.70, and silver closed down $0.08 at $28.25. The trading theme this week for gold is familiar as we have been down this path more than once these past few months. While both gold and silver bullion are a unique financial asset in this upside down world of finance, they both are very sensitive to changing sentiment. In June of this year gold bottomed out at $2300.00. It then moved to a high of $2475.00. As usual traders took profits as gold turned bearish, reaching $2350.00 before again turning bullish and moving to $2475.00. So, this remains a predictable market in the short term, until the Fed lowers interest rates, both traders and investors can expect more of the same. Last Friday gold closed at $2380.00 / silver at $27.86. On the week gold was down $45.70 and silver was higher by $0.39.
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On Monday the price of gold was choppy in the early trade between $2386.00 and $2395.00 but traders sold this early updraft and gold once again tested support around $2370.00. And while the bulls still hold a solid technical picture the specter of lower prices, especially in the near term, remains a possibility if the Fed decides not to reduce interest rates in September.
Still the possible downside in price for both gold or silver may not be much considering the upcoming presidential election and the continued tension on the geopolitical front.
Long term investors may rebalance their holdings. If they thought gold was too high, they would sell gold and buy silver. If they thought silver was too high, they would sell silver and buy gold.
FXEmpire ( Christopher Lewis) – Gold Continues to See Support – “The early hours of Monday have seen gold traders step into the market and buy the yellow metal again. However, the $2400 level continues to see a lot of noise and resistance, and therefore the pullback shouldn’t be a massive surprise at this point in time. Gold Markets Technical Analysis – “The gold market has tested the $2,400 level, an area that of course is a large round, psychologically significant number, and if we can break above there, then it’s possible that we could go to the $2,425 level. Anything above there opens up a much bigger move, as it would compete for the attention of traders due to momentum re-entering the market. It’s probably worth noting that we just tested the 50-day EMA and so far, it looks as if it is trying to hold, which makes sense as it is so widely followed by technical traders around the world. Even on a pullback here, I believe this is a market that will eventually find a reason to continue going higher. The bond markets are seeing interest rates drop, so that certainly helps gold and I think you also have to keep in mind there is more than enough out there as far as geopolitical concerns are listed and therefore, I think you’ve got a situation where it’s a simple matter of safety. The US dollar of course can have a major influence on gold but right now I think it’s more about interest rates and geopolitical concerns than anything else. I remain bullish, but I also recognize we have a big fight on our hands, and as a result, you should pay close attention to your position sizing in this market. The gold market can get extraordinarily volatile, so always pay close attention to this market, because it can give you a gauge on the risk appetite around the world.”
On the day gold closed down $2.70 at $2377.30, and silver closed down $0.16 at $27.70.
On Tuesday the price of gold was choppy in the morning trade between $2386.00 and $2394.00 in what initially looked like a test of recent support. But out of the blue gold surged to weekly highs ($2405.00) before the domestic market closed in what must be a welcomed plus to bullish sentiment. I say this because the FOMC meeting begins this morning and ends Wednesday afternoon after the markets close. With rates expected to remain the same traders were not expecting any surprises. Today was a big surprise as gold again pushed over $2400.00.
It is too soon to claim victory over the bearish darkness, but let’s just say this at least sets the stage for higher gold prices if the FOMC lowers interest rates anytime soon. For you naysayers let’s also include the possibility that the Fed will not lower interest rates. If this is the case, the worst case scenario for the bulls may turn out to be that gold continues to test support just below $2400.00. But the important point to keep in mind is that regardless of the outcome the 2024 September and December FOMC meetings are associated with a Summary of Economic Projections. Chief Powell will talk about trends, expectations and what the Federal Reserve has in mind for the remainder of 2024. Which dismisses a great deal of confusion and makes longer term planning easier for the physical market across our trading desk.
FXEmpire (James Hyerczyk) – Gold Edges Higher as Markets Await Fed Decision and US Economic Data – “Gold prices moved slightly upward on Tuesday as investors anticipate the Federal Reserve’s commentary on monetary policy and upcoming U.S. economic data. These factors are expected to provide insights into the pace and scale of potential Fed interest rate cuts. At 10:51 GMT, XAU/USD is trading $2390.42, up $6.63 or 0.28%. Fed Meeting in Focus – The Federal Reserve is expected to maintain current interest rates at the conclusion of its two-day meeting on Wednesday. However, the central bank may signal potential policy easing as early as September, citing inflation approaching its 2% target. Investors will be closely monitoring Fed Chair Jerome Powell’s press conference for any clues regarding the timing of potential rate cuts. Treasury Yields and Economic Data – U.S. Treasury yields remained relatively stable on Tuesday as investors turned their attention to upcoming economic data and the Fed meeting. Key labor market data, including JOLTs job openings figures and the July jobs report, are scheduled for release this week. These reports, along with consumer confidence insights, will provide crucial information about the state of the U.S. economy. Gold Demand Trends – While India’s gold demand in the June quarter fell 5% year-over-year, consumption in the second half of 2024 is expected to improve due to local price corrections following import tax reductions. However, record-high international prices have impacted global consumer demand, with bar and coin demand falling 5% and jewelry demand dropping 19% year-on-year. Market Forecast – The short-term outlook for gold appears cautiously bullish. Potential signals from the Fed regarding rate cuts and expected slowdown in job additions could catalyze further investment demand for the precious metal. However, traders should remain vigilant as market reactions to economic data releases and Fed commentary may introduce volatility in the coming days. Technical Analysis – Gold (XAU/USD) is currently showing a slight bias to the upside. Not only did traders defend the medium-term uptrend last week with a successful test of the 50-day moving average at $2358.70, but it has also jumped to the strong side of a key pivot at $2380.54. Despite holding these two support levels, prices aren’t likely to rise much without a catalyst. Gold could rally this week as long as support holds, and the Fed provides the firepower for a surge. Prices could remain rangebound if the Fed agrees with the market on September rate cut but remains uncertain on a similar move in December. Sentiment could turn bullish if the Fed hints at a December rate cut. If the Fed disappoints then traders will challenge the 50-day MA again.”
On the day gold closed up $27.70 at $2405.00, and silver closed up $0.67 at $28.37.
On Wednesday the price of gold moved higher on safe haven demand as Israel assassinated Hamas leader Ismail Haniyeh sparking concerns that retaliation will lessen the chances of finding a “joint middle ground” solution to this ongoing conflict. Gold established itself solidly above $2300.00 in March and has since moved above $2400.00 on three occasions, today’s surge being the strongest attempt to date. This solid technical picture may suggest higher prices if interest rates cooperate. The picture, however, is complicated with strong cross winds, the assassination helped push the price of gold higher by $21.00 on the close. And Powell’s comments today pushed the aftermarket higher by another $21.00 at the time of this writing. At the same time gold is higher by $78.00 this past month and $440.00 year over year, which may suggest profit taking is right around the corner.
Reuters (Rahul Paswan) – Gold on track for monthly gain on Mideast fears, Fed rate-cut hopes – “Gold prices were on track to register their best month since March on Wednesday led by geopolitical concerns and hopes of an interest rate cut in September as focus shifted to the U.S. Federal Reserve’s upcoming policy decision. Spot gold was up 0.7% at $2,424.29 per ounce, as of 1341 GMT, and has gained more than 4% this month. U.S. gold futures were up 0.7% to $2,422.50. The Fed is expected to leave rates unchanged as it concludes its two-day meeting later in the day but could also hint that a reduction in borrowing costs could come as soon as September. “If they do have something more concrete on rate cuts coming gold should trade up north of $2,500 but if they kind of leave it dragging along, I expect gold to sell off a bit,” said Bob Haberkorn, senior market strategist at RJO Futures. “But there’s so much geopolitical concern out there right now and concerns on economic issues that gold will form a pretty good base here down around $2,400.” Hamas leader Ismail Haniyeh was assassinated early on Wednesday morning in Iran, the Palestinian militant group and Tehran said, drawing threats of revenge on Israel in a region already shaken by the war in Gaza and a deepening conflict in Lebanon. Helping non-yielding bullion further, the dollar index slipped, and benchmark U.S. 10-year Treasury yields hit their lowest in more than four months. “While investors wait for Fed rate cuts to take a more constructive view on gold, positioning on silver has been more bullish due to its link to green technologies,” BofA said in a note. Believe silver should outperform gold because it is more sensitive to manufacturing activity, BofA added. Spot silver was up 1.6% at $28.83 per ounce. The metal is set for a second straight monthly loss. Platinum gained 1.3% to $971.55 and palladium climbed 4.5% to $929. However, both the metals were headed for a monthly decline.”
On the day gold closed up $21.50 at $2426.50, and silver closed up $0.41 at $28.78.
On Thursday the price of gold initially moved higher, touching $2455.00 before settling considerably off highs on the day. Which may suggest this latest rally is running out of gas. Still, there are several reasons the bulls still have a smile on their face after this weeks Fed meeting. Weekly job claims are higher, suggesting an interest rate cut may be in order. Geopolitical tension has increased safe haven demand. And according to Chief Powell’s latest public comments a rate cut may be on the table, so the stars are coming into alignment.
Another plus for gold today was the Bank of England cutting rates by 25 basis points. I’m surprised that more is not made of this move. It suggests lower rates are in the cards for the US and suggests the Fed’s “soft economic landing” is not a big longshot. But the outcome is far from certain so traders will continue to play this market from both sides of the street. Which guarantees continued volatility. One side of the street will favor the metals with lower interest rates. Wall Street will rejoice, lower interest rates help the metals, and the Grinch will not steal Christmas. The other side of the street bring bearish clouds reflected in today’s failure to build on highs, a bullish disappointment. I remain optimistic, but it may be too soon to get out the champagne, still I would have a bottle ready considering the bigger picture.
FXEmpire (Christopher Lewis) – Gold Continues to Look Strong After The Fed Meeting – “The gold market continues to see a lot of upward momentum over the long term, as we have multiple reasons to think that we are going to see more upward pressures. This is a market that I think is getting close to making a fresh, new, high. Technical Analysis – The gold market has gone back and forth quite a bit during the early hours here on Thursday, as it looks like we are going to continue to see buyers, but I think given enough time, we probably not only go higher, but we break the recent highs just below the crucial $2,490 level. I do think it is probably only a matter of time before we not only break above there, but then clear the psychologically important $2,500 level. All things being equal, this is a market that I believe buyers will continue to come in and take advantage of cheap ounces with the $2,400 level underneath being a major support level as it had previously been a major resistance level. We also have the 50 day EMA underneath there that comes into the picture. And of course, we have the trend line that also has been rather obvious over the last several months as we continue to grind higher, and I do think that’s the key here, the word being grind, I do think that things get a little bit choppier, but after the Wednesday session, the market seems pretty sure that the Federal Reserve is going to cut interest rates in September, and that generally does help gold. Furthermore, we have plenty of geopolitical risks out there, especially in the Middle East. So, with that, I think gold continues to look attractive to most traders, at least as a part of your portfolio.”
On the day gold closed up $8.50 at $2435.00, and silver closed down $0.45 at $28.33.
On Friday gold presented a confusing tale. In the early market it challenged $2480.00 but traders quickly sold the rally and gold dipped into the $2420.00 range reacting to several crosscurrents. Each driven by short term sentiment, even though the longer term picture should favor the bulls. While everyone got excited over an apparent dovish turn by the FOMC, this happiness for the metals is still only a possibility. The price reality, at least for the present, is straightforward. Anything approaching $2500.00 may turn into a dogfight as these higher prices and open the gate to short-term profit taking.
Jim Wycoff (Kitco) – Gold price drops below unchanged on heavy profit taking, weak long liquidation – “Gold and silver prices have fallen below unchanged levels on the day near midday Friday. Gold is seeing profit taking by shorter-term futures traders and weak long liquidation in the futures market heading into an uncertain weekend. Gold prices were up sharply earlier today, supported by this week’s downbeat U.S. economic data, highlighted by this morning’s weaker-than-expected U.S. jobs report for July. Non-farm payrolls rose less than expected, the unemployment rate up-ticked and wage inflation was less than expected. The U.S. stock indexes have sold off strongly late this week and are trading at multi-week lows, the U.S. dollar index has tanked and hit a 4.5-month low, while U.S. Treasury yields have dropped to multi-month lows. Adding to the precious-metals-bullish cocktail late this week has been safe-haven demand for gold and silver amid heightened Middle East tensions. Don’t be surprised to see gold prices at least challenge the record highs in the near term. Still, the spooked marketplace to end the trading week is prompting many gold and silver futures bulls to take their money off the table heading into the weekend.”
On the day gold closed down $9.30 at $2425.70, and silver closed down $0.08 at $28.25.
Platinum closed down $2.70 at $962.70, and palladium closed down $12.60 at $879.20.
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