Commentary for Friday, Oct 4, 2024 (www.golddealer.com) – Today gold closed down $11.30 at $2645.80, and silver closed down $0.06 at $32.13. The price of gold this week traded between $2668.00 and $2631.00 suggesting that traders are getting used to these higher prices. The same thing is true for silver which traded between $31.08 and $32.34. While this is a short term snapshot, it is nonetheless encouraging with large future rate cuts becoming less likely. Reuters – US job growth surges in September; unemployment rate falls to 4.1%. “The acceleration in job growth further reduces the need for the Federal Reserve to maintain large interest rate cuts at its remaining two meetings this year.” Even with all the buzz $2700.00 gold is not assured, though it is suggested by the strong monthly technical picture. I believe the reason is that prices have turned flat around $2660.00 since September 24. A less aggressive interest rate program might also lead to a cooling in gold prices, which is a contradiction. This may have traders scratching their heads, but as bullish sentiment continues to grow, many are considering new records highs in 2025. Last Friday gold closed at $2646.75 / silver at $31.54. On the week gold was higher by $0.95, and silver was higher by $0.59.
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On Monday the price of gold drifted lower reaching $2630.00 in the early trade. You are seeing a bit of profit taking early in the week as the Dollar Index firms. A strong technical picture and rising geopolitical tension in the Middle East support safe haven demand. Considering these opposing forces, I expect this “chop” around $2600.00 to continue in the shorter term. In the longer term most traders are looking for lower interest rates and higher metals prices. It’s surprising that gold drifted lower today considering Chief Powell’s upbeat comments.
FXEmpire (Christopher Lewis) – Gold Pulls Back to Start The Week – “Gold markets have pulled back a bit to start the week, as it looks like we are seeing a bit of profit-taking. However, there are plenty of reasons out there to think that this market will continue to go higher over the longer term. Technical Analysis – The gold market has pulled back just a bit during the early hour on Monday, as we continue to see a lot of noisy behavior, but I do think at this point, the market has gotten a little overextended and that is very likely the biggest problem. After all, we still have plenty of reasons to believe that the gold market is going to go higher, including things like the ratcheting up of tensions in the Middle East, the interest rates around the world falling, central banks around the world buying gold, and then quite frankly, just the technical analysis and the trend of the market itself. Momentum alone should drive this market higher given enough time, but momentum can only carry a market for so long before people have to take profit and I think that’s essentially what they’ve done here. A move below the $2,600 level could open up a drop to the $2,530 level, where the 50-day EMA presently resides, and it should offer significant support. Regardless, I think a short-term pullback is necessary, but I also think it’s an opportunity. I’ll be looking at the first signs of a bounce to get involved as we go looking to the $3,000 level over the longer term. I don’t necessarily think that’s easy to get there, but I do think that’s probably where the market’s trying to get to over the next several months. After all, it’s not as if any of the fundamental reasons driving gold higher are going anywhere anytime soon. Silver Continues to See Overhead Resistance – The silver market has pulled back a bit in the early hours of Monday, as we continue to see a lot of noisy behavior. Ultimately, this is a situation where a lot of traders, including myself, will be looking for value in this market. Technical Analysis – The silver market has pulled back just a bit during the course of the early hours on Monday, and therefore it looks like we are trying to form a bit of a double top. The double top of course is a major technical barrier that a lot of people would be paying attention to, but ultimately, I don’t necessarily think this is the end of the uptrend in silver. Rather I think it’s just the perfect place for the market to pull back in order to find value. I recognize that the 50-day EMA is sitting just above the $30 level. And I do think that the $30 level will attract a lot of attention. Whether or not we even get there, I am looking for signs of a bounce to take advantage of so I can pick up cheap silver. If we can break above the $32.75 level, it’s likely that the market will try to go higher, at that point I would anticipate silver to start looking towards the $35 level. Inflation isn’t going anywhere, and that does help gold and silver, both, and therefore, I think you’ve got to look at it through that prism. The U.S. dollar was a little oversold. So, the silver market giving back some of the gains while the U.S. dollar picks up a little bit of strength makes a certain amount of sense. But overall, the momentum seems to be favoring silver. In theory, we do have divergence on the moving average convergence divergence indicator from the most recent high to the one we made back in the month of May, but at this point in time that doesn’t necessarily mean anything. We haven’t seen a massive move downstairs. Upstairs, on the other hand, if we break above that shooting star from the Thursday session, then we will continue to climb much higher, again, to what I believe will be the $35 level.”
On the day gold closed down $7.90 at $2628.20, and silver closed down $0.15 at $31.01.
On Tuesday gold moved higher reaching $2670.00 before settling the day mildly in the red. Gold is now within striking distance of $2700.00. And a strong technical picture suggests higher prices are in the making. Chief Powell yesterday hinted that the Fed is considering two more rate cuts, this year which enhanced bullish sentiment. The Wall Street Journal claims that inflation is weakening also suggests higher prices might be right around the corner. “Consumer prices increased by 1.8% on the year in September, down from 2.2% in August. Eurozone inflation fell below the European Central Bank’s target for the first time in more than three years, suggesting a lengthy struggle to bring price rises under control is nearing an end.”
It might seem odd that lower inflation creates higher gold prices. But traders believe that lower interest rates underscore higher prices in the metals. In an ominous note this morning (CNN) the While House warned that Iran is preparing a missile attack against Israel. Another escalation which raises the stakes in this conflict and fuels safe haven demand.
Reuters (Anjana Anil) – Gold jumps 1% as safe-haven demand, lower US yields support prices – “Gold prices jumped 1% on Tuesday as safe-haven demand spurred by an escalation in the Middle East conflict, along with lower U.S. bond yields pushed back prices near last week’s record highs. Spot gold was up 1.1% at $2,664.20 per ounce, as of 9:48 a.m. ET (1348 GMT), after hitting an all-time high of $2,685.42 last Thursday. U.S. gold futures edged 0.5% higher to $2,673. Gold is rising because of the possibility of what can happen if things spiral out of control with Lebanon and Israel with boots on the ground, and Iran becomes more involved in the Middle East, said Daniel Pavilonis, senior market strategist at RJO Futures. Gold is viewed as a safe asset during economic and political turmoil and also gains in a low-rate environment as it offers no interest of its own. Benchmark U.S. 10-year bond yield slipped, making non-yielding bullion more attractive. “At the same time, we’re looking at cutting rates at a time when inflation has slowed, but we’re still in an inflationary environment… this is the appropriate time to be long gold” Pavilonis added. The market will now be closely watching U.S. labor data this week as well as remarks from various Fed officials, for more hints on the Fed’s policy stance. Bullion on Monday posted its worst day in over four weeks after Fed Chair Jerome Powell suggested the central bank will likely pursue quarter-percentage-point rate cuts moving forward. However, the causes of the recent rally, including expectations of lower U.S. interest rates and safe-haven demand driven by geopolitical instability, remain intact, said Ricardo Evangelista, senior analyst at ActivTrades. Elsewhere, spot silver was up 1.7% at $31.66 per ounce, platinum gained 1.9% to $994.90, while palladium added 0.2% to $1,001.50.”
On the day gold closed down $3.20 at $2664.10, and silver closed up $0.02 at $31.47.
On Wednesday the price of gold continued to settle perhaps suggesting that overhead resistance is tougher than most believe, even though the technical picture points to higher prices on the shorter term. The price swing in gold this morning moved between $2644.00 and $2658.00, roughly within yesterday’s range but it did close in the red again today. Which makes for three days in a row of negative numbers, not a big deal considering all-time highs, but it might suggest early trader caution and the possibility of profit taking could be a growing factor.
Still the overall world picture suggests that gold will continue to attract investors. Investor patience however may prove rewarding. The Fed will eventually be forced to lower interest rates, but conservative players may wait to see those lower numbers. When it happens, fresh money will pump up the physical market and increase buzz for a fresh look at possibilities in 2025.
FXEmpire (Christopher Lewis) – Gold Continues to Consolidate at Highs – “The gold market has gone back and forth over the last few days, and on Wednesday, we saw a bit of selling. This isn’t to say that there is going to be a lot of negativity. However, we have a bit of work to do in order to go higher. Technical Analysis – The gold market pulled back slightly in the early hours on Wednesday, as we continue to consolidate after a pretty significant shot higher. At this juncture, I do believe that the $2,600 level underneath will continue to be support, and I also recognize that there are a handful of reasons why this market should continue to go higher over the longer term. The first one, of course, is the fact that central banks around the world are cutting rates and more specifically the Federal Reserve is, and that has gold bugs excited. On the other hand, we have plenty of geopolitical issues out there that could drive the price of gold higher, and that’s not to be dismissed very lightly because, quite frankly, there are a few things that are safer than owning gold. Short-term pullbacks I do think continue to get bought into as value, as has been the case for some time now. Above the $2,700 level, the market then goes much higher, perhaps reaching towards the $3,000 level over the longer term. When I look at the chart, I can see that we are in the midst of perhaps forming a bit of a bullish flag, so that could also come into the picture as well. So ultimately, I think you’ve got a market that goes much higher, but it just got a little bit ahead of itself in the short term. This happens from time to time and therefore a bit of profit taking makes a bit of sense.”
On the day gold closed $2647.10 down $20.20, and silver closed $31.63 up $0.18.
On Thursday the price of gold moved from $2656.00 to what looks like today’s support level around $2642.00. This early downward drift, reacting to solid economic data and a bounce back in the US dollar. But our shiny friend reversed direction and closed in the green. A surprising move as the Dollar Index gained 2 points since Monday. This “back and forth” movement is consistent however this week, as gold traded between $2675.00 and $2631.00.
I pointed out earlier this week that overhead resistance gets a shot in the arm as the economy and the dollar strengthen. For these reasons, even though the technical picture for gold remains solid, $2700.00 may not be a walk in the park. This general guess as to short term pricing is supported by conjecture that while the Fed wants to further lower interest rates to keep our economy stable, this trick in their tool bag is limited. Especially if inflation remains stubbornly high.
Reuters (Anjana Anil) – Gold dips as US dollar rebounds on fading bets for large rate cut – “Gold prices fell on Thursday on a stronger dollar as investors toned down expectations of another big interest-rate cut from the U.S. Federal Reserve, while looking ahead to Friday’s payrolls data for further policy clues. Spot gold was down 0.4% at $2,648.49 per ounce by 10:08 a.m. ET (1408 GMT), after hitting a record high of $2,685.42 last week. U.S. gold futures shed 0.2% to $2,665.70. “Over the last several sessions, gold has consolidated just off its recent highs. That consolidation is the market in a wait and see mode going into a very important jobs report on Friday. In addition to that, we have seen a major bounce back in the dollar,” said David Meger, director of metals trading at High Ridge Futures. “If there is some sense that the Fed has a higher probability of going 50 bps, that would likely be positive for gold and we could see a little further pull back if the alternate occurs.” The U.S. central bank’s fight to return inflation to its 2% target may take longer than expected, limiting how far interest rates can be cut, Richmond Fed President Thomas Barkin said. Traders watered down their bets for a 50-basis-point rate cut in November to 34% from 49% last week. Meanwhile, Israel’s military urged residents of over 20 southern Lebanese towns to evacuate immediately amid an ongoing incursion following its worst losses in a year of fighting Hezbollah. “While there was some safe-haven buying following the announcement of the Iranian attack, the possibility that (U.S.) rate cuts might not be as aggressive as anticipated likely limited the gains and continue to do so,” said Zain Vawda, market analyst at MarketPulse by OANDA. Bullion is considered a safe investment during times of political uncertainty and thrives in a low-rate environment. Spot silver fell 0.2% to $31.81, platinum dropped 1.1% to $991.30, and palladium slipped 2.3% to $991.58.”
On the day gold closed up $10.00 at $2657.10, and silver closed up $0.56 at $32.19.
On Friday gold finished the week with a mild drift to the downside, fueled by a stronger dollar and a very strong jobs picture. CNBC – “US job creation totaled 254,000 in September, much better than expected.” This will soften the chance of stronger rate cuts in the coming months. And today according to the CME Group’s Fed Watch tool traders are now pricing in a 91% chance of a quarter percentage point rate cut in September. So, this transition from higher interest rates to lower interest rates proceeds in an orderly fashion. This suggests the Fed is on the right track in unwinding their “inflation beating” higher interest rate machine. But most traders believe that the bullish sentiment will not cool easily because there are plenty of reasons still in place which support higher gold and silver prices.
Reuters (Anjana Anil) – Gold slips as stronger US jobs data shrinks hopes of big Fed rate cut – “Gold prices slipped on Friday after a stronger-than-expected U.S. jobs report boosted the dollar and caused analysts to scale back expectations of an aggressive rate cut from the Federal Reserve next month. Spot gold was down 0.6% to $2,640.61 per ounce by 9:03 a.m. EDT (1303 GMT), after scaling a record high of $2,685.42 last week. U.S. gold futures lost 0.7% to $2,660.90. U.S. job growth accelerated in September and the unemployment rate slipped to 4.1%, further reducing pressure on the Fed to deliver another 50-basis-point rate cut at its Nov. 6-7 policy meeting. “Gold stumbles as a strong payrolls report seems likely to lock in 25bps in November. Revisions to last month were higher as well, which we haven’t seen in many months, while the unemployment rate ticked lower even as participation stayed flat,” said Tai Wong, a New York-based independent metals trader. The dollar index jumped after the data and was headed for a weekly gain, making bullion more expensive for overseas buyers. However, “I expect any gold retracement to be relatively shallow as bullish sentiment remains undaunted,” Wong said. Traders scaled back their expectations of a 50-basis-point rate cut in November to 11% from 28% before the payrolls data. “If geopolitics play a role over the weekend, gold futures could easily accelerate back up to $2,700 and threaten new all-time highs,” said Phillip Streible, chief market strategist at Blue Line Futures. Iran’s Supreme Leader Ayatollah Ali Khamenei said his country and its regional allies will not back down after an Israeli attack on Beirut. Gold is used as a safe-haven investment during times of political and financial uncertainty and thrives in a low-rate environment. Retail gold demand in India improved slightly this week due to an upcoming festival but remained lower than usual because of high prices. In other metals, spot silver dropped 0.9% to $31.74 but was headed for a weekly gain. Platinum climbed 0.3% to $993.40, and palladium advanced 0.4% to $1,004.00.”
On the day gold closed down $11.30 at $2645.80, and silver closed down $0.06 at $32.13.
Platinum closed down $3.40 at $989.80, and palladium closed down $2.10 at $995.20.
Jim Wycoff (Kitco) – “Technically, December gold bulls have the strong overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,800.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $2,600.00. First resistance is seen at $2,675.00 and then at the overnight high of $2,687.70. First support is seen at $2,650.00 and then at this week’s low of $2,646.20. December silver futures bulls have the firm overall near-term technical advantage. Prices are in a seven-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 $33.50. The next downside price objective for the bears is closing prices below solid support at $30.00. First resistance is seen at this week’s high of $32.59 and then at $33.00. Next support is seen at Thursday’s low of $31.65 and then at this week’s low of $31.15.”
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